Filed under: CMS, Physician Compensation, Research
On February 14, 2012, Marilyn Tavenner, the acting Administrator of CMS, told reporters that CMS will “re-examine the timeframe” of the planned conversion to the ICD-10 code standard. Presently, covered entities under HIPAA must fully convert from the ICD-9 coding system to ICD-10 by October 1, 2013.
ICD-10, which stands for the International Classification of Diseases, 10th Revision, is a coding system that providers use for billing purposes and medical researchers also use for statistical analysis. ICD-10 consists of 68,000 codes that will expand upon the 13,000 codes currently being used with ICD-9. The codes, each representing a separate medical service or diagnosis, are used by providers and hospitals when they submit their bills to the insurer. The providers receive payment for their services based upon the codes and the terms of their reimbursement agreement. From these codes, medical researchers are able to evaluate kind and frequency of care; with more than five times as many descriptive codes in the new system, many researchers and evidence based medicine proponents are said to look forward to the far greater depth of analysis the new coding system will offer. The United States already lags behind many countries in ICD-10 implementation and it is said that this compliance extension will widen the gap even further.
Two days after Ms. Tavenner’s announcement, HHS issued a news release stating that “HHS will initiate a process to postpone the date by which certain health care entities have to comply with ICD-10.” Kathleen G. Sebelius, the Secretary of HHS, states in the news release that “we have heard from many in the provider community who have concerns about the administrative burdens they face in the years ahead. We are committing to work with the provider community to reexamine the pace at which HHS and the nation implement these important improvements to our health care system.”
HHS’s news release leaves a lot of questions unanswered. There is no hint at which “certain health care entities” will be granted an extension for compliance and how far off the new deadline will be. HHS claims they will “initiate a process,” which leads many to believe a formal rule making process with public comments will occur. This process could possibly take years to complete, which undoubtedly has caused a giant sigh of relief for providers and institutions across the country that feel ill-prepared for the 2013 deadline. Analysts at Health Care IT News estimate that the deadline could be pushed off a year or two if there is a formal rule-making process.
As the news of Ms. Tavenner’s announcement spread, members of the industry sent out messages cautioning that a complete overhaul of the current plan is unlikely. Ms. Tavenner’s announcement, which happened at the American Medical Association (AMA) Advocacy Conference in Washington, D.C., was fittingly met with applause by AMA members. The AMA has publicly and vehemently opposed the current October 1, 2013 deadline. In a January 17, 2012 letter addressed to Speaker of the House John A. Boehner, the Executive Vice President and CEO of the AMA James L. Madara M.D. pleaded with Speaker Boehner to stop the implementation of ICD-10. In the letter, Dr. Madara argues that the conversion “will create significant burdens on the practice of medicine with no direct benefit to individual patient care, and will compete with other costly transitions associated with quality and health IT reporting programs.” Of course, Dr. Madara is referring to the task of implementing an electronic health records (EHR) system in accordance with CMS’s meaningful use criteria, which entitles a covered entity to receive incentive payments from CMS. Dr. Madara also cites to what he deems to be the competing tasks of dealing with financial penalties for non-participation in Medicare programs, including e-prescribing and the Physician Quality Reporting System.
ICD-10 opponents also cite to the industry’s recent failure to comply with the January 1, 2012 deadline to comply with the transition to Version 5010, a HIPAA electronic transactions upgrade that is necessary to support ICD-10, as evidence that the industry is not ready for the ICD-10 change. In November 2011, CMS gave in to industry pressures to extend the 5010 compliance deadline an additional ninety days. It is undeniable that providers are already subject to tremendous demands under HIPAA and the HITECH Act, on top of Medicare cuts, which are placing significant financial stress and compliance burdens on the industry. It is not surprising that ICD-10 has met a lot of resistance from providers. However, it is no secret that providers and institutions are consistently successful lobbyists for their concerns and beliefs and it remains to be seen how CMS will proceed with the scheduled ICD-10 implementation and what compromises will be made.
