The Way of the ACO: Understanding and Forming a Medicare Shared Savings Program

Transcription

1 Presents: The Way of the ACO: Understanding and Forming a Medicare Shared Savings Program Wednesday, November 7, :00 PM 1:30 PM Eastern 11:00 AM 12:30 PM Central 10:00 AM 11:30 AM Mountain 9:00 AM 10:30 AM Pacific Presented By: Craig B. Garner Michelle L. Knowles 19185

2 The Way of the ACO: Understanding and Forming a Medicare Shared Savings Program Presenters: Craig B. Garner and Michelle L. Knowles November 7, 2012 Craig B. Garner Craig is an attorney and health care consultant, specializing in issues surrounding modern American health care and the ways it should be managed in its current climate of reform. His established law practice focuses on health care regulatory compliance and counseling to represent providers in all matters pertaining to contemporary health care in the United States, including hospitals, physicians, pharmacies, medical groups, clinical laboratories, and other health care practitioners. Craig is admitted as an attorney and counselor at law in the State of California (1995), District of Columbia (1996) and the State of New York (2001). Craig s consulting practice offers an array of short and long term services to help health care institutions navigate the fluid structure of the U.S. health care system, including interim management of health care institutions, strategic guidance, fair market valuations, analysis for health care mergers and acquisitions, development and implementation of health care regulatory compliance programs, formation of Medicare shared savings programs (accountable care organizations) and expert consulting. Craig is an adjunct professor of law at Pepperdine University School of Law, where he teaches a hospital law course that surveys legal issues that frequently arise in a hospital setting, as well as analyzes issues occurring in related health care environments. Between 2002 and 2011, Craig was the Chief Executive Officer at Coast Plaza Hospital. He was responsible for administration and oversight of this general acute care hospital providing services to the City of Norwalk and surrounding communities in Southeast Los Angeles County. Additional information can be found at 2 1

3 Michelle L. Knowles Chief Legal Officer, Compliance Officer and Director of Human Resources for A- Med Health Care Michelle leads the legal, regulatory compliance, and human resource efforts of A- Med Health Care, a privately owned specialty pharmacy and disposable medical supply company based in Huntington Beach, CA. Michelle has been integral in the development and implementation of corporate strategies, taking A-Med Health Care from a small to a medium-sized company with significant share in the California specialty pharmacy and medical supply market, expanding business lines and building national opportunities. Michelle joined A-Med Health Care in 2004, after working in private practice, having spent time as an associate with Friedman Stroffe & Gerard, P.C. in Irvine, CA, and earlier as a Senior Tax Specialist at KPMG. Michelle s private practice experience spanned general corporate work, intellectual property (trademark and copyright), and health care regulation. Michelle graduated magna cum laude and valedictorian of the Class of 2000 of Chapman University School of Law, and was the Editor-in-Chief of the Chapman Law Review. She earned her B.A. in Business Management from California State University, Fullerton. Michelle is a member of the Health Care Law Committee, a sub-committee of the Business Law Section of the California Bar, and a Board Member of the California Association of Medical Product Suppliers. What is an Accountable Care Organization (ACO)? An ACO is a shared savings program that promotes accountability for a patient population, coordinates items and services under Medicare parts A and B, and encourages investment in infrastructure and redesigned care processes to improve quality and efficiency of service. Not later than January 1, 2012, the Secretary shall establish a shared savings program (in this section referred to as the program ) that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery. (42 U.S.C. 1395jjj) 2

