The Center for Medicare and Medicaid Innovation (CMMI) recently provided important updates and responses to frequently asked questions (FAQs) relative to applications for the Pioneer Accountable Care Organization (ACO) Model. CMMI, in the communication, provides clarification to the communication transmitted July 15, 2011, relating to the calculation of financial exposure, ACO governance structure, application clarification and information relating to privacy.

The Centers for Medicare and Medicaid Services (CMS) requires Pioneer ACOs to commit to pay their fair share of any losses to CMS. In the response to FAQs, CMS and CMMI clarify that the ACO must establish its financial security for losses at the time of application submission by committing to provide a financial guarantee that will cover 25 percent of total potential losses for each performance period. CMS and CMMI clarify that any letter of credit used as a form of guarantee must be provided at the time the applicant signs the agreement to participate in the Pioneer ACO Model. Additionally, CMS and CMMI clarify that any similarly enforceable mechanism may be used.

With regard to providing proof of outcomes-based contracts, CMS and CMMI indicate that letters from purchasers or payers with whom the ACO has entered into or has plans to negotiate an outcomes-based contract are acceptable means of documentation.   With regard to what appears to be a multiplicity of questions surrounding the governance structure requirements, CMS and CMMI appear to be providing leeway by recognizing that various state laws may prohibit patients or consumer advocates from sitting on certain boards. While the requirement is to have one patient and one consumer advocate on the Pioneer ACO board, it appears as though reasonable explanations and citations to the appropriate state law, and plans to achieve the requirements through other means, may be acceptable to CMS and CMMI in consideration of the application for the Pioneer ACO Model. CMS corrects the draft agreement and clarifies that the agreement should not have indicated that 10 percent of the Pioneer ACOs board has to be patients or patient advocates. This was an error and the final agreement will be corrected to reflect this change.

Finally, with regard to the claims feed resulting in the allocation of beneficiaries, CMMI and CMS indicate that the ACOs must choose between two options: (1) receipt of three years of de-identified historical claims data for aligned beneficiaries, or (2) notification of the aligned beneficiaries with an opt-out for sharing personally identifiable information. After the 30-day opt-out period has passed, CMS will provide the ACO with three years of historical claims data that includes personally identifiable data for those aligned beneficiaries who have not chosen to opt out.