Accountable Care Organization pilot program

Title XVIII of the Social Security Act is amended by inserting after section 1866C the following new section:

1866D.

Accountable Care Organization pilot program

(a)

In general

The Secretary shall conduct a pilot program (in this section referred to as the pilot program) to test different payment incentive models, including (to the extent practicable) the specific payment incentive models described in subsection (c), designed to reduce the growth of expenditures and improve health outcomes in the provision of items and services under this title to applicable beneficiaries (as defined in subsection (d)) by qualifying accountable care organizations (as defined in subsection (b)(1)) in order to— (1)promote accountability for a patient population and coordinate items and services under parts A and B; (2)encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery; and (3)reward physician practices for the provision of high quality and efficient health care services. (b)

Qualifying Accountable care organizations (ACOs)

(1)

Qualifying ACO defined

(A)

In general

In this section, the terms qualifying accountable care organization and qualifying ACO mean a group of physicians that— (i)is organized at least in part for the purpose of providing physicians’ services; and (ii)meets such criteria as the Secretary determines to be appropriate to participate in the pilot program, including the criteria specified in paragraph (2). (B)

Inclusion of other providers

Nothing in this subsection shall be construed as preventing a qualifying ACO from including a hospital or any other provider of services or supplier furnishing items or services for which payment may be made under this title that is affiliated with the ACO under an arrangement structured so that such provider or supplier participates in the pilot program and shares in any incentive payments under the pilot program. (C)

Physician

In this section, the term physician includes, except as the Secretary may otherwise provide, any individual who furnishes services for which payment may be made as physicians’ services. (D)

Other services

Nothing in this paragraph shall be construed as preventing a qualifying ACO from furnishing items or services, for which payment may not made under this title, for purposes of achieving performance goals under the pilot program. (2)

Qualifying criteria

The following are criteria described in this paragraph for an organized group of physicians to be a qualifying ACO: (A)The group has a legal structure that would allow the group to receive and distribute incentive payments under this section. (B)The group includes a sufficient number of primary care physicians for the applicable beneficiaries for whose care the group is accountable (as determined by the Secretary). (C)The group is comprised of only participating physicians. (D)The group reports on quality measures in such form, manner, and frequency as specified by the Secretary (which may be for the group, for providers of services and suppliers, or both). (E)The group reports to the Secretary (in a form, manner, and frequency as specified by the Secretary) such data as the Secretary determines appropriate to monitor and evaluate the pilot program. (F)The group provides notice to applicable beneficiaries regarding the pilot program (as determined appropriate by the Secretary). (G)The group contributes to a best practices network or website, that shall be maintained by the Secretary for the purpose of sharing strategies on quality improvement, care coordination, and efficiency that the groups believe are effective. (H)The group utilizes patient-centered processes of care, including those that emphasize patient and caregiver involvement in planning and monitoring of ongoing care management plan. (I)The group meets other criteria determined to be appropriate by the Secretary. (c)

Specific payment incentive models

The specific payment incentive models described in this subsection are the following: (1)

Performance target model

Under the performance target model under this paragraph (in this paragraph referred to as the performance target model): (A)

In general

A qualifying ACO qualifies to receive an incentive payment if expenditures for applicable beneficiaries are less than a target spending level or a target rate of growth. The incentive payment shall be made only if savings are greater than would result from normal variation in expenditures for items and services covered under parts A and B. (B)

Computation of performance target

(i)

In general

The Secretary shall establish a performance target for each qualifying ACO comprised of a base amount (described in clause (ii)) increased to the current year by an adjustment factor (described in clause (iii)). Such a target may be established on a per capita basis, as the Secretary determines to be appropriate. (ii)

Base amount

For purposes of clause (i), the base amount in this subparagraph is equal to the average total payments (or allowed charges) under parts A and B (and may include part D, if the Secretary determines appropriate) for applicable beneficiaries for whom the qualifying ACO furnishes items and services in a base period determined by the Secretary. Such base amount may be determined on a per capita basis. (iii)

