8 Things to Know About the ACO Final Rule

The Department of Health and Human Services today released its final rule for the Medicare Shared Savings Program, which involves the establishment of accountable care organizations and is set to take effect Jan. 1, 2012. So far, experts have said the final rule is more relaxed compared to HHS' proposed rule, which was released in March and triggered a wave of opposition as providers found it overly burdensome.

Providers still have to make a three-year commitment to care for a group of at least 5,000 Medicare beneficiaries under the program. However, a few important aspects of ACOs have been modified in the final rule. Here are eight important changes from the proposed rule to the final rule.

1. Quality measurements reduced from 65 to 33. The fact that quality measures were nearly cut in half is one of the major signs that the final rule has been relaxed to appeal to more providers. "We are sensitive to the concerns raised by commenters regarding the administrative burden of the proposed measures, and we have modified our proposal by reducing the number of required measures by removing measures perceived as redundant, operationally complex or burdensome," according to the rule [257].

2. All ACOs must eventually transition into Track 2 models. Like the proposed rule, the final rule outlines a choice of ACOs on two tracks with a modified proposal for Track 1.

Under Track 1, CMS and the ACO will reconcile savings and allow the ACO to share in those savings without the risk of the ACO sharing in any losses. This is also known as the one-sided model.

More experienced ACOs that are ready to share in losses with greater opportunity for reward could elect to immediately enter the two-sided model. An ACO participating in Track 2 would be under the two-sided model for all three years of its agreement period. Under this model, the ACO would be eligible for higher sharing rates than would be available under the one-sided model.

The proposal for Track 1 ACOs has been modified, however. Track 1 will be a shared-savings only model for the duration of the ACO's first agreement period. Initially, it was proposed that ACOs electing the one-sided model be required to transition to the two-sided model during their initial agreement period. Now the final rule says ACOs can complete their initial agreement period on Track 1, but are then required to transition to Track 2 [394].

In the final rule, ACOs electing Track 2 will be under the two-sided model for the duration of their first agreement period.

3. The final rule eliminates barring ACOs with net losses from continued participation in the program. "[W]e are revising our proposed policy in order to allow ACOs that have a net loss during their first agreement period to continue to participate in the program, provided they meet all other participation requirements," according to the rule [391].

Underperforming ACOs can still participate in the MSSP, but all ACOs that choose to continue would be required to be accountable for their losses. The report says this rule was modified because barring ACOs that saw a net loss during their initial agreement period would "serve as a disincentive for ACO formation" [393].

4. The requirement that healthcare providers use electronic health records to report quality measures has been eliminated. Instead, ACO participants can use survey-based measures, claims and administrative data based measures, and the group practice reporting options web interface as a means of ACO quality data reporting for certain measures [343].

5. Participants can only be part of a single ACO. Upholding its proposed rule, the agencies rule that physicians, hospitals and other providers can still only participate in one ACO if they have been assigned Medicare beneficiaries. [118]

6. Retrospective assignment has been slightly modified. "We are modifying our proposed assignment methodology to provide ACOs preliminary prospective assignment of beneficiaries with retrospective reconciliation based on actual beneficiary utilization," according to the rule [367].

7. CMS will use a "step-wise approach" as the basic assignment methodology. Under this method, beneficiaries will first be assigned to ACOs on the basis of utilization of primary care services provided by their PCPs. Beneficiaries who are not seeing a PCP may be assigned to an ACO based on primary care services provided by other physicians.  This final policy thus allows consideration of all physician specialties in the assignment process, according to the rule [202].

Also, the rule refutes any notions of cherry-picking. "We disagree that an attribution model based on primary care utilization could result in a disproportionate number of high-risk beneficiaries being assigned to the ACO." [Pg 190]

8. Governance is no longer required to be proportional to ownership. Additionally, ACO participants on the board are not required to have "proportionate control" of the ACO governing body in terms of ownership representation. The agencies sided with commenters on this rule to avoid the risk of governing bodies becoming "unwieldly" and losing their effectiveness [61].

Still, the proposed rule that no more than 25 percent of board seats can be held by non-ACO participants such as entrepreneurial companies was upheld in the final rule [68].

Related Articles on Accountable Care Organizations:

ACO Final Rule Released
Rep. Michael Burgess Hopes CMS "Scraps" Initial Approach to ACOs in Final Rule
50 Things to Know About the Proposed ACO Regulations

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