On October 20, 2011, the Centers for Medicare & Medicaid Services (CMS) released the highly anticipated final rule for the Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs). CMS issued a proposed rule earlier this year allowing stakeholders to comment. According to CMS Administrator Donald Berwick, M.D., CMS “listened very carefully to more than 1,300 comments received on the proposed rule,” and the “final rule includes a number of improvements suggested by those comments that will strengthen the program.”1 To view the 694-page rule, please click here.2  

The final rule contains the following changes and clarifications:

  • The proposed 65 quality reporting measures around five domains are reduced to 33 measures with four domains.
  • The final rule significantly minimizes the ACO risk-sharing in losses and increases the amount of minimum savings that can be shared among ACO providers and suppliers.
  • Quality measures will be phased in from a performance basis over the three-year period of the ACO agreement.
  • Federally Qualified Health Centers and Rural Health Clinics are added to the list of providers eligible to both form and participate in an ACO.
  • The requirement that ACOs meet the electronic health record (EHR) meaningful use requirements are removed. The final rule instead adds EHR capabilities to the list of quality measures.
  • ACOs are required to be notified in advance of the Medicare patient population assigned to the ACO.
  • The final rule mandates that MSSP ACO applications will be accepted beginning January 1, 2012. The first ACO agreements will start on or after April 1, 2012, and July 1, 2012. ACOs must report quality measures for calendar year 2013 to qualify for first performance year shared savings

The changes to the final rule seem to be intended to encourage program participation by physicians. Physicians wishing to participate in ACOs may find the following changes to the final rule make program participation easier and less risky:

  • The final rule contains less burdensome reporting requirements for quality measures.
  • EHR capabilities are encouraged but not mandated.
  • The final rule provides opportunities for physicians and other providers to share in savings without being at risk for losses.
  • Physicians will know in advance which of their Medicare patients are being attributed to the ACO, so that they work with those patients as true partners in achieving better outcomes. Beneficiaries would be attributed to the ACO on a prospective rather than a retrospective basis.
  • The final rule recognizes the role of internal medicine subspecialists in providing primary care. As noted by the ACP, in situations in which a beneficiary has not received primary care services from a defined primary care physician, the final rule allows attribution to be linked to any other ACO professional that provides a plurality of primary care services reflecting that certain specialty/subspecialty providers do provide primary care services to some Medicare beneficiaries.3
  • Primary care physicians used for attribution can participate in more than one ACO, rather than being limited to a single ACO under certain conditions, and ACOs will be able to get “first dollar” payments for achieving minimum quality thresholds.4  

Notably, medical associations such as the American College of Physicians (ACPs), American Medical Association and the American College of Cardiology have issued statements commending CMS for the flexibility and improvements of the final rule.5  

The Center for Medicare & Medicaid Innovation also released, on October 20, 2011, its Advance Payment Model initiative, which will provide additional support to physician-owned and rural providers participating in the Medicare Shared Savings Program who also would benefit from additional start-up resources to build the necessary infrastructure, such as new staff or information technology systems.6 The advanced payments would be recovered from any future shared savings achieved by the ACO.

In addition, CMS and the U.S. Department of Health & Human Services Office of Inspector General released an interim final rule that addresses waivers of certain provisions of the Stark Law, Anti-kickback Statute, and civil money penalties laws in consideration of ACOs.7 Further, the Federal Trade Commission in partnership with the Department of Justice released a final statement on the enforcement of the anti-trust law as it relates to ACOs.8 Please note that Internal Revenue Service also released a fact sheet to provide guidance to tax-exempt organizations that form ACOs.