[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Rules and Regulations]
[Pages 67802-67990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27461]
[[Page 67801]]
Vol. 76
Wednesday,
No. 212
November 2, 2011
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 425
Medicare Program; Medicare Shared Savings Program: Accountable Care
Organizations; Final Rule
Federal Register / Vol. 76 , No. 212 / Wednesday, November 2, 2011 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 425
[CMS-1345-F]
RIN 0938-AQ22
Medicare Program; Medicare Shared Savings Program: Accountable
Care Organizations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule implements section 3022 of the Affordable Care
Act which contains provisions relating to Medicare payments to
providers of services and suppliers participating in Accountable Care
Organizations (ACOs) under the Medicare Shared Savings Program. Under
these provisions, providers of services and suppliers can continue to
receive traditional Medicare fee-for-service (FFS) payments under Parts
A and B, and be eligible for additional payments if they meet specified
quality and savings requirements.
DATES: These regulations are effective on January 3, 2012.
FOR FURTHER INFORMATION CONTACT: Rebecca Weiss, (410) 786-8084,
Facsimile: (410) 786-8005, Email address: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
To assist readers in referencing sections contained in this
preamble, we are providing a table of contents.
I. Background
A. Introduction and Overview of Value-Based Purchasing
B. Statutory Basis for the Medicare Shared Savings Program
C. Overview of the Medicare Shared Savings Program
D. Public Comments Received on the Proposed Rule
E. Reorganization of the Regulations Text
II. Provisions of the Proposed Rule, Summary of and Responses to
Public Comments, and Provisions of the Final Rule
A. Definitions
B. Eligibility and Governance
1. General Requirements
a. Accountability for Beneficiaries
b. Agreement Requirement
c. Sufficient Number of Primary Care Providers and Beneficiaries
d. Identification and Required Reporting on Participating ACO
Professionals
2. Eligible Participants
3. Legal Structure and Governance
a. Legal Entity
b. Distribution of Shared Savings
c. Governance
d. Composition of the Governing Body
4. Leadership and Management Structure
5. Processes To Promote Evidence-Based Medicine, Patient
Engagement, Reporting, Coordination of Care, and Demonstrating
Patient-Centeredness
a. Processes To Promote Evidence-Based Medicine
b. Processes To Promote Patient Engagement
c. Processes To Report on Quality and Cost Measures
d. Processes To Promote Coordination of Care
6. Overlap With Other CMS Shared Savings Initiatives
a. Duplication in Participation in Medicare Shared Savings
Programs
b. Transition of the Physician Group Practice (PGP)
Demonstration Sites Into the Shared Savings Program
c. Overlap With the Center for Medicare & Medicaid Innovation
(Innovation Center) Shared Savings Models
C. Establishing the Agreement With the Secretary
1. Options for Start Date of the Performance Year
2. Timing and Process for Evaluating Shared Savings
3. New Program Standards Established During the Agreement Period
4. Managing Significant Changes to the ACO During the Agreement
Period
5. Coordination With Other Agencies
a. Waivers of CMP, Anti-Kickback, and Physician Self-Referral
Laws
b. IRS Guidance Relating to Tax-Exempt Organization
Participating in ACOs
c. Antitrust Policy Statement
d. Coordinating the Shared Savings Program Application With the
Antitrust Agencies
D. Provision of Aggregate and Beneficiary Identifiable Data
1. Data Sharing
2. Sharing Aggregate Data
3. Identification of Historically Assigned Beneficiaries
4. Sharing Beneficiary Identifiable Claims Data
5. Giving Beneficiaries the Opportunity To Decline Data Sharing
E. Assignment of Medicare Fee-for-Service Beneficiaries
1. Definition of Primary Care Services
