Health System Reform Insight - Nov. 3, 2011
Given the new direction for the nation’s health system, the AMA has developed Health System Reform Insight to help you understand what this new direction means to you and your patients.
The final regulation governing Medicare accountable care organizations (ACOs) includes numerous improvements from the original proposal that the Centers for Medicare & Medicaid Services (CMS) issued last spring. These improvements—many of which are a direct result of AMA advocacy—will make it easier for independent physician practices to form ACOs.
For example, in response to criticism of the lack of Medicare ACO opportunities for groups of independent practitioners, CMS stated in the final rule:
There is no requirement that an ACO include a hospital. Similarly, we have not established any "hospital-oriented" requirements. We have intentionally provided ACOs the flexibility to establish their organizations in such a manner that will most effectively define their preferred ACO model.
Following are some of the key changes that CMS made in response to AMA comments on the proposed rule.
No mandatory shared "losses"
The proposed rule offered two tracks for payments to Medicare ACOs, both of which would have allowed the ACOs to share a portion of any Medicare savings they achieved. However, both tracks also would have required ACOs to pay Medicare a share of any spending that exceeded their target amount.
In response to AMA comments, the final rule modifies the two tracks such that ACOs in one track are eligible to share savings without having to pay Medicare a portion of spending over the target amount. The final rule also acted on AMA advocacy in revising the two-sided risk track so that Medicare will not withhold a portion of the ACO's shared savings to pay any shared losses.
Number of quality measures cut in half; meaningful use requirement dropped
In the final rule, CMS adopted AMA recommendations to reduce the number of required quality measures and better align these measures with other quality reporting programs. CMS reduced the number of required measures from 65 to 33, attempting to remove measures perceived as redundant, operationally complex or burdensome.
The AMA cautioned CMS that ACOs without a hospital would have difficulty reporting hospital-acquired conditions measures and that the majority of primary care physicians would be unable to adopt the burdensome "meaningful use" stage one requirements. Consequently, CMS removed the hospital-acquired conditions composite measure and the requirement that at least 50 percent of an ACO's primary care physicians must be "meaningful users" of electronic health records by the program's second year.
Patient attribution more prospective and inclusive
The AMA's comments included serious concerns about the proposed retrospective methodology for attributing patients to ACOs. Under this approach, ACO physicians would not know which patients were in the ACO and which were not.
CMS addresses this issue in the final rule, which states that CMS will identify a preliminary patient population for each ACO prospectively and then determine final patient assignments at the end of the performance year. It quotes the AMA's letter urging CMS "at a minimum … to move further down the continuum toward some hybrid approach between prospective assignment and retrospective attribution."
The AMA also objected to basing patient attribution solely on visits with physicians in four primary care specialties and encouraged CMS to also count services provided by physicians in other specialties. Adopting this recommendation, CMS will allow attribution of patients who have not seen physicians in the identified primary care specialties to be attributed to ACOs based on visits with other specialists.
First dollar of savings to be shared
A major concern with the proposed rule was that the Medicare program would have kept the first 2 percent of any savings; ACO participants would have only received a portion of the savings that exceeded this threshold. Given the investments that ACOs must make in order to achieve the targeted savings, this reluctance to share more of the savings contributed to a widespread perception that the financial risks for Medicare ACOs outweighed potential benefits.
CMS responded positively to comments from the AMA and others by removing the 2 percent threshold so that ACOs whose savings exceed their required minimum can share in the first dollar of savings.
Governance structure to mandate physician leadership
CMS's proposed rule included favorable requirements that ACO participants must have at least 75 percent control of the ACO's governing body and that the ACO's clinical management and oversight must be managed by a senior-level medical director who is a physician. In accordance with AMA recommendations, CMS included these proposals in the final rule—despite having received a number of objections from other organizations.
Watch Health System Reform Insight for information about the application process for Medicare ACOs and the new ACO advance payment program and its application process. Future issues also will provide an analysis of the final antitrust guidance from the Department of Justice and Federal Trade Commission as well as the interim final rule from CMS and the Office of the Inspector General, which will waive certain prohibitions on gainsharing and other rules for Medicare ACOs.
Also view the blog of AMA President Peter W. Carmel, MD, to read more about the revisions to the final rule on Medicare ACOs and how they benefit physicians.
A free AMA webinar at 7 p.m. Eastern time, featuring AMA President-elect Jeremy Lazarus, MD, and national expert Harold Miller, will outline the significant improvements in the Medicare ACO program final rule and discuss the application process. Register today.
The Joint Select Committee on Deficit Reduction is scheduled to approve a proposal to reduce federal spending by at least $1.2 trillion. Tell Congress that repeal of Medicare's flawed sustainable growth rate (SGR) formula must be part of the committee's proposal.
Physicians who wish to change their Medicare participation status must do so by the end of the year. The AMA's newly updated Medicare Participation Kit explains the Medicare participation options to help physicians assess which one might be best for their practices.