Proponents of the ICD-10 system argue that the new coding system will create significant positive changes in the industry because it will help collect important data that will improve the quality of patient care, decrease costs, and collect statistics for medical research. CMS and the Center for Disease Control and Prevention believe that the new codes will create more accurate and exact descriptions of diagnoses and inpatient procedures, which will improve efforts to track care, detect emerging health issues and improve quality. A report from Deloitte, a consulting firm, reported that the increased size and scope of the ICD-10 codes is expected to provide potential benefits in cost and quality measurement, public health, research, and organizational monitoring and performance measurement. Whether a provider supports the change or not, Deloitte echoes the sentiment of many that advance planning is essential. Providers and institutions that have already invested time and money into the ICD-10 implementation are frustrated and upset by CMS’s decision to “reexamine” the current compliance deadline. After all, no provider wants to see its large investment in the ICD-10 system put to waste.
The fact is that no one, perhaps even CMS and HHS, is certain about the date of the future ICD-10 implementation plan so perhaps the smartest choice for providers is to proceed with steps to continue the ICD-10 implementation. Considering the prospect of the financial disincentives attached with non-compliance, it seems like a risky choice for any provider to sit around and wait and see what may happen, especially when the ICD-10 implementation cannot happen overnight. There are providers that started the ICD-10 conversion process back in 2009 when it was first introduced and they still have not completed the task. Unfortunately for providers, the ICD-10 conversion requires time, manpower, training, testing with payers, and significant technological changes that will carry high administrative and financial costs. The Medical Group Management Association (MGMA), which opposes the ICD-10 implementation, estimates that it will cost a ten doctor practice more than $285,000 to convert to ICD-10, with software upgrades accounting for only $15,000 of that amount. According to the MGMA, the bulk amount would be for increases in claims queries, reductions in cash flow, and increased documentation time. What it comes down to is that if a provider wants to be paid for its services, noncompliance with ICD-10 is not an option. The risk for successful claims processing and receiving payments in a timely fashion is present, but adequate preparation and testing well before the compliance deadline is the best way to combat this significant risk.
One thing is certain – until HHS releases a new rule and schedule for ICD-10 implementation, opponents will continue to argue that the costs to adopt the new system are too high, the task too onerous, and the rewards too speculative to justify such an undertaking. Unless the industry comes together to find a solution for an easy transition, this could be a bumpy road until the ICD-10 transition is complete.
On April 29, the Department for Health & Human Services (HHS) announced the launch of the Hospital Inpatient Value-Based Purchasing (Hospital VBP) program under the Medicare Inpatient Prospective Payment System (IPPS). According to HHS, the Hospital HVP program “marks the beginning of an historic change in how Medicare pays health care providers and facilities-for the first time, 3,500 hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide.”
As a part of the launch of the Hospital VBP program, authorized under § 3001(a) of the Patient Protection and Accountable Care Act of 2010 (ACA, codified at 42 U.S.C. § 1886(o)), the Centers for Medicare & Medicaid Services published the final rule outlining the measures, performance standards, scoring methodology, and methodology for translating hospitals’ Total Performance Scores into value-based incentive payments.
Why Should I Care?
Value-based purchasing has been called a “fast-approaching, mandatory competition with millions of dollars on the line.” The program is aimed to fix two previously identified problems: (1) preventable medical errors and (2) resulting health care costs. According to CMS:
One in seven Medicare patients will experience some “adverse” event such as a preventable illness or injury while in the hospital. One in three Medicare beneficiaries who leave the hospital today will be back in the hospital within a month. Every year, as many as 98,000 Americans die from errors in hospital care.
In addition to adding to the suffering of patients and their caregivers, these errors lead to significant unnecessary health care spending. Medicare spent an estimated $4.4 billion in 2009 to care for patients who had been harmed in the hospital, and readmissions cost Medicare another $26 billion.
The Hospital VBP program marks a shift in CMS reforms, from “pay-for-reporting” to “pay-for-performance.” In 2003, the Hospital Inpatient Quality Reporting (IQR) Program introduced the core-measures concept. Hospitals that did not successfully report data under the IQR program were penalized by a 2.0 percentage point reduction in their applicable percentage increase. The Hospital VBP program continues using payment incentives and takes the next logical step “in promoting higher quality care for Medicare beneficiaries and transforming Medicare into an active purchaser of quality health care for its beneficiaries.” The Hospital VBP program now directly ties payment amounts to a hospital’s performance score. CMS will begin measuring hospital performance for incentive payments this July.
To fund the Hospital VBP incentive program, CMS will reduce the base operating diagnosis-related group (DRG) payment by 1% in FY 2013 and increase withholding by 0.25% each year until it peaks at 2% in FY 2017. As a result, approximately $850 million will be allocated for the Hospital VBP program in FY 2013. Since overall Medicare spending for inpatient stays at acute care hospitals will remain constant, the new payment scheme will benefit some hospitals and hurt others. As the Hospitalist writes, “[i]t’s also a zero-sum game. That means there will be winners and losers, with the entire cost-neutral program funded by extracting money from the worst performers to financially reward the best.”
How It Works
As summarized by our very own Kate Greenwood:
[§ 3001(a)], which applies to patients discharged on or after October 1, 2012, establishes “value-based purchasing,” meaning that the government will make “value-based incentive payments” to hospitals that provide care to Medicare patients that meets or exceeds certain performance standards to be established by the Secretary of Health and Human Services. Initially the standards must relate to at least the following five conditions: heart attack, heart failure, pneumonia, surgery, and healthcare-associated infections. Eventually (by fiscal year 2014) the standards are to incorporate “efficiency measures,” that is Medicare spending per beneficiary must be a factor.
Beginning in FY 2013 (October 1, 2012), hospitals will receive incentive payments “based on how well they perform on each measure or how much they improve their performance on each measure compared to their performance on the measure during a baseline performance period.” The final rule adopts twelve clinical process of care measures and one patient experience measure, the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. These measures overlap or align with the Hospital Inpatient Quality Reporting (IQR) Program measures.
FY 2013 Objective Measures
Acute Myocardial Infarction
|AMI-7a||Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival|
|AMI-8a||Primary PCI Received Within 90 Minutes of Hospital Arrival|
|PN-3b||Blood Cultures Performed in the ED Prior to Initial Antibiotic Received in Hospital|
|PN-6||Initial Antibiotic Selection for CAP in Immunocompetent Patient|
|SCIP-Inf-1||Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision|
|SCIP-Inf-2||Prophylactic Antibiotic Selection for Surgical Patients|
|SCIP-Inf-3||Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time|
|SCIP-Inf-4||Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose|
Surgical Care Improvement
|SCIP-Card-2||Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker
During the Perioperative Period
|SCIP-VTE-1||Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered|
|SCIP-VTE-2||Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis
Within 24 Hours Prior to Surgery to 24 Hours After Surgery
In FY 2014, CMS will add thirteen more measures.
FY 2014 Objective Measures
Acute Myocardial Infarction
|Mortality-30-AMI||Acute Myocardial Infarction (AMI) 30-day Mortality Rate|
|Mortality-30-HF||Heart Failure (HF) 30-day Mortality Rate|
|Mortality-30-PN||Pneumonia (PN) 30-Day Mortality Rate|
Hospital Acquired Condition Measures
|Foreign Object Retained After Surgery|
|Pressure Ulcer Stages III & IV|
|Falls and Trauma: (Includes: Fracture, Dislocation, Intracranial Injury,
Crushing Injury, Burn, Electric Shock)
|Vascular Catheter-Associated Infections|
|Catheter-Associated Urinary Tract Infection (UTI)|
|Manifestations of Poor Glycemic Control|
AHRQ Patient Safety Indicators (PSIs),
|Complication/patient safety for selected indicators (composite)|
|Mortality for selected medical conditions (composite)|
Hospitals will be scored according to achievement (compared to all other hospitals) and improvement (over each hospital’s baseline) for each applicable measure. Achievement points will be awarded if the hospitals performance during the measurement period (quarterly) exceeds the 50th percentile of hospitals measured during the baseline period (the “threshold”). Improvement points will be awarded to the extent that a hospital’s current performance exceeds baseline period performance.
Baseline scores for improvement measurement have already been set, during the period from July 1, 2009 to June 30, 2010. The FY 2013 performance period for clinical process of care measures will be July 1, 2011 through March 31, 2012. July 1, 2011 will also mark the beginning of a 12-month performance period for the FY 2014 30-day mortality measures.
The Total Performance Score (TPS) is calculated “for each hospital by combining the greater of its achievement or improvement points on each measure to determine a score for each domain, multiplying each domain score by the proposed domain weight and adding the weighted scores together.” In 2013, clinical measures will account for 70% of a hospital’s performance score and the HCAHPS survey for 30%. Over time, scoring methodologies will be “weighted more heavily towards outcome, patient experience, and functional status measures.”
Moving forward, CMS will implement other ACA provisions designed to improve care and reduce costs. For instance, hospitals will begin receiving reduced payments in FY 2015 if they are unable to prevent certain hospital acquired infections or if the hospital fails to “meaningfully use information technology to communicate within the hospital to deliver better, safer, more coordinated care.” Check prior posts to learn more about HITECH’s “Meaningful Use” Rule.
Tim Greaney has already posted on the FTC/DOJ Joint Policy Statement on antitrust scrutiny of ACO applicants, and Jordan Cohen posted on the CMS’s draft regulations on the Medicare Shared Savings Program (“MSSP”) for ACOs. In this post, I’ll describe some interesting structural issues presented by the OIG’s notice on proposed waivers, which cross-references the CMS MSSP draft regulations. The fundamental issue for the OIG is how “virtual organizations” — those not fully integrated in a corporate or financial sense — can serve the integrative goals of the Affordable Care Act while staying on the right side of the web of federal laws prohibiting physician self-referral, kickbacks, and payments to reduce care to Medicare beneficiaries. The OIG notice proposes to square this circle in two steps.
The OIG two-step; Step One
The Fraud & Abuse problem with ACOs is that they are intended to achieve the efficiency and quality gains of formally integrated delivery systems (Geisinger, Mayo Clinic) through contract-based aggregation of providers. This less formal integration, of course, implicates the dealings generally prohibited by the Physician Self-Referral Law (“Stark”), Anti Kickback Statute (“AKS”), and the Prohibition on Hospital Payments to Physicians to Induce Reduction in Services law (which provides for civil money penalties for violations) (“CMP”). The OIG notice proceeds very incrementally. In large part, the OIG proposes to affirm that a CMS determination that an ACO qualifies for participation in the MSSP signifies the adoption of quality and fiscal protections sufficient to allow a waiver of Stark, AKS, and CMP enforcement for purposes of the distribution of shared savings. In addition, and to the extent “necessary for and directly related to” the ACOS’s participation in the shared savings plan, the OIG proposes to waive enforcement under the AKS and CMP provisions with respect to conduct that falls within a Stark exception. In outline form, then, the OIG proposes as its initial waiver guidance:
- Stark. The OIG proposes to waive enforcement of Stark for
- The actual distribution of MSSP to and among ACO participants, and ACO providers/suppliers for conduct during a year in which shared savings were earned; and
- “activities necessary for and directly related to the ACO’s participation in and operations under the” MSSP.
- AKS. The OIG proposes to waive enforcement of AKS under two scenarios:
- The distribution of shared savings under the MSSP
- to and among ACO participants, and ACO providers/suppliers for conduct during a year in which shared savings were earned; and
- for any financial relationships between ACO participants and ACO providers/suppliers necessary for and directly related to the ACO’s MSSP participation that implicate Stark, but fall within a Stark exception.
- The distribution of shared savings under the MSSP
- CMP. The OIG proposes to waive enforcement of the CMP provisions under two scenarios:
- Distribution of shared savings from a hospital to a physician so long as
- “the payments are not made knowingly to induce the physician to reduce or limit medically necessary items or services”; and
- the hospital and physicians were ACO participants or providers/suppliers during the year in which the shared savings were earned.
- In the context of financial relationships among ACO participants and/or providers/suppliers necessary for and directly related to the ACO’s MSSP operations, that implicate Stark but that fall within a Stark exception.
- Distribution of shared savings from a hospital to a physician so long as
The OIG two-step; Step Two
In Step One, the OIG proposes waivers for arrangements that are central to the MSSP gain distributions, or that are central to the ACO enterprise and are structurally within Stark exceptions. The OIG goes on to solicit input on the need for additional waiver guidance, for conduct that is “beneficial” to ACO participation in the MSSP, but that also protects “patients and programs from harms caused by fraud and abuse.” The OIG solicits input on:
- Arrangements related to establishing the ACO;
- Arrangements between or among ACO participants or providers/suppliers related to ongoing operations of the ACO and achieving ACO goals;
- Arrangements between the ACO, its ACO participants and/or providers/suppliers and outside individuals or entities;
- Distributions of shared savings or similar payments from private payers;
- Other financial arrangements for which a waiver would be necessary;
- Miscellaneous: duration of waivers, scope of the waivers listed above in “Step One,” and additional safeguards; and
- Arrangements in which providers are subjected to risk, particularly in the “two-sided risk model” in the CMS draft regulations on the MSSP.
“Necessary for and directly related to”
It is pretty clear that the lion’s share of the OIG’s waiver work will be done by determining whether or not an ACO has been qualified by CMS for the MSSP. There will be waivers, however, even under Step One, that will require the OIG to evaluate the proposed arrangements. Stark enforcement regarding the actual distribution of shared gains, for example, will be waived under the proposal for CMS-qualified ACOs. But Step One proposes additional waivers “for activities necessary for and directly related to the ACO’s participation in and operations under the” MSSP. Similarly, AKS and CMP waivers are proposed for dealings between ACO participants that are within Stark exceptions so long as they are “necessary for and directly related to the ACO’s MSSP participation.” A standard based on what is “necessary for and directly related to” an ACO’s MSSP participation will, then, do a lot of the waiver work. It is not a self-defining standard, and further elaboration from the OIG (by providing examples, perhaps) will lend clarity to the OIG’s waiver guidance.
Attribution, assignment, and patient notice
ACO commentators (here (subscription required) and here) have observed that the method by which patients are “attributed” to ACOs is central to ACOs’ financial and structural planning. Attribution was the term used in the literature to refer to the formal determination that a particular Medicare patient should “count” for assessing the gain (and possibly the loss) experienced by the ACO. The CMS draft regulations on the MSSP, consistent with the terms of the Affordable Care Act, use the term “assignment” rather than attribution. The CMS proposal’s treatment of assignment, or attribution, will engender much discussion here and elsewhere in the coming weeks.
One important issue, however, seems to have been resolved. In the literature on ACOs, it has not been clear whether Medicare beneficiaries would know whether or not they had been assigned or attributed to an ACO; consistent with continuing commitment to beneficiaries’ right to choose providers within the Medicare fee for service system, the discussion contemplated the possibility that ACOs would organize a beneficiary’s care, gain payments as a result of efficiencies, but never inform the beneficiary of his “attribution” to an ACO.