a. Consideration of Physician Specialties in the Assignment
Process
b. Consideration of Services Furnished by Non-Physician
Practitioners in the Assignment Process
c. Assignment of Beneficiaries to ACOs That Include FQHCs and/or
RHCs
(1) Identification of Primary Care Services Rendered in FQHCs
and RHCs
(2) Identification of the Type of Practitioner Providing the
Service in an FQHC/RHC
(3) Identification of the Physician Specialty for Services in
FQHCs and RHCs
2. Prospective vs. Retrospective Beneficiary Assignment To
Calculate Eligibility for Shared Savings
3. Majority vs. Plurality Rule for Beneficiary Assignment
F. Quality and Other Reporting Requirements
1. Introduction
2. Measures To Assess the Quality of Care Furnished by an ACO
a. General
b. Considerations in Selecting Measures
c. Quality Measures for Use in Establishing Quality Performance
Standards That ACOs Must Meet for Shared Savings
3. Requirements for Quality Measures Data Submission by ACOs
a. General
b. GPRO Web Interface
c. Certified EHR Technology
4. Quality Performance Standards
a. General
b. Performance Scoring
(1) Measure Domains and Measures Included in the Domains
(2) Methodology for Calculating a Performance Score for Each
Measure Within a Domain
(3) Methodology for Calculating a Performance Score for Each
Domain
(4) The Quality Performance Standard Level
5. Incorporation of Other Reporting Requirements Related to the
PQRS and Electronic Health Records Technology Under Section 1848 of
the Act
6. Aligning ACO Quality Measures With Other Laws and Regulations
G. Shared Savings and Losses
1. Authority for and Selection of Shared Savings/Losses Model
2. Shared Savings and Losses Determination
a. Overview of Shared Savings and Losses Determination
b. Establishing the Benchmark
c. Adjusting the Benchmark and Actual Expenditures
(1) Adjusting Benchmark and Performance Year Average Per Capita
Expenditures for Beneficiary Characteristics
(2) Technical Adjustments to the Benchmark and Performance Year
Expenditures
(a) Impact of IME and DSH
(b) Geographic and Other Payment Adjustments
(3) Trending Forward Prior Year's Experience To Obtain an
Initial Benchmark
(a) Growth Rate as a Benchmark Trending Factor
(b) National Growth Rate as a Benchmark Trending Factor
d. Updating the Benchmark During the Agreement Period
e. Determining Shared Savings
(1) Minimum Savings Rate
(a) One-Sided Model
(b) Two-Sided Model
(2) Quality Performance Sharing Rate
(3) Additional Shared Savings Payments
(4) Net Sharing Rate
(5) Performance Payment Limits
f. Calculating Sharing in Losses
(1) Minimum Loss Rate
(2) Shared Loss Rate
g. Limits on Shared Losses
h. Ensuring ACO Repayment of Shared Losses
i. Timing of Repayment
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j. Withholding Performance Payments
k. Determining First Year Performance for ACOs Beginning April 1
or July 1, 2012
(1) Interim Payment Calculation
(2) First Year Reconciliation
(3) Repayment Mechanism for ACOs Electing Interim Payment
Calculations
3. Impact on States
H. Additional Program Requirements and Beneficiary Protections
1. Background
2. Beneficiary Protections
a. Beneficiary Notification
b. ACO Marketing Guidelines
3. Program Monitoring
a. General Methods Used to Monitor ACOs
b. Monitoring Avoidance of At-Risk Beneficiaries
(1) Definition of At-Risk Beneficiaries
(2) Penalty for Avoidance of At-Risk Beneficiaries
c. Compliance With Quality Performance Standards
4. Program Integrity Requirements
a. Compliance Plans
b. Compliance With Program Requirements
c. Conflicts of Interest
d. Screening of ACO Applicants
e. Prohibition on Certain Required Referrals and Cost Shifting
f. Record Retention
g. Beneficiary Inducements
5. Terminating an ACO Agreement
a. Reasons for Termination of an ACO's Agreement
b. Corrective Action Plans
6. Reconsideration Review Process
III. Collection of Information Requirements
IV. Regulatory Impact Analysis
A. Introduction
B. Statement of Need