4 What is an ACO? continued An ACO is a legal entity that is recognized and authorized under applicable state, federal or tribal law, is identified by a Taxpayer Identification Number (TIN), and is formed by one or more ACO participants that are defined at (a)*. This may also include any other ACO participants described at (b). By aligning health care providers that focus on improvement, efficiency, and experience within a particular patient demographic, ACOs connect reimbursement with quality, outcomes, and resource utilization. This is a significant departure from the traditional fee-for-service model that for years has been the standard in American health care. *Unless stated otherwise, all statutory references can be found in Title 42 of the Code of Federal Regulations. ACOs Today As of July 1, 2012, 89 new ACOs began serving 1.2 million people with Medicare in 40 states and Washington, D.C. In the previous round, HHS approved 27 ACOs to participate in the Medicare shared savings program. This does not include those participating in the Pioneer ACO Model by CMS s Center for Medicare & Medicaid Innovation or the Physician Group Practice Transition Demonstration. Better coordinated care is good for patients and it saves money. We applaud every one of these doctors, hospitals, health centers and others for working together to ensure millions of people with Medicare get better, more patient-centered, coordinated care. -- HHS Secretary Kathleen Sebelius (July 9, 2012) 3

5 Who Can be an ACO Participant? An individual or group of ACO providers/suppliers identified by a Medicare-enrolled TIN, that alone or together with one or more ACO participants comprise an ACO, the information for which must be included on the list of ACO participants as required in the application process. Who Can be an ACO Professional? (1) a physician licensed to practice medicine (2) a practitioner who is one of the following: physician assistant nurse practitioner clinical nurse specialist Who Can be an ACO Provider/Supplier? A provider or supplier that: Is enrolled in Medicare; Bills for items and services it furnishes to Medicare fee-for-service beneficiaries under a Medicare billing number assigned to the TIN of an ACO participant in accordance with the applicable Medicare regulations; and Is included on the list of ACO providers/suppliers that is required in the application. 4

6 Formation For Profit ACOs Professional Medical Corporation General Partnership Limited Liability Partnership* Limited Liability Corporation* Limited Partnership* *Beware of certain states prohibition of the corporate practice of medicine. Unless an ACO is owned by licensed medical providers, it may not be able to employ physicians and other health care professionals directly. Instead, it may need to enter into additional contractual arrangements with participating providers for certain entities in certain states. 5

7 Non-Profit Prohibition on gifts of charitable funds for private benefit could impact non-profit model. Statutory prohibition on distributions to members (ACOs are designed to distribute cost savings to group members). Limitation on number of interested persons. Election of board by private individuals. Who Can Form an ACO? (a): The following ACO participants or combinations thereof are eligible to form an ACO that may apply to participate in the Shared Savings Program: 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 professionals. Certain Critical Access Hospitals (CAHs). Rural Health Clinics (RHCs). Federally Qualified Health Centers (FQHCs). 6

8 Attendance Poll Eligibility 7

9 Eligibility Requirements ACO participants may work together to manage and coordinate care for Medicare feefor-service beneficiaries through an ACO that meets the specified criteria. The ACO must become accountable for the quality, cost, and overall care of the Medicare feefor-service beneficiaries assigned to the ACO. ACOs that meet or exceed a minimum savings rate established under the program, meet the minimum quality performance standards established under the program, and otherwise maintain their eligibility to participate in the Shared Savings Program are eligible to receive payments for shared savings. ACOs that operate under the two-sided model and meet or exceed a minimum loss rate must share losses with the Medicare program. Eligibility Requirements continued An ACO must be a legal entity formed under applicable state, federal, or tribal law that is authorized to conduct business in each state in which it operates for purposes of the following: (1) Receiving and distributing shared savings. (2) Repaying shared losses or other monies determined to be owed to the Centers for Medicare & Medicaid Services (CMS). (3) Establishing, reporting, and ensuring provider compliance with health care quality criteria, including quality performance standards. (4) Fulfilling other ACO functions identified herein. An ACO formed by two or more otherwise independent ACO participants must be a legal entity separate from any of its ACO participants. 8

10 Governance and Leadership Governance General Rule: An ACO must maintain an identifiable governing body with authority to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care. Responsibilities of the governing body and its members: (1) The governing body must have responsibility for oversight and strategic direction of the ACO, holding ACO management accountable. (2) The governing body must have a transparent governing process. (3) Members of the governing body must have a fiduciary duty to the ACO and must act in a way that is consistent with that fiduciary duty. (4) The governing body of the ACO must be separate and unique to the ACO in cases where the ACO comprises multiple, otherwise independent ACO participants. (5) If the ACO is an existing entity, the ACO governing body may be the same as the governing body of that existing entity. 9