Adjustment factor

For purposes of clause (i), the adjustment factor in this clause may equal an annual per capita amount that reflects changes in expenditures from the period of the base amount to the current year that would represent an appropriate performance target for applicable beneficiaries (as determined by the Secretary). Such adjustment factor may be determined as an amount or rate, may be determined on a national, regional, local, or organization-specific basis, and may be determined on a per capita basis. Such adjustment factor also may be adjusted for risk as determined appropriate by the Secretary. (iv)

Rebasing

Under this model the Secretary shall periodically rebase the base expenditure amount described in clause (ii). (C)

Meeting target

(i)

In general

Subject to clause (ii), a qualifying ACO that meet or exceeds annual quality and performance targets for a year shall receive an incentive payment for such year equal to a portion (as determined appropriate by the Secretary) of the amount by which payments under this title for such year relative are estimated to be below the performance target for such year, as determined by the Secretary. The Secretary may establish a cap on incentive payments for a year for a qualifying ACO. (ii)

Limitation

The Secretary shall limit incentive payments to each qualifying ACO under this paragraph as necessary to ensure that the aggregate expenditures with respect to applicable beneficiaries for such ACOs under this title inclusive of incentive payments described in this subparagraph do not exceed the amount that the Secretary estimates would be expended for such ACO for such beneficiaries if the pilot program under this section were not implemented. (D)

Reporting and other requirements

In carrying out such model, the Secretary may (as the Secretary determines to be appropriate) incorporate reporting requirements, incentive payments, and penalties related to the physician quality reporting initiative (PQRI), electronic prescribing, electronic health records, and other similar initiatives under section 1848, and may use alternative criteria than would otherwise apply under such section for determining whether to make such payments. The incentive payments described in this subparagraph shall not be included in the limit described in subparagraph (C)(ii) or in the performance target model described in this paragraph. (2)

Partial capitation model

(A)

In general

Subject to subparagraph (B), a partial capitation model described in this paragraph (in this paragraph referred to as a partial capitation model) is a model in which a qualifying ACO would be at financial risk for some, but not all, of the items and services covered under parts A and B, such as at risk for some or all physicians’ services or all items and services under part B. The Secretary may limit a partial capitation model to ACOs that are highly integrated systems of care and to ACOs capable of bearing risk, as determined to be appropriate by the Secretary. (B)

No additional program expenditures

Payments to a qualifying ACO for applicable beneficiaries for a year under the partial capitation model shall be established in a manner that does not result in spending more for such ACO for such beneficiaries than would otherwise be expended for such ACO for such beneficiaries for such year if the pilot program were not implemented, as estimated by the Secretary. (3)

Other payment models

(A)

In general

Subject to subparagraph (B), the Secretary may develop other payment models that meet the goals of this pilot program to improve quality and efficiency. (B)

No additional program expenditures

Subparagraph (B) of paragraph (2) shall apply to a payment model under subparagraph (A) in a similar manner as such subparagraph (B) applies to the payment model under paragraph (2). (d)

Applicable beneficiaries

(1)

In general

In this section, the term ‘applicable beneficiary’ means, with respect to a qualifying ACO, an individual who— (A)is enrolled under part B and entitled to benefits under part A; (B)is not enrolled in a Medicare Advantage plan under part C or a PACE program under section 1894; and (C)meets such other criteria as the Secretary determines appropriate, which may include criteria relating to frequency of contact with physicians in the ACO. (2)

Following applicable beneficiaries

The Secretary may monitor data on expenditures and quality of services under this title after an applicable beneficiary discontinues receiving services under this title through a qualifying ACO. (e)

Implementation

(1)

Starting date

The pilot program shall begin no later than January 1, 2011. An agreement with a qualifying ACO under the pilot program may cover a multi-year period of between 3 and 5 years. (2)

Waiver

The Secretary may waive such provisions of this title and title XI as the Secretary determines necessary in order implement the pilot program. (3)

Performance results reports

The Secretary shall report performance results to qualifying ACOs under the pilot program at least annually. (4)

Limitations on review

There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of— (A)the elements, parameters, scope, and duration of the pilot program; (B)the selection of qualifying ACOs for the pilot program; (C)the establishment of targets, measurement of performance, determinations with respect to whether savings have been achieved and the amount of savings; (D)determinations regarding whether, to whom, and in what amounts incentive payments are paid; and (E)decisions about the extension of the program under subsection (g), expansion of the program under subsection (h) or extensions under subsection (i). (5)