C. Overall Impact
D. Anticipated Effects
1. Effects on the Medicare Program
a. Assumptions and Uncertainties
b. Detailed Stochastic Modeling Results
c. Further Considerations
2. Impact on Beneficiaries
3. Impact on Providers and Suppliers
4. Impact on Small Entities
E. Alternatives Considered
F. Accounting Statement and Table
G. Conclusion
Regulations Text
Acronyms
ACO Accountable Care Organization
AHRQ Agency for Healthcare Research and Quality
BAA Business Associate Agreements
BCBSMA Blue Cross Blue Shield of Massachusetts
BIPA Benefits Improvement and Protection Act
CAD Coronary Artery Disease
CAHPS Consumer Assessment of Health Providers and Systems
CAHs Critical Access Hospitals
CBIC Competitive Bidding Implementation Contractor
CBSA Core Based Statistical Area
CHCs Community Health Centers
CHIP Children's Health Insurance Program
CMP Civil Monetary Penalties
CMS Centers for Medicare & Medicaid Services
CNM Certified Nurse Midwife
CMS-HCC CMS Hierarchal Condition Category
COPD Chronic Obstructive Pulmonary Disease
CP Certified Psychologist
CSW Clinical Social Worker
CWF Common Working File
DHHS Department of Health and Human Services
DOB Date of Birth
DOJ Department of Justice
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DSH Disproportionate Share Hospital
DUA Data use Agreement
E&M Evaluation and Management
EHR Electronic Health Record
ESRD End Stage Renal Disease
eRx Electronic Prescribing Incentive Program
FFS Fee-for-service
FQHCs Federally Qualified Health Centers
FTC Federal Trade Commission
GAO Government Accountability Office
GPCI Geographic Practice Cost Index
GPRO Group Practice Reporting Option
HAC Hospital Acquired Conditions
HCAHPS Hospital Consumer Assessment of Health care Provider and
Systems
HCC Hierarchal Condition Category
HCPCS Healthcare Common Procedure Coding System
HHAs Home Health Agencies
HICN Health Insurance Claim Number
HIPAA Heath Insurance Portability and Accountability Act of 1996
HIE Health Information Exchange
HIT Health Information Technology
HITECH Health Information Technology for Economic and Clinical
Health
HMO Health Maintenance Organization
HRSA Health Resources and Services Administration
HVBP Hospital Value Based Purchasing
IME Indirect Medical Education
IOM Institute of Medicine
IPPS Inpatient Prospective Payment System
IQR Inpatient Quality Reporting
IRS Internal Revenue Service
LTCHs Long-Term Acute Care Hospitals
MA Medicare Advantage
MAPCP Multipayer Advanced Primary Care Practice
MedPAC Medicare Payment Advisory Commission
MHCQ Medicare Health Care Quality
MMA Medicare Prescription Drug, Improvement, and Modernization Act
MS-DRGs Medicare Severity-Adjusted Diagnosis Related Groups
MSP Minimum Savings Percentage
MSR Minimum Savings Rate
NCQA National Committee for Quality Assurance
NCCCN North Carolina Community Care Network
NP Nurse Practitioner
NPI National Provider Identifier
NQF National Quality Forum
OIG Office of Inspector General
OMB Office of Management and Budget
PA Physician Assistant
PACE Program of All Inclusive Care for the Elderly
PACFs Post-Acute Care Facilities
PCMH Patient Centered Medical Home
PFS Physician Fee Schedule
PGP Physician Group Practice
PHI Protected health information
POS Point of Service
PPO Preferred provider organization
PPS Prospective Payment System
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
PRA Paperwork Reduction Act
PSA Primary Service Areas
RFI Request for Information
RHCs Rural Health Clinics
RIA Regulatory Impact Analysis
SNFs Skilled Nursing Facilities
SSA Social Security Administration
SSN Social Security Number
TIN Taxpayer Identification Number
I. Background
A. Introduction and Overview of Value-Based Purchasing
On March 23, 2010, the Patient Protection and Affordable Care Act
(Pub. L. 111-148) was enacted, followed by enactment of the Health Care
and Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30,
2010, which amended certain provisions of Public Law 111-148.