11 Governance continued Composition and control of the governing body: (1) The ACO must provide for meaningful participation in the composition and control of the ACO's governing body for ACO participants or their designated representatives. (2) The ACO governing body must include at least one Medicare beneficiary representative served by the ACO who does not have a conflict of interest with the ACO, and who has no immediate family member with a conflict of interest with the ACO. (3) At least 75% control of the ACO's governing body must be held by ACO participants. Governance continued Conflict of Interest The ACO governing body must have a conflict of interest policy that applies to members of the governing body. The conflict of interest policy must: Require each member of the governing body to disclose relevant financial interests; Provide a procedure to determine whether a conflict of interest exists and set forth a process to address any conflicts that arise; and Address remedial action for members of the governing body that fail to comply with the policy. 10

12 Leadership and Management An ACO must have a leadership and management structure that includes clinical and administrative systems that align with and support the goals of the Shared Savings Program and the aims of better care for individuals, better health for populations, and lower growth in expenditures. The ACO's operations must be managed by an executive, officer, manager, general partner, or similar party whose appointment and removal are under the control of the ACO's governing body and whose leadership team has demonstrated the ability to influence or direct clinical practice to improve efficiency processes and outcomes. Leadership and Management continued Clinical management and oversight must be managed by a senior-level medical director who is both a physician and one of its ACO providers/suppliers, who is physically present on a regular basis at any clinic, office, or other location participating in the ACO, and who is a board-certified physician licensed in the state in which the ACO operates. Each ACO participant and each ACO provider/supplier must demonstrate a meaningful commitment to the mission of the ACO to ensure the ACO's likely success. 11

13 General Criteria Number of Professionals and Beneficiaries The ACO must include primary care ACO professionals that are sufficient for the number of Medicare fee-for-service beneficiaries assigned to the ACO. The ACO must have at least 5,000 assigned beneficiaries. CMS deems an ACO to have initially satisfied the requirement to have at least 5,000 assigned beneficiaries if the number of beneficiaries historically assigned to the ACO participants in each of the three years before the start of the agreement period is 5,000 or more. 12

14 Number of Professionals and Beneficiaries continued If at any time during the performance year an ACO's assigned population falls below 5,000 assigned beneficiaries, the ACO will be issued a warning and placed on a corrective action plan (CAP). (1) While under the CAP, the ACO remains eligible for shared savings and losses during that performance year and its minimum savings rate (MSR) will be set at a level consistent with the number of assigned beneficiaries. (2) If the ACO's assigned population is not returned to at least 5,000 or more by the end of the following performance year, the ACO's agreement will be terminated and the ACO will not be eligible to share in savings for that performance year. Required Processes and Patient-Centeredness Criteria An ACO must: Promote evidence-based medicine and beneficiary engagement, internally report on quality and cost metrics, and coordinate care; Adopt a focus on patient-centeredness that is promoted by the governing body and integrated into practice by leadership and management working with the organization's health care teams; and Have defined processes to fulfill these requirements. 13

15 Required Processes and Patient-Centeredness Criteria continued An ACO must have a qualified health care professional responsible for the ACO s quality assurance and improvement program, which must cover certain defined processes. For each defined process, the ACO must: Explain how it will require ACO participants and ACO providers/suppliers to comply with and implement each process (and supplement thereof), including the remedial processes and penalties (as well as the potential for expulsion) applicable to ACO participants and ACO providers/suppliers for failure to comply with and implement the required process; and Explain how it will employ its internal assessments of cost and quality of care to continuously improve the ACO s care practices. Defined Processes The ACO must define, establish, implement, evaluate, and periodically update processes to accomplish the following: (1) Promote evidence-based medicine. These processes must cover diagnoses with significant potential for the ACO to achieve quality improvements, taking into account the circumstances of individual beneficiaries. (2) Promote patient engagement. 14

16 Promote Patient Engagement These processes must address: Compliance with patient experience of care survey requirements. Compliance with beneficiary representative requirements. A process for evaluating the health needs of the ACO s population, including consideration of diversity in its patient populations, and a plan to address the needs of its population. Communication of clinical knowledge/evidence-based medicine to beneficiaries in a way that is understandable to them. Exclusivity of ACO Participant TINs For purposes of the Shared Savings Program, each ACO participant TIN is required to commit to a participation agreement with CMS. Each ACO participant TIN upon which beneficiary assignment is dependent must be exclusive to one Medicare Shared Savings Program ACO for purposes of Medicare beneficiary assignment. ACO participant TINs upon which beneficiary assignment is not dependent are not required to be exclusive to one Medicare Shared Savings Program ACO. 15

17 The ACO Application Agreement With CMS ACOs must enter into a participation agreement with CMS for a period not less than three years. Closed for 2013 Performance year: The ACO s performance year is the 12 month period starting January 1 of each year (unless otherwise noted in the agreement). ACOs must always submit measures in the form and manner required by CMS. 16

18 Application Content Accountability: The ACO must certify that the ACO, its ACO participants, and its ACO providers/suppliers have agreed to become accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to the ACO. Disclosure of Prior Participation: ACOs must disclose to CMS whether the ACO, its ACO participants, or its ACO providers/suppliers have participated in the Medicare Shared Savings Program under the same or a different name, or if any are related to or have an affiliation with another Shared Savings Program ACO. Application Content, Eligibility As part of its application, an ACO must submit to CMS the following supporting materials to demonstrate that the ACO satisfies the eligibility requirements: Documents (e.g., participation agreements, employment contracts, and operating policies) sufficient to describe the ACO participants and ACO providers /suppliers rights and obligations in and representation by the ACO. This includes how the receipt of shared savings or other financial arrangements will encourage ACO participants and ACO providers/suppliers to adhere to ACO tenets. 17

19 Application Content, Eligibility continued As part of its application, an ACO must submit to CMS the following supporting materials to demonstrate that the ACO satisfies the eligibility requirements: A description of, or documents sufficient to describe, the ways in which the ACO will implement the required processes and patient-centeredness criteria, including descriptions of the remedial processes and penalties (including the potential for expulsion) that will apply if an ACO participant or an ACO provider/supplier fails to comply with and implement these processes. Materials documenting the ACO's organization and management structure, including an organizational chart, a list of committees (including names of committee members) and their structures, and job descriptions for all senior administrative and clinical leaders. Application Content, Eligibility continued An ACO must also submit to CMS the following supporting materials: Evidence that the governing body is an identifiable body, that the governing body is comprised of representatives of the ACO s participants, and that the ACO participants have at least 75% control of the ACO s governing body. Evidence that the governing body includes at least one Medicare beneficiary representative served by the ACO who does not have a conflict of interest with the ACO, and who has no immediate family member presenting any conflict of interest with the ACO. A copy of the ACO s compliance plan or documentation describing the plan that will be put in place at the time the ACO's agreement with CMS becomes effective. 18

20 Application Content, Eligibility continued The ACO must provide CMS with such information regarding its ACO participants and its ACO providers/suppliers participating in the program as is necessary to implement the program. The ACO must submit a list of all ACO participants and their Medicare-enrolled TINs. For each ACO participant, the ACO must submit a list of the ACO providers/suppliers and their provider identifier (for example, NPI) and indicate whether the ACO provider/supplier is a primary care physician. The list specified above must be updated in accordance with the program. ACOs must also submit any other specific identifying information as required by CMS in the application process. Application Content, Eligibility continued Distribution of Savings: As part of its application to participate in the Shared Savings Program, an ACO must describe the following: How it plans to use shared savings payments, including the criteria it plans to employ for distributing shared savings. How the proposed plan will achieve the specific goals of the Shared Savings Program. How the proposed plan will achieve the general aims of better care for individuals, better health for populations, and lower growth in expenditures. 19

21 Application Content, Eligibility continued Assurance of ability to repay: An ACO must have the ability to repay losses for which it may be liable, and any other monies determined to be owed upon first performance year reconciliation. As part of its application, an ACO that is applying to participate under the two-sided model of the Shared Savings Program or requesting an interim payment calculation under the one-sided model must submit for CMS approval documentation that it is capable of repaying losses or other monies determined to be owed upon first year reconciliation. Screening of ACO Applicants ACOs, ACO participants, and ACO providers/suppliers will be reviewed during the Shared Savings Program application process and periodically thereafter with regard to their program integrity history, including any history of Medicare program exclusions or other sanctions and affiliations with individuals or entities that have a history of program integrity issues. ACOs, ACO participants, or ACO providers/suppliers whose screening reveals a history of program integrity issues or affiliations with individuals or entities that have a history of program integrity issues may be subject to denial of their Shared Savings Program applications or the imposition of additional safeguards or assurances against program integrity risks. 20

22 Approval Provisions for Participation Agreement Upon being notified by CMS of its approval to participate in the Shared Savings Program, an executive of that ACO who has the ability to legally bind the ACO must sign and submit to CMS a participation agreement. Under the participation agreement the ACO must agree to comply with the provisions of this part in order to participate in the Shared Savings Program. 21

23 Provisions for Participation Agreement, continued Compliance with laws. The ACO must agree, and must require its ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to the ACO's activities to agree or comply with all applicable laws including, but not limited to, the following: Federal criminal laws The False Claims Act The Anti-Kickback Statute The civil monetary penalties law The physician self-referral laws Provisions for Participation Agreement, continued Certifications: The ACO must agree, as a condition of participating in the program and receiving any shared savings payment, that an individual with the authority to legally bind the ACO will certify the accuracy, completeness, and truthfulness of any data or information requested by or submitted to CMS, including, but not limited to, the application form, participation agreement, and any quality data or other information on which CMS bases its calculation of shared savings payments and shared losses. The ACO must meet the requirements for data submission and certifications. 22

24 Compliance Plan Compliance Plan The ACO must have a compliance plan that includes at least the following elements: A designated compliance official or individual who is not legal counsel to the ACO and reports directly to the ACO s governing body. Mechanisms for identifying and addressing compliance problems related to the ACO's operations and performance. A method for employees or contractors of the ACO, ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to ACO activities to anonymously report suspected problems related to the ACO to the compliance officer. 23

25 Compliance Plan continued Compliance training for the ACO, the ACO participants, and the ACO providers/suppliers. A requirement for the ACO to report probable violations of law to an appropriate law enforcement agency. ACOs that are existing entities may use their current compliance officer if the compliance officer meets the necessary requirements. An ACO s compliance plan must be updated periodically to reflect changes in law and regulations. Public Reporting and Transparency 24

26 Public Reporting and Transparency For purposes of the Shared Savings Program, each ACO must publicly report the following information regarding the ACO in a standardized format as specified by CMS: Name and location Primary contact Organizational information Public Reporting and Transparency continued Shared savings and loss information, including: (1) Amount of any shared savings performance payment received by the ACO or shared losses owed to CMS. (2) Total proportion of shared savings invested in infrastructure, redesigned care processes and other resources required to support the three-part goals of better health for populations, better care for individuals, and lower growth in expenditures, including the proportion distributed among ACO participants. 25

27 Audits and Monitoring Audits and Record Retention Right to Audit The ACO must agree, and must require its ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to ACO activities to agree that the CMS, DHHS, the Comptroller General, the Federal Government or their designees have the right to audit, inspect, investigate, and evaluate any books, contracts, records, documents and other evidence of the ACO, ACO participants, and ACO providers/suppliers, as well as other individuals or entities performing functions or services related to ACO activities that pertain to all of the following: 26

28 Audits and Record Retention continued TheACO s compliance with Shared Savings Program. The quality of services performed and determination of amount due to or from CMS under the participation agreement. The ability of the ACO to bear the risk of potential losses and to repay any losses to CMS. If, as a result of any inspection, evaluation, or audit, it is determined that the amount of shared savings due to the ACO or the amount of shared losses owed by the ACO has been calculated in error, CMS reserves the right to reopen the initial determination and issue a revised initial determination. Monitoring of ACOs In order to ensure that the ACO continues to satisfy the eligibility and program requirements under this part, CMS monitors and assesses the performance of ACOs, their ACO participants, and ACO providers/suppliers. CMS employs a range of methods to monitor and assess the performance of ACOs, ACO participants, and ACO providers/suppliers. 27

29 Monitoring of ACOs continued Monitoring ACO compliance with quality performance standards: To identify ACOs that are not meeting quality performance standards, CMS will review an ACO s submission of quality measurement data. CMS may request additional documentation from an ACO, ACO participants, or ACO providers/suppliers, as appropriate. If an ACO does not meet quality performance standards or fails to report on one or more quality measures, CMS can issue a warning letter depending on the nature and severity of the noncompliance, subject the ACO to pre-termination actions, or immediately terminate the ACO's participation agreement. Assignment of Beneficiaries 28

30 Assignment of Beneficiaries Medicare fee-for-service beneficiary is assigned to an ACO when the beneficiary's utilization of primary care services meets the criteria established under the assignment methodology. Medicare assigns beneficiaries in a preliminary manner at the beginning of a performance year based on the most recent data available. Assignment will be updated quarterly based on the most recent 12 months of data. Final assignment is determined after the end of each performance year, based on data from that performance year. Assignment of Beneficiaries continued Beneficiary assignment to an ACO is for purposes of determining the population of Medicare fee-for-service beneficiaries for whose care the ACO is accountable, and for determining whether an ACO has achieved savings, and in no way diminishes or restricts the rights of beneficiaries assigned to an ACO to exercise free choice in determining where to receive health care services. Primary care services for purposes of assigning beneficiaries are identified by selected HCPCS codes (99201 through 99215, through 99340, and through 99350), G codes (G0402, G0438 and G0439), or revenue center codes (0521, 0522, 0524, 0525 submitted by FQHCs (for services furnished prior to January 1, 2011) or by RHCs). 29

31 Basic Assignment Methodology CMS employs the following two-step methodology to assign Medicare beneficiaries to an ACO after identifying all patients that had at least one primary care service with a physician who is an ACO provider/supplier of that ACO: Step One: Identify all primary care services rendered by primary care physicians during one of the following: The most recent 12 months (for purposes of preliminary prospective assignment and quarterly updates to the preliminary prospective assignment); or The performance year (for purposes of final assignment). Basic Assignment Methodology continued The beneficiary is assigned to an ACO if the allowed charges for primary care services furnished to the beneficiary by all the primary care physicians who are ACO providers/suppliers in the ACO are greater than the allowed charges for primary care services furnished by primary care physicians who are: ACO providers/suppliers in any other ACO; and Not affiliated with any ACO and identified by a Medicare-enrolled TIN 30

32 Basic Assignment Methodology continued Step Two: Consider the remainder of the beneficiaries who have received at least one primary care service from an ACO physician, but who have not had a primary care service rendered by any primary care physician, either inside or outside the ACO. The beneficiary will be assigned to an ACO if the allowed charges for primary care services furnished to the beneficiary by all ACO professionals who are ACO providers/suppliers in the ACO are greater than the allowed charges for primary care services furnished by: All ACO professionals who are ACO providers/suppliers in any other ACO; and Other physicians, nurse practitioners, physician assistants, clinical nurse specialists who are unaffiliated with an ACO and are identified by a Medicare-enrolled TIN. Notification to Beneficiaries of Participation ACO participants must do all of the following: Notify beneficiaries at the point of care that their ACO providers/suppliers are participating in the Shared Savings Program. Post signs in their facilities to notify beneficiaries that their ACO providers/suppliers are participating in the Shared Savings Program. Make available standardized written notices regarding participation in an ACO and, if applicable, data opt-out. Such written notices must be provided by the ACO participants in settings in which beneficiaries receive primary care services. 31

33 Quality of Care Measures to Assess the Quality of Care Selecting Measures: CMS selects the measures designated to determine an ACO s success in promoting the aims of better care for individuals, better health for populations, and lower growth in expenditures. CMS designates the measures for use in the calculation of the quality performance standard. CMS seeks to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both. 32

34 Calculating the ACO Quality Performance Score Establishing a quality performance standard in each performance year: For the first performance year of an ACO s agreement, CMS defines the quality performance standard at the level of complete and accurate reporting for all quality measures. During subsequent performance years, the quality performance standard will be phased in such that the ACO must continue to report all measures but the ACO will be assessed on performance based on the minimum attainment level of certain measures. Calculating the ACO Quality Performance Score continued Establishing a performance benchmark and minimum attainment level for measures: CMS designates a performance benchmark and minimum attainment level for each measure, and establishes a point scale for the measures. Contingent upon data availability, performance benchmarks are defined by CMS based on national Medicare fee-for-service rates, national Medicare Advantage (MA) quality measure rates, or a national flat percentage. The minimum attainment level is set at 30%, or the 30th percentile of the performance benchmark. 33

35 Calculating the ACO Quality Performance Score continued Methodology for calculating a performance score for each measure: Performance below the minimum attainment level for a measure will receive zero points for that measure. Performance equal to or greater than the minimum attainment level for a measure will receive points on a sliding scale based on the level of performance. Those measures designated as all or nothing measures will receive the maximum available points if all criteria are met and zero points if one or more of the criteria are not met. Performance at or above 90% or the 90th percentile of the performance benchmark earns the maximum points available for the measure. Calculating the ACO Quality Performance Score continued In establishing quality performance requirements for domains, CMS groups individual quality performance standard measures into four domains (33 measures in total): Patient/caregiver experience. Care coordination/patient safety. Preventative health. At-risk population. Electronic Health Records capability is not mandatory, but it is a quality standard with four points rather than two. 34

36 Calculating the ACO Quality Performance Score continued To satisfy quality performance requirements for a domain: The ACO must report all measures within a domain. ACOs must score above the minimum attainment level determined by CMS on 70% of the measures in each domain. If an ACO fails to achieve the minimum attainment level on at least 70% of the measures in a domain, CMS will take termination actions. If the ACO achieves the minimum attainment level for at least one measure in each of the four domains, and also satisfies the requirements for realizing shared savings, the ACO may receive the proportion of those shared savings for which it qualifies. If an ACO fails to achieve the minimum attainment level on all measures in a domain, it will not be eligible to share in any savings generated. Calculating the ACO Quality Performance Score continued Methodology for calculating the ACO s overall performance score: CMS scores individual measures and determines the corresponding number of points that may be earned based on the ACO s performance. CMS adds the points earned for the individual measures within the domain and divides by the total points available for the domain to determine the domain score. Domains are weighted equally and scores averaged to determine the ACO s overall performance score and sharing rate. 35

37 Risk Models Establishing the Benchmark Step 1: Computing per capita Medicare Part A and Part B benchmark expenditures: In computing an ACO s fixed historical benchmark that is adjusted for historical growth and beneficiary characteristics, including health status, CMS determines the per capita Parts A and B fee-for-service expenditures for beneficiaries that would have been assigned to the ACO in any of the 3 most recent years prior to the agreement period using the ACO participants TINs identified at the start of the agreement period. CMS does all of the following: (1) Calculates the payment amounts included in Parts A and B fee-for-service claims using a 3 month claims run out with a completion factor. This calculation excludes indirect medical education (IME) and disproportionate share hospital (DSH) payments. This calculation considers individual beneficiary identifiable payments made under a demonstration, pilot, or time limited program. 36

38 Establishing the Benchmark continued (2) Makes separate expenditure calculations for each of the following populations of beneficiaries: End stage renal disease (ESRD), disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries. (3) Adjusts expenditures for changes in severity and case mix using prospective health care cost calculator (HCC) risk scores. (4) Truncates an assigned beneficiary s total annual Parts A and B fee-for-service per capita expenditures at the 99th percentile of national Medicare fee-for-service expenditures as determined for each benchmark year in order to minimize variation from catastrophically large claims. Establishing the Benchmark continued (5)(a) Using CMS Office of the Actuary national Medicare expenditure data for each of the years making up the historical benchmark, determines national growth rates, trends, and expenditures for each benchmark year (BY1 and BY2) to the third benchmark year (BY3) dollars. (5)(b) To trend forward the benchmark, CMS makes separate calculations for expenditure categories for each of the following populations of beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries. 37

39 Establishing the Benchmark continued (6) Restates BY1 and BY2 trended and risk adjusted expenditures in BY3 proportions of ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible Medicare and Medicaid beneficiaries. (7) Weighs each year of the benchmark using the following percentages: BY3 at 60%. BY2 at 30%. BY1 at 10%. (8) The ACO s benchmark may be adjusted for the addition and removal of ACO participants or ACO providers/suppliers during the term of the agreement period. Establishing the Benchmark continued Step 2: Updating the benchmark. CMS updates the historical benchmark annually for each year of the agreement period based on the flat dollar equivalent of the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare fee-for-service program. (1) CMS updates this fixed benchmark by the projected absolute amount of growth in national per capita expenditures for Parts A and B services under the original Medicare fee-for-service program using data from CMS' Office of the Actuary. 38

40 Establishing the Benchmark continued (2) To update the benchmark, CMS makes expenditure calculations for separate categories for each of the following populations of beneficiaries: ESRD Disabled Aged/dual eligible Medicare and Medicaid beneficiaries Aged/non-dual eligible Medicare and Medicaid beneficiaries Calculation of Shared Savings and Losses Under the Two-Sided Model General Rule: For each performance year, CMS determines whether the estimated average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries for Parts A and B services are above or below the updated benchmark. In order to qualify for a shared savings payment under the two-sided model, or to be responsible for sharing losses with CMS, an ACO s average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries for Parts A and B services for the performance year must be below or above the updated benchmark, respectively, by at least the minimum savings or loss rate. 39

41 Calculation Under the Two-Sided Model continued Loss recoupment limit: The amount of shared losses for which an eligible ACO is liable may not exceed the following percentages of its updated benchmark: 5% in the first performance year of participation in a two-sided model under the Shared Savings Program. 7.5% in the second performance year. 10% in the third or any subsequent performance year. October 2011 Revisions 40

42 Questions Speaker Contact Information Craig Garner, Esq. CEO Garner Health, LLC Michelle Knowles, Esq. Chief Legal Officer A-Med Health Care

43 Upcoming ACHE Events Webinars: December 11, 2012 Leading Patient Flow: Improving Care Through New Ideas Online Seminars: January 9 Exceptional Leadership February 20, 2013 For more information or to register, log onto Find out what you missed during... Repositioning Your Service Lines in an Accountable Care World This ACHE webinar was attended by many of your peers on September 19, Now it s available to you on CD! Presented by: Barbra Riegel, MBA Vice President The Camden Group Robert Minkin, MBA, FACHE Senior Vice President The Camden Group Topics explored include: Key trends and takeaway tools you can apply to enhance your service line strategy Successful methods including co-management and bundled payments for repositioning your service line for the future of healthcare delivery Through case studies, how other organizations have structured their service line models for organizational success Cost: $195 ACHE affiliates/ $215 Non-affiliates To order call KRM at: Or visit: RS/AudioCD_index.cfm 42

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