By Sharon Bee Cheng, Strategic Healthcare
I’m honored to be asked by the team at to offer some of our firm’s insight into what CMS is seeking in its regulations governing ACOs.
CMS hopes that the formation of ACOs will prompt some reorganization of health systems, even the most integrated ones. Organizations that already substantially meet the regulation’s requirements, for example, are asked to provide evidence of some change to their governance or other change in response to the regulation’s requirements.
Requirements and Incentives to Participate
ACOs must establish exclusive arrangements with enough primary care physicians to care for at least 5,000 Medicare beneficiaries. CMS will use the physicians’ tax identification numbers to calculate historical caseloads and determine whether an ACO has a sufficient number of primary care physicians. Primary care providers include: internal medicine, family practice, general practice, and geriatric medicine. Other care management professionals will be needed to establish effective referral and transition procedures. ACOs will also need to work with nurses and pharmacists to prevent costly complications of chronic diseases. Bonuses are available for including rural health clinics and federally-qualified health centers.
Hospitals may or may not be part of the ACO structure. ACOs can be 1) physician group practice arrangements, 2) networks of individual practices of ACO professionals, 3) partnerships or joint ventures arrangements between hospitals and ACO professionals, or 4) hospitals employing ACO professionals. Critical Access Hospitals (CAHs) using billing method I cannot form ACOs, but CAHs using billing method II can participate. The proposed rule makes almost no mention of other provider types having key roles in ACOs, neither to include them, nor specifically exclude them from participating in an ACO along with one of the four groups mentioned.
Capabilities of an ACO
To become an ACO, the applicant must demonstrate capacity to promote evidence-based medicine, patient engagement, and coordination of care. Strong ACOs will have committed clinical leadership that champions the use of best practices and promotes effective medical treatments. The ACO should establish plans to promote health literacy and involve patients in decision-making.
Most ACOs will use health information technology to meet many of these goals, especially coordination of care and reporting quality measures. Part of an ACO’s shared savings bonus will depend on participating physicians meeting the meaningful use requirements of the HIT incentive program.
ACOs will need effective leadership to meet their goals. An ACO is a legal entity comprised of professionals who agree to participate with the ACO. The form of the governing body is left to the ACO to decide (board, committee, etc.), but it must be:
- led by an executive who can sign and submit the contract between the ACO and CMS;
- distinct from the ACO; and
- comprised of participating professionals, representatives of all the entities within the ACO, and a Medicare beneficiary representative.
At least 75 percent control of the ACO’s governing body must be held by ACO participants. The members of the governing body must proportionately share responsibilities for the finances of the ACO, the ACO’s administration, and oversight of clinical operations.
ACO leadership must include some individuals with experience in clinical quality improvement and compliance. At least one ACO leader must be a full-time senior level medical director who is a board-certified physician. Other leaders include a physician-directed quality assurance and improvement committee and a designated compliance official.
During the three-year ACO agreement, physician participants can be removed from an ACO but not added. Providers and suppliers may be added or removed.
Distributing bonuses/paying penalties
The ACO will be an entity that must request the bonus payment, which it has earned, and also have plans to distribute these funds. ACOs should pay some attention to their plans for bonus distribution as this is one of the areas that will likely face scrutiny in terms of inducements, kick backs, and the like.
A compliant bonus distribution plan will make payments only to participants, providers, and suppliers that were directly engaged in the ACO’s operation in the year the bonus was earned. The activities rewarded will be clearly related to achieving the ACO’s goals. Once awarded, recipients of ACO bonus payments should have plans to invest them in ACO-related capital or activities. ACOs will be required to report to the public how the bonus money was used to improve performance, care for individuals, and health for populations; as well as lower growth in expenditures.
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