Collectively known as the Affordable Care Act, these public laws
include a number of provisions designed to improve the quality of
Medicare services, support innovation and the establishment of new
payment models, better align Medicare payments with provider costs,
strengthen program integrity within Medicare, and put Medicare on a
firmer financial footing.
Many provisions within the Affordable Care Act implement value-
based purchasing programs; section 3022 requires the Secretary to
establish the Medicare Shared Savings Program (Shared Savings Program),
intended to encourage the development of Accountable Care Organizations
(ACOs) in Medicare. The Shared Savings Program is a key component of
the Medicare delivery system reform initiatives included in the
Affordable Care Act and is a new approach to the delivery of health
care aimed at: (1) Better care for individuals; (2) better health for
populations; and (3) lower growth in Medicare Parts A and B
expenditures. We refer to this approach throughout this final rule as
the three-part aim.
Value-based purchasing is a concept that links payment directly to
the quality of care provided and is a strategy that can help transform
the current payment system by rewarding providers for delivering high
quality, efficient clinical care. In the April 7, 2011 Federal Register
(76 FR 19528), we published the Shared Savings Program proposed rule.
In the proposed rule, we
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discussed our experience implementing value based purchasing concepts.
In addition to improving quality, value-based purchasing initiatives
seek to reduce growth in health care expenditures.
We view value-based purchasing as an important step to revamping
how care and services are paid for, moving increasingly toward
rewarding better value, outcomes, and innovations instead of merely
increased volume. For a complete discussion, including our goals in
implementing value-based purchasing initiatives, please refer to
section I.A. of the proposed rule (76 FR 19530).
B. Statutory Basis for the Medicare Shared Savings Program
Section 3022 of the Affordable Care Act amended Title XVIII of the
Social Security Act (the Act) (42 U.S.C. 1395 et seq.) by adding new
section 1899 to the Act to establish a Shared Savings Program that
promotes accountability for a patient population, 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. A detailed summary of the provisions within
section 3022 of the Affordable Care Act is in section I.B. of the
proposed rule (see 76 FR 19531).
C. Overview of the Medicare Shared Savings Program
The intent of the Shared Savings Program is to promote
accountability for a population of Medicare beneficiaries, improve the
coordination of FFS items and services, encourage investment in
infrastructure and redesigned care processes for high quality and
efficient service delivery, and incent higher value care. As an
incentive to ACOs that successfully meet quality and savings
requirements, the Medicare Program can share a percentage of the
achieved savings with the ACO. Under the Shared Savings Program, ACOs
will only share in savings if they meet both the quality performance
standards and generate shareable savings. In order to fulfill the
intent of the Shared Savings Program as established by the Affordable
Care Act, we stated in the proposed rule that we will focus on
achieving the three-part aim consisting of: (1) Better care for
individuals; (2) better health for populations; and (3) lower growth in
expenditures.
In developing the Shared Savings Program, and in response to
stakeholder suggestions, we have worked very closely with agencies
across the Federal government to develop policies to encourage
participation and ensure a coordinated and aligned inter- and intra-
agency program implementation. The result of this effort is the release
of several documents that potential participants are strongly
encouraged to review. These documents are described in more detail in
section II.C.5. of this final rule, and include: (1) A joint CMS and
DHHS OIG interim final rule with comment period published elsewhere in
this issue of the Federal Register entitled Medicare Program; Final
Waivers in Connection With the Shared Savings Program; (2) IRS Notice
2011-20 and other applicable IRS guidance viewable on www.irs.gov; and
(3) a Statement of Antitrust Enforcement Policy Regarding Accountable
Care Organizations Participating in the Shared Savings Program issued
by the FTC and DOJ (collectively, the Antitrust Agencies).
