November 2011 ACOs: The Final Rule and New Opportunities 1
Presenters John M. Kirsner, Esq. is a health care partner at Squire Sanders, focusing his practice on payor/provider issues, provider alignment and integration, and health care antitrust analysis. He moderated the 2011 University of Miami ACO Forum, which received national coverage from C-SPAN. Paul Lee is senior partner and founder of Strategic Health Care in Washington, D.C. where he advises clients on strategies and federal opportunities. He is a former senior staffer in the U.S. Senate, a hospital association executive and has led Strategic Health Care for 17 years. Marian Lowe is a partner at Strategic Health Care in the Washington, D.C. office, where she advises clients on Medicare policy and strategy, particularly in identifying opportunities for hospitals and ambulatory providers to take advantage of changes in federal reimbursement policies. Peter A. Pavarini , Esq. is chair of the Squire Sanders multidisciplinary Health Reform Task Force, focusing his practice on representation of hospitals and other health care providers, particularly on integration models and ACO development. He serves on the board of the American Health Lawyers Association. 2
Presentation Outline • Overview • Structure – Beneficiary assignment – New opportunities for rural and small community providers to create or join ACOs – ACO organization and governance – FTC/DOJ Antitrust – OIG waivers for gainsharing and other collaborations • Function – Quality reporting – Electronic data exchange • Funding – Advanced funding of ACO start-up costs – Improvements to the shared savings rate 3
OVERVIEW 4
Overview: ACO Background • Proposed rule published March 31, 2011 – CMS received 1200 formal comments • Final rule published October 20, 2011 • Basic ACO concept remains the same – Voluntary group of providers and hospitals – ACO participants assume some degree of financial risk and the opportunity to share in savings from patient outcomes – Aim is to provide better, more coordinated care for beneficiaries while controlling cost growth 5
Major Changes in the Final Rule • Allows one-sided risk models to participate in shared savings earlier – Both risk models start sharing from the first dollar • Reduces number of quality measures by half – 33 measures in 4 domains • Provides opportunities for ACOs to receive advanced payments 6
Major Changes in the Final Rule • More flexibility in agreement period timelines • Expands eligibility to include FQHCs and RHCs • Changes beneficiary assignment process to a two step process • Extends pay for reporting period into years 2 and 3 7
Interaction with other programs • No dual participation in ACO and other shared savings. – Also cannot be a participant in the independence at home medical practice pilot program • Anticipates providers will participate in HIT incentives, PQRI, VBP, and other programs. 8
STRUCTURE 9
New Beneficiary Alignment Process • New: Two-step assignment process based on: – Beneficiary’s use of primary care services from a primary care physician, or – Beneficiary’s use of primary care services from any other ACO professional • New: Preliminary prospective assignment process with reconciliation after each performance year • Uses physicians’ TIN and associated NPIs to attribute claims 10
FQHCs and Rural and Small Community Providers • The final rule allows FQHCs and RHCs to form and participate in an ACO – Required to provide a list of physicians who directly provide primary care services in their facility – Beneficiaries will be assigned based on utilization of their services 11
Separate Legal Entity • Proposed Rule : Requirement that ACO be governed by a separate legal entity. (The exception – entities that already have an existing legal entity recognized and authorized to govern and distribute shared savings under State law.) – In or out in the Final Rule? IN . – Help or Hindrance? Hindrance . Existing systems may have some body empowered to facilitate shared decision-making (a dusty PHO, for example), but it may not have the power to undertake lofty oversight requirements, such as quality enhancement and cost-effectiveness. • The Good : There is an exception (but realistically, few existing entities will qualify for it) • The Bad : Creation of a new entity is costly; maintenance of multiple boards is complicated; payer relationships with existing board may be compromised 12
Control of Governing Body • Proposed Rule : Requirement that each ACO participant have a seat on, and proportionate control of, the governing body. – In or out in the Final Rule? OUT . – Help or Hindrance? Help . Forced proportionate control may have run afoul of State corporation laws, and left room for abuse by individual interests. But a “voice” for all participants is still mandatory. • The Good : CMS’ efforts to allow ACOs flexibility in their governing bodies will be welcomed. • The Bad : Boards will be on their own to make sure they don’t take license with the freedom. They’ll be left to deal with their own power struggles, while preventing collusion and conflicts of interest. 13
Representation on Governing Body • Proposed Rule : ACO participants must have at least 75% control of governing body; one board member must be a Medicare beneficiary representative served by the ACO. – In or out in the Final Rule? IN . – Help or Hindrance? Help – depending on your capacity for creativity. CMS emphasized “provider-driven” governance, while leaving the door open for participation by non-Medicare enrolled entities (e.g., health plans). • The Good : CMS expressly declined to require that voting rights or representation be assigned, in certain percentages, to certain provider types within the controlling 75%. • The Bad : Again, it may mean “start over” for certain integrated system governing bodies that had hoped to qualify, as-is. (But the Rule leaves an opening even for these systems, who can still qualify by describing for CMS how they will include ACO participants in innovative ways.) 14
Governance • Proposed Rule : The Proposed Rule was long on proposing how an ACO governing body should look; short on describing how it should work. – Additional guidance on specific responsibilities and processes are IN the Final Rule . Governing body must: • Have authority to execute the functions of an ACO; • Hold management accountable for ACO’s activities; • Have a transparent governing process; • Have a conflicts of interest policy; • Have a fiduciary duty to the ACO; • Provide for meaningful participation in governing body by ACO participants. 15
Governance, Continued • Help or Hindrance? Theoretically, a help . Practically, a hindrance. Though CMS gave more direction as to desired outcomes, the Agency still largely punted as to real solutions for integration at arms’ length, leaving this task to “innovative” systems. • The Good : Flexibility is the watchword. • The Bad : The “make it up as you go along” approach will test the patience and comfort of participants. While applauding its allowance of flexibility, CMS has expressly declined to approve bright-line mechanisms that would ease integration. For example, in the Final Rule, the Agency refuses to deem 501(c)(3) organizations as meeting governance requirements. 16
Antitrust – Overview • The DOJ/FTC Final Statement of Antitrust Policy Regarding ACOs differs from the Proposed Policy (issued in March) in two major respects: – The entire final policy (except sections regarding voluntary expedited review) applies to all provider collaborations that are eligible and intend (or have been approved) to participate in the Medicare Shared Savings Program. – No more mandatory antitrust review as a condition of entry into the Shared Savings Program. 17
Antitrust – ACO Joint Negotiations • Proposed Statement : The agencies will not challenge as “per se” illegal ACO joint negotiations with private insurers in commercial markets, but will apply a “rule of reason” analysis in analyzing a potential antitrust violation, under certain conditions: (1) compliance with CMS eligibility criteria, and (2) use of the same governance and leadership structures and clinical and administrative processes in Medicare and commercial markets. • In or Out of the Final Statement? IN… but the Agencies promise to take a hard look at quality metrics of ACOs approved by CMS, to see if the CMS eligibility criteria truly equate to bona fide efficiencies. • The Good : FTC & DOJ confirm that they are on the same page with CMS, as far as determining what constitutes clinical integration. • The Bad : FTC & DOJ stop short of deferring to CMS’ judgment, entirely, yet still refuse to set forth their own guidelines for “clinical integration” sufficient to satisfy review. The potential still exists for different agencies to take different views of true clinical integration. 18
Antitrust – ACO Safety Zone • Proposed Statement : The FTC and DOJ have proposed a formal ACO safety zone where the Agencies will not, absent extraordinary circumstances, challenge the ACO. The bright line rule states that each physician specialty in the ACO must not exceed 30 percent of the primary service area (PSA) where the ACO participates. • In or Out of the Final Statement? IN . 19
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