Administration

Chapter 35 of title 44, United States Code shall not apply to this section. (f)

Evaluation

The Secretary shall evaluate the payment incentive model for each qualifying ACO under the pilot program to assess impacts on beneficiaries, providers of services, suppliers and the program under this title. The Secretary shall make such evaluation publicly available within 60 days of the date of completion of such report. (g)

Extension of pilot agreement with successful organizations

(1)

Reports to congress

Not later than 2 years after the date the first agreement is entered into under this section, and biennially thereafter for six years, the Secretary shall report to Congress on the use of authorities under the pilot program. Each report shall address the impact of the use of those authorities on expenditures, access, and quality under this title. (2)

Extension

Subject to the monitoring described in paragraph (1), with respect to a qualifying ACO, the Secretary may extend the duration of the agreement for such ACO under the pilot program as the Secretary determines appropriate if— (A)the ACO receives incentive payments with respect to any of the first 4 years of the pilot agreement and is consistently meeting quality standards; or (B)the ACO is consistently exceeding quality standards and is not increasing spending under the program. (3)

Termination

The Secretary may terminate an agreement with a qualifying ACO under the pilot program if such ACO did not receive incentive payments or consistently failed to meet quality standards in any of the first 3 years under the program. (h)

Expansion to additional ACOs

(1)

Testing and refinement of payment incentive models

Subject to the evaluation described in subsection (f), the Secretary may enter into agreements under the pilot program with additional qualifying ACOs to further test and refine payment incentive models with respect to qualifying ACOs. (2)

Expanding use of successful models to program implementation

(A)

In general

Subject to subparagraph (B), the Secretary may issue regulations to implement, on a permanent basis, the components of the pilot program that are beneficial to the program under this title, as determined by the Secretary. (B)

Certification

The Chief Actuary of the Centers for Medicare & Medicaid Services shall certify that the expansion of the components of the program described in subparagraph (A) would result in estimated spending that would be less than what spending would otherwise be estimated to be in the absence of such expansion. (i)

Treatment of physician group practice demonstration

(1)

Extension

The Secretary may enter in to an agreement with a qualifying ACO under the demonstration under section 1866A, subject to rebasing and other modifications deemed appropriate by the Secretary, until the pilot program under this section is operational. (2)

Transition

For purposes of extension of an agreement with a qualifying ACO under subsection (g)(2), the Secretary shall treat receipt of an incentive payment for a year by an organization under the physician group practice demonstration pursuant to section 1866A as a year for which an incentive payment is made under such subsection, as long as such practice group practice organization meets the criteria under subsection (b)(2). (j)

Additional provisions

(1)

Authority for separate incentive arrangements

The Secretary may create separate incentive arrangements (including using multiple years of data, varying thresholds, varying shared savings amounts, and varying shared savings limits) for different categories of qualifying ACOs to reflect natural variations in data availability, variation in average annual attributable expenditures, program integrity, and other matters the Secretary deems appropriate. (2)

Eligibility for medical home bonus payments

A qualifying ACO shall be eligible for bonus or incentive payments for provision of a medical home (or similar model of care delivery) under section 204 of the Medicare Improvement and Extension Act of 2006 (division B of Public Law 109–432) in the same manner as health care providers participating in the ACO are so eligible. (3)

Encouragement of participation of smaller organizations

In order to encourage the participation of smaller accountable care organizations under the pilot program, the Secretary may limit a qualifying ACO’s exposure to high cost patients under the program. (4)

Involvement in private pay arrangements

Nothing in this section shall be construed as preventing qualifying ACOs participating in the pilot program from negotiating similar contracts with private payers. (5)

Antidiscrimination limitation

The Secretary shall not enter into an agreement with an entity to provide health care items or services under the pilot program, or with an entity to administer the program, unless such entity guarantees that it will not deny, limit, or condition the coverage or provision of benefits under the program, for individuals eligible to be enrolled under such program, based on any health status-related factor described in section 2702(a)(1) of the Public Health Service Act.