In this final rule we have made significant modifications to reduce
burden and cost for participating ACOs. These modifications include:
(1) Greater flexibility in eligibility to participate in the Shared
Savings Program; (2) multiple start dates in 2012; (3) establishment of
a longer agreement period for those starting in 2012; (4) greater
flexibility in the governance and legal structure of an ACO; (5)
simpler and more streamlined quality performance standards; (6)
adjustments to the financial model to increase financial incentives to
participate; (7) increased sharing caps; (8) no down-side risk and
first-dollar sharing in Track 1; (9) removal of the 25 percent withhold
of shared savings; (10) greater flexibility in timing for the
evaluation of sharing savings (claims run-out reduced to 3 months);
(11) greater flexibility in antitrust review; and (12) greater
flexibility in timing for repayment of losses; and (13) additional
options for participation of FQHCs and RHCs.
D. Public Comments Received on the Proposed Rule
We received approximately 1,320 public comments on the April 7,
2011 proposed rule (76 FR 19528). These public comments addressed
issues on multiple topics and here, rather than throughout the
regulation, we extend our great appreciation for the input. We received
some comments that were outside the scope of the proposed rule and
therefore not addressed in this final rule (for example, suggested
changes to the physician fee schedule, or suggestions on other
Affordable Care Act provisions). Summaries of the public comments that
are within the scope of the proposals and our responses to those
comments are set forth in the various sections of this final rule under
the appropriate headings. In this final rule, we have organized the
document by presenting our proposals, summarizing and responding to the
public comment for the proposal(s), and describing our final policy.
Comment: We received comments expressing support for the proposed
design of the Shared Savings Program, as well as comments disagreeing
with it. Those in disagreement generally found the proposed
requirements to be too prescriptive and burdensome. Other commenters
expressed their disagreement with a program they perceive as limiting
access to necessary care.
Response: We appreciate all the feedback we received. We have been
encouraged by the level of engagement by stakeholders in this
rulemaking process. We thank all of the commenters for helping us
develop the Shared Savings Program. Where possible we have tried to
reduce or eliminate prescriptive or burdensome requirements that could
discourage participation in the Shared Savings Program. We have also
been vigilant in protecting the rights and benefits of FFS
beneficiaries under traditional Medicare to maintain the same access to
care and freedom of choice that existed prior to the implementation of
this program. These provisions can be found throughout this final rule.
Comment: Two commenters encouraged CMS to make the PGP
demonstration a national program. In contrast, a few commenters stated
concern about insufficient testing of the Shared Savings Program as a
demonstration program prior to this final rule. The commenters
acknowledged the PGP demonstration as the precursor, but stated that
our proposals deviated too far from the PGP demonstration. One
commenter noted the PGP demonstration consisted of large health
organizations that had access to $1.75 million in capital and while
half of the participants shared in savings, none had a complete return
on their investment. They suggested that CMS continue to create
demonstration projects for shared savings initiatives and delay the
implementation of the Shared Savings Program. One commenter suggested
phasing in the program. Specifically, the commenter suggested that we
start small and periodically assess the program's requirements to
determine which policies promote success and which create barriers.
Response: The Shared Savings Program adopts many of the program
aspects of the PGP demonstration, but some adjustments were necessary
in
[[Page 67805]]
order to create a national program. We removed a few of the proposed
deviations from the PGP demonstration from this final rule. For
example, under the policies we are implementing in this final rule,
Shared Savings Program participants may choose to enter a ``shared
savings'' only track that will not require repayment of losses. The
statute does not authorize us to delay the establishment of the Shared
Savings Program. But, it is important to note that the Shared Savings
Program is a voluntary program. Organizations that are not ready to
participate can begin the transition towards a more coordinated
delivery system, incorporating policies that promote success for the
early participants and join the program at such time as they are ready.
Additionally, the Innovation Center will continue to test program
models that may influence policies adopted for future agreement periods
for the Shared Savings Program. We intend to assess the policies for
the Innovation Center's models and the Shared Savings Program to
determine how well they are working and if there are any modifications
that would enhance them.
Comment: One commenter expressed concern that we appeared to be
limiting participation in the Shared Savings Program to 5 million
beneficiaries and 100 to 200 ACOs.
