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Accountable Care Organization (ACO) Resources for Hospitalists


On October 20, 2011, the Department of Health and Human Services (HHS) announced the establishment of a new voluntary Medicare Shared Savings Program (MSSP) intended to give Medicare fee-for-service beneficiaries the advantage of better coordination of care, and to make patients and providers partners in care decisions. Created by the Affordable Care Act (ACA), the MSSP, along with the Advance Payment model, will help providers form Accountable Care Organizations.

The proposed rule, released in March, faced heavy criticism from the provider community, including SHM, due to its rigid structure and burdensome requirements. CMS appears to have addressed most of this criticism through a much improved final rule. Highlights of the improvements made in the final rule include:

  • A single start date (January 1, 2012) for all ACOs has been replaced by multiple start dates in 2012 (April 1 and July 1)
  • ACOs will be told which Medicare beneficiaries are likely to be part of their system (prospective attribution). Under the proposed rule, ACOs would not know which patients were in the ACO until their contract ended (retrospective attribution)
  • Greater flexibility in the governance and legal structure of an ACO
  • No downside risk for ACOs choosing Track 1 and a share of first dollar savings for all ACOs achieving the minimum savings rate
  • The number of quality measures that ACOs will have to meet to qualify for performance bonuses was reduced from 65 to 33
  • Increased sharing caps
  • Removal of the 25 percent withhold of shared savings
  • Greater flexibility in antitrust review (applicants are no longer responsible for market share calculations and antitrust review is now voluntary for all applicants)

CMS has provided a chart directly comparing the proposed rule with modifications to the final rule. It can be found here.

The Advance Payment model will help provide physician-owned and rural provider ACOs with up-front capital. Under this initiative, CMS will distribute $170 million through the Center for Medicare and Medicaid Innovation.

ACO Final Rule
ACO Fact Sheets
Advanced Payment Model Solicitation
Antitrust Policy Statement

Summary of ACA Provision

Section 3022 of the ACA permits providers meeting certain criteria to be recognized as Accountable Care Organizations (ACOs), beginning on January. 1, 2012, and to qualify for a new shared savings program (provided they meet certain quality thresholds).

The ACA defines an ACO to include specified groups of providers and suppliers who have an established mechanism for shared governance. Eligible are ACO professionals in group practice arrangements, networks of individual practices of ACO professionals, partnerships or joint venture arrangements between hospitals and ACO professionals, hospitals employing ACO, and other groups of providers as determined by the Secretary.

The ACO must be willing to become accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it. An ACO must participate in the program for at least 3 years and must include primary care ACO professionals that are sufficient for the number of Medicare fee-for-service beneficiaries assigned to the ACO.

An ACO shall have at least 5,000 beneficiaries assigned to it and must achieve a certain minimum level of savings (to be determined by the Secretary) before further savings is shared (with the Secretary authorized to determine the percent of shared savings and establish limits on the total amount of shared savings to be paid to an ACO).

The ACA authorizes the Secretary to use a partial capitation model or any other payment model that will improve the quality and efficiency of items and services furnished under Medicare. Under partial capitation, a qualifying ACO would be at financial risk for some, but not all, of Part A and B Services.

The Secretary will have sole and final authority over the following issues, which have yet to be determined:

  1. The establishment of the quality performance standards and the assessment of the ACO's performance against such standards
  2. The assignment of Medicare fee-for-service beneficiaries to the ACO
  3. The determination of whether an ACO is eligible for shared savings or the amount of such shared savings—including the determination of the estimated average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries assigned to the ACO, the average benchmark for the ACO, the percent of shared savings, and any limit on the total amount of shared savings

The Congressional Budget Office (CBO) estimated that this shared savings program will save Medicare $4.9 billion over FY2010-2019.

Background Material

Medicare Program Final Rule; Medicare Shared Savings Program: Accountable Care Organizations
Final Rule released October 20, 2011

Final Waivers in Connection With the Shared Savings Program
Joint CMS and Department of Health and Human Services Office of Inspector General (OIG) Interim Final Rule with Comment Period addressing waivers of certain fraud and abuse laws in connection with the Shared Savings Program

Affordable Care Act Gives Providers New Options to Better Coordinate Healthcare
New ACO models will improve patient care and could save Medicare up to $430 million

Legislative Language From the Affordable Care Act
Full text of the ACO provision

SHM Submits Comments in Response to CMS Request for Information Regarding Accountable Care Organizations and the Medicare Shared Savings Program
Read the December 3, 2010 letter to CMS Administrator Berwick

Accountable Care Organizations and the Medicare Shared Savings Program
November 2010 Report from the Congressional Research Service



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