On October 20, 2011, the Centers for Medicare & Medicaid Services (CMS) released a final rule on the creation of Accountable Care Organizations (ACOs). The final rule implements provisions of the Affordable Care Act that require the Secretary of Health and Human Services (HHS) to establish a Medicare Shared Savings Program, and follows from a proposed rule issued by CMS on April 7, 2011. CMS received approximately 1,320 public comments on the ACO proposed rule. According to the agency, the final rule includes “significant modifications” from the proposed rule that are intended “to reduce the burden and cost for participating ACOs.” These modifications include:
- greater flexibility in eligibility to participate in the Shared Savings Program;
- multiple start dates in 2012;
- establishment of a longer agreement period for those starting in 2012;
- greater flexibility in the governance and legal structure of an ACO;
- simpler and more streamlined quality performance standards;
- adjustments to the financial model to increase financial incentives to participate;
- increased sharing caps;
- no down-side risk and first-dollar sharing in “Track 1”;
- removal of the 25 percent withhold of shared savings;
- greater flexibility in timing for the evaluation of sharing savings (claims run-out reduced to 3 months);
- greater flexibility in antitrust review;
- greater flexibility in timing for repayment of losses; and
- additional options for participation of Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs).
In connection with the ACO final rule, CMS and the HHS Office of Inspector General released an interim final rule with comment period establishing waivers of the Physician Self-Referral Law (“Stark law ”), the Anti-Kickback Statute, and certain civil monetary penalty law provisions to specified arrangements involving ACOs. The Federal Trade Commission and Antitrust Division of the Department of Justice also issued a “Statement of Antitrust Enforcement Policy” regarding ACOs and the Internal Revenue Service issued a notice concerning tax-exempt organizations.
Simultaneously, the Center for Medicare & Medicaid Innovation announced an ACO advanced payment model. This model is intended for organizations, including rural and physician-led ACOs, in need of capital to make the necessary investments to coordinate care.
We will provide additional updates on the contents of the ACO final rule and related documents shortly.