Response: We assume this commenter was referring to the Regulatory
Impact Analysis section of our proposed rule where our Office of the
Actuary estimated that up to 5 million beneficiaries would receive care
from providers participating in ACOs. That figure was an estimate based
on the proposed program requirements and the anticipated level of
interest and participation of providers based on the requirements.
After making programmatic changes based on commenter feedback, we
believe the policies implemented in this final rule will be more
attractive to participants and have a positive impact on those
estimates. Please note that as a voluntary national program, any and
all groups of providers and suppliers that meet the eligibility
criteria outlined in this final rule are invited to participate.
Comment: Many commenters requested CMS issue an interim final rule,
rather than a final rule, in order to have flexibility to modify the
proposals in the proposed rule. One commenter suggested the 60-day
comment period did not provide enough time to analyze and comment on
the proposed rule given the volume and complexity of the specific
proposals as related to tribal health organizations and other public
health providers.
Response: In the proposed rule, we not only outlined our proposals
for implementing the Shared Savings Program, but also provided detailed
information on other alternatives we had considered and we sought
comment on both our proposed policies and the other alternatives. The
public comments submitted in response to the proposed rule have
provided us with additional information and background regarding not
only our proposed policies, but also the alternatives we considered. In
response to the public comments, we have made significant changes to a
number of our proposed policies. Nevertheless, we believe the policies
in this final rule remain consistent with the overall framework for the
program initially laid out in the proposed rule. As a result, we do not
believe that there is any benefit to publishing this rule as an interim
final rule rather than a final rule. We also believe 60 days
represented a sufficient amount of time for interested parties to
submit their comments on the proposed rule. We received many detailed
comments in response to the proposed rule within the 60-day comment
period. We also note that a 60-day comment period is consistent with
the requirements of section 1871(b)(1) of the Act and is the standard
timeframe used for many of our proposed rules.
Comment: Many commenters were concerned that the Shared Savings
Program has similar characteristics to some forms of managed care where
it is possible to achieve savings through inappropriate reductions in
patient care. Some commenters, for example, asserted that the Shared
Savings Program is a capitated model that is not in the best interest
of patients. Other commenters, such as beneficiaries and beneficiary
advocates, indicated that beneficiaries should retain their right to
see any doctor of their choosing. We also received comments expressing
concern that, as with some managed care approaches, the Shared Savings
program essentially transfers the locus of responsibility for health
care away from the patient, which is not as effective as more consumer-
driven approaches. Another commenter expressed concern that assignment
of beneficiaries to an ACO participating in the Shared Savings Program
indicates that the program is a new version of managed care. One
commenter suggested using the current Medicare Advantage (MA) structure
to serve as the foundation of the Shared Savings Program. The commenter
argued that MA plans are better suited to take on risk and provide care
that meets many of the goals of the Shared Savings Program, and
allowing these entities to participate will enable the program to reach
a larger population. Additionally, a commenter requested information on
why CMS is creating new policies for compliance, marketing and
ownership instead of using policies already in place by MA plans. A few
commenters claimed other countries tried this model and failed.
Response: It is important to note that the Shared Savings Program
is not a managed care program. Medicare FFS beneficiaries retain all
rights and benefits under traditional Medicare. Medicare FFS
beneficiaries retain the right to see any physician of their choosing,
and they do not enroll in the Shared Savings Program. Unlike managed
care settings, the Shared Savings Program ``assignment'' methodology in
no way implies a lock in or enrollment process. To the contrary, it is
a process based exclusively on an assessment of where and from whom FFS
beneficiaries have chosen to receive care during the course of each
performance period. The program is also not a capitated model;
providers and suppliers continue to bill and receive FFS payments
rather than receiving lump sum payments based upon the number of
assigned beneficiaries. The design of the Shared Savings Program places
the patient at the center. It encourages physicians, through the
eligibility requirements, to include their patients in decision making
about their health care. While we frequently relied on our experience
in other Medicare programs, including MA, to help develop program
requirements for the Shared Savings Program, there are often times when
the requirements deviate precisely because the intent of this program
is not to recreate MA. Unlike MA, this program's design retains FFS
flexibility and freedom of choice available under Medicare Parts A and
B which necessitates different program requirements. Lastly, in order
for an ACO to share in savings the ACO must meet quality standards and
program requirements that we will be monitoring. We will monitor the
ACO's compliance with these requirements, as described in section II.H.
of this final rule, with a special focus on ACOs that attempt to avoid
at-risk patients. The purpose of the Shared Savings Program is to
achieve savings through improvements in the coordination and quality of
care, and not through avoiding certain beneficiaries or placing limits
on beneficiary access to needed care.