Donald Berwick highlighted the requirement of patient notice in his Perspective published in the New England Journal of Medicine on the day of the regulations’ release. The CMS draft regulations on the MSSP explain the requirement of patient notice in the following terms:
[W]hile the statute refers to the assignment of beneficiaries to an ACO, we would characterize the process more as an “alignment” of beneficiaries with an ACO as the exercise of free choice by beneficiaries in the physicians and other health care providers and suppliers from whom they receive their services. . . . Therefore, an important component of the Shared Savings Program will be timely and effective communication with beneficiaries concerning the Shared Savings Program, their possible assignment to an ACO, and their retention of freedom of choice under the Medicare FFS program.
That piece of consumer protection regulation was absolutely essential. It would be odd indeed, after decades of struggle with patient protection in managed care systems, were patients to be engaged without their knowledge in a system built on economic incentives to providers directed to care management. We’ll post more about assignment and other ACO issues in the coming weeks.
CMS recently released the proposed rule that will regulate PPACA’s Medicare Shared Savings Program (MSSP). The MSSP relies on the accountable care organization (ACO) model in order to generate and distribute savings. HealthReformWatch.com has discussed the general framework for ACOs before. Clocking in at nearly 500 hundred pages, the proposed rule helps to flesh out what was largely a philosophical exercise in cooperative health care delivery. Below are what I believe to be a number of key pieces of the proposed rule.
Proposed Rule Highlights
The 2 ACO Models – (425.7)
There will be two ACO models. The choice between models appears to be largely geared towards minimizing ACO risk while hospitals and providers are first bringing their ACOs online.
- One-Sided Model: A one-sided ACO shares in the savings, but is not on the hook to share in any of the losses (i.e., costs surpassing the ACO’s benchmark as determined by CMS, see below).
- Two-Sided Model: A two-sided ACO shares in both the savings as well as the losses.
Basic Time frame and Structure
Not surprisingly, ACO hopefuls must form an agreement with CMS directly. ACOs under the MSSP must last for not less than three years after the application has been approved. (425.18). The performance period will be 12 months. The ACO must have at least 5,000 beneficiaries, and must include a sufficient number of primary care physicians to treat the ACO beneficiary population.
- First 3 years of ACO life: Choose a Track – 425.5(d)(6).
- Track 1: ACO operates under a one-sided model for two years, and under a two sided model for the third year. With the exception of quality performance, the third year of this track will be measured using the methodologies that measure the first year of the Track 2 ACOs.
- Track 2: ACO operates under the two-sided model, sharing both savings and losses with the Medicare program for three years.
- After 3 years
- ACOs operate under the 2-sided model, thus sharing both gains and losses with Medicare.
Regulating Risk and Payment — 425.5(d)(6)(b)(4)
ACOs must obtain reinsurance, place funds in escrow, obtain surety bonds, establish a line of credit that Medicare can draw upon, or establish other repayment mechanisms that will provide for payment of losses to Medicare under the 2-sided model.
Legal Structure — 425.5(d)(7)
ACO must be constituted as a legal entity for the purposes of, among other things, receiving and distributing shared savings, repaying shared losses, and establishing reporting.
Governance — 425.5(d)(8)
The ACO must establish and maintain a governing body to fulfill and execute ACO functions. It must be comprised of ACO participants or their representatives, as well as representatives of the Medicare beneficiaries in the ACO. At least 75 percent of the governing body must consist of ACO participants. ACO participants and ACO providers/suppliers must have a meaningful commitment to the ACO’s clinical integration, which may consist of a financial investment or a meaningful human investment in the ongoing operations of the ACO, such that potential loss or recoupment is likely to motivate that participant.
Overseeing Quality and Performance — Accountability Internally Enforced by Physician-directed Committee — 425.5(d)(9)(v)
ACOs will be required to have a physician-directed committee tasked with overseeing a quality assurance and improvement program. This program must establish internal performance standards for quality of care, cost-effectiveness, and process and outcome improvements. The committee must hold the ACO providers/suppliers accountable for meeting these standards. The program must have processes and procedures to identify and correct poor compliance.
Evidence-Based Medicine — 425.5(d)(9)(viii)
The ACOs are required to implement evidence-based medicine or clinical practice guidelines and processes in an effort to improve individual care, better the health of the population, and lower the growth of health care expenditures. The guidelines and processes must cover diagnoses with “significant potential” for the ACO to achieve quality and cost improvements, taking into account the circumstances of individual beneficiaries. All ACO participants and suppliers/providers must agree to abide by these guidelines and processes, and must be evaluated for their compliance. Remedial actions must be a possibility for non-compliance, and ACOs must have policies and procedure for ACO expulsion of participants and/or providers/suppliers.
Health Information Technology — 425.5(d)(9)(viii) & 425.11
ACOs are required to have an infrastructure, such as information technology (which may include EHR technology that is certified for the meaningful use program) that enables the ACO to collect and evaluate data and provide feedback to ACO participants and ACO providers/suppliers across the entire ACO, including providing information to influence care at the point of care.
By the second year, at least 50 percent of an ACO’s primary care physicians must be meaningful users of EHR technology. Failure to fulfill this obligation could lead to ACO termination.
Assigning Beneficiaries to ACOs — 425.6
The general approach of the CMS is to assign beneficiaries to ACOs based on the utilization of primary care. 425.6(a). Beneficiaries are assigned based on their utilization of primary care services by a primary care physician who is an ACO provider/supplier during the performance year for which shared savings are to be determined. Assignment to an ACO in no way diminishes or restricts the right of the beneficiaries assigned to an ACO to exercise free choice in determining where to receive health benefits.
More specifically, beneficiaries will be assigned to the ACO where they receive a plurality of their primary care services. 425.6(b). CMS will establish a fixed benchmark which will be adjusted for overall growth and beneficiary characteristics, including health status. This benchmark will be updated annually based on the absolute growth in national per capita expenditures for Medicare Part A and Part B services under the original Medicare fee-for-service program.
Payment and Treatment of Savings — 425.7
- Shared Savings under One-Sided Model — Each year, CMS will determine whether the estimated per capita Medicare beneficiary expenditures under the ACO are below the benchmark for Medicare fee-for-service. To qualify for savings, an ACO in this model must have costs below the benchmark by more than a “minimum savings rate,” as determined by CMS. ACOs in the one-sided model that exceed this minimum savings rate (as determined by CMS calculations) are eligible to share savings net 2 percent of its benchmark. One sided ACOs can share in a maximum of 50 percent of the savings, with an additional 2.5 percent being allowed for rural hospitals or federally qualified health centers–in certain circumstances. Payment is capped at 7.5 percent of the ACOs benchmark. However, ACOs will not be able to blindly slash costs in an effort to obtain savings. Rather, eligibility of the shared savings will be contingent on the reaching of certain minimum quality performance measures. These measures will focus on five areas, including patient/care giver experience, care coordination, patient safety, preventative health, and at-risk population/frail elderly health. In addition to determining general eligibility for savings, the quality performance measures will also determine the actual percentage of savings that the ACO is eligible to take home.
- Shared Savings under Two-Sided Model – In the two-sided model, CMS will also determine a benchmark of Medicare Part A and Part B costs. This benchmark will determine whether the ACO is eligible for savings payments or — as is unique to the two-sided model — whether they are liable for losses. To trigger savings or losses, the ACO must be below or above their benchmark by more than a minimum savings rate, or alternatively, a minimum loss rate when considering losses. Unlike one-sided ACOs whose minimum savings rates are calculated based on the beneficiary population, the minimum savings rates for two-sided ACOs are capped at 2 percent below the benchmark rate. Likewise, to be subject to loss, the ACO’s expenditures must be above 2 percent of its benchmark. Two-sided models also use the quality performance measures to determine eligibility as well as the rate of shared savings. Two-sided ACOs can share in a maximum of 60 percent of the savings, with an additional 2.5 percent being allowed for rural hospitals or federally qualified health centers–in certain circumstances. In addition, whereas the shared savings of the one-sided model caps out at 7.5 percent of the ACO’s benchmark, the two-sided model caps out at 10 percent.
Preventing Cherry Picking — 425.12(b)
CMS will use the methodologies it applies to analyzing ACO performance in an effort to prevent ACOs from “cherry picking” the healthiest individuals for their ACOs. CMS reserves the right to terminate an ACO for avoiding at-risk beneficiaries. Other less drastic options are also at the option of CMS.
Ensuring quality performance — 425.12(c)
CMS will be monitoring ACO compliance by analyzing the data provided by the ACO to determine its eligibility for, and its percentage of, shared savings. If the ACO fails to meet CMS performance standards it will be given a warning. An ACO given a warning will be reevaluated the following year. If the ACO is still failing to meet the performance measures CMS may terminate the ACO immediately or take alternative actions as specified in the rule. If the ACO does not submit the requested quality performance data, CMS will request submission of the data, allow for a correction of the data, or allow for a written explanation of why the data was not provided. ACOs that continue to fail in providing the requested data will be terminated immediately.
Beneficiary Data Sharing – 425.19(d)
CMS will provide ACOs with monthly claims data for potentially assigned beneficiaries. CMS makes clear that HIPAA protections will apply to this data sharing. More notably, ACOs must provide the beneficiary with the opportunity to opt-out of sharing his or her personal health information for the purposes of ACO activities.
Public Reporting and Transparency – 425.23
ACOs will be required to publicly report a variety of information, including quality performance standard scores, shared savings or losses information, the total amount of shared savings distributed among ACO participants, and the total proportion that was used to support quality performance.
1. CMS [Proposed Rule]: Medicare Program: Medicare Shared Savings Program: Accountable Care Organizations on ACOs. For those wanting the rule without the preamble, I have uploaded it here. It is only 59 pages.
2. CMS and HHS Office of the Inspector General [Notice with Comment]: Medicare Program; Waiver Designs in Connection with the Medicare Shared Savings Program and the Innovation Center.
3. DOJ and FTC [Proposed Statement]: Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.
Health Affairs recently convened a day-long conference entitled “Innovations Across the Nation in Health Care Delivery.” Dr. Richard Gilfillan, the acting director of the Center for Medicare and Medicaid Innovation, keynoted the event as one of a number of stops on his recent “listening tour” across the states in an effort to garner input for the Center’s quest to eliminate waste and to create “a sustainable system” in health care.
The Center’s mandate under the law is “to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished.” But as Dr. Gilfillan mentioned, perhaps the most interesting aspect of the law is that if the Center can show that it has found a way to fulfill its mandate– demonstrating such and proving it to the CMS actuaries, then the Secretary can sign into effect new regulations to effectuate new payment models for CMS.
An underlying guidance, if not a mantra, for Dr. Gilfillan is the notion that, as contained in an Institute of Medicine study, there is 30% waste in medical services. Much of this, he believes, is attributable to our fragmented health care system; thus, the emphasis going forward should be on implementing “seamless coordinated care.” An interesting example of something that works, is a chronic care “hotline.” Dr. Gilfillan described the innovation–where a chronic disease patient, suffering from both COPD and diabetes, cold call a particular nurse, Mary, to express concerns she might have about some aspect of her health– be it weight gain, increased shortness of breath, or anything else. The patient’s daughter could Mary as well. They did. The patient’s hospitalizations are down– and the patient attributes to the program the fact that she’s still alive.
According to Health Affairs, “The program also featured several panels of CEOs and program leaders from institutions that have innovated at the patient care level; in the creation of more highly coordinated patient care systems; and at the population level, in terms of improving population health.”
It’s an interesting conference. You can find the panel videos, including Dr. Richard Gilfillan’s address here.