[[Page 67806]]
Comment: One commenter suggested CMS provide funding to Regional
Health Improvement Collaboratives to assist in educating Medicare
beneficiaries about the program and to help enable the collection and
reporting of data on patient experience. In addition, one commenter
recommended the creation of a national surveillance database during
ACOs implementation to guide osteoporosis prevention, intervention and
treatment efforts. The commenter suggested that a national database
would help reduce mortality and costs associated with preventable hip
fractures due to osteoporosis.
Response: Both are excellent suggestions. Unfortunately, we are not
in a position to implement these recommendations for this program at
this time. The comment suggesting funding for Regional Health
Improvement Collaboratives is beyond the scope of the proposed rule. We
note, however, that the Innovation Center is currently accepting
innovative solutions aimed at improving care delivery at their Web
site, Innovations.cms.gov.
Comment: One commenter suggested CMS address the comments received
from the November 17, 2010 RFI.
Response: In the proposed rule, we summarized many of the comments
we received in response to the RFI, and these comments informed many of
the policy choices made in the proposed rule. In addition, the RFI
comments are publicly available at regulations.gov. Accordingly, we
will not be addressing the entirety of those comments in this final
rule; however any RFI comments we determined pertinent to this final
rule may appear.
Comment: One commenter expressed concern over CMS' example of
reducing unnecessary hospital visits as one way that ACOs could improve
care. The commenter explained that the excess revenue created by
additional ER visits helps to sustain other services provided by a
hospital that may not bring in as much revenue. The commenter concluded
the reduction in visits would eventually lead to the closure of many
small rural hospitals. A similar comment stated that encouraging
coordination and reducing fragmented care will reduce hospital
reimbursements.
Response: The focus of the Shared Savings Program is to provide
coordinated care to Medicare FFS beneficiaries. The program aims to
provide higher quality care across the continuum of care; this may
include additional office visits, as opposed to ER visits, for patients
who do not require emergency services. Cost shifting is of great
concern to us both within the Shared Savings Program and outside of the
program. We believe it is in the patient's best interest to receive
care in the proper setting and to receive emergency services only in
times of emergency. Incurring costs for unnecessary care, or care
provided in an inappropriate care setting, can be harmful to
beneficiaries and payers alike. For more information about cost
shifting related to the Shared Savings Program refer to section II.H.4.
of this final rule.
E. Reorganization of the Regulations Text
We have revised the proposed regulations text to reflect the final
policies adopted in this final rule. We have also made significant
revisions to the structure and organization of the regulations text in
order to correspond more closely with the organization of the preamble
to this final rule and to make it easier to locate specific provisions
within the regulations text.
II. Provisions of the Proposed Rule, Summary of and Responses to Public
Comments, and the Provisions of the Final Rule
A. Definitions
For purposes of the proposed rule, we defined three terms used
throughout the discussion: Accountable care organization (ACO), ACO
participant, and ACO provider/supplier. We encourage the reader to
review these definitions in Sec. 425.20. We incorporated comments on
these definitions into the discussion that follows.
B. Eligibility and Governance
1. General Requirements
a. Accountability for Beneficiaries
Section 1899(b)(2)(A) of the Act requires participating ACOs to
``be willing to become accountable for the quality, cost, and overall
care of the Medicare fee-for-service beneficiaries assigned to it.'' To
satisfy this requirement, we proposed that an ACO executive who has the
authority to bind the ACO must certify to the best of his or her
knowledge, information, and belief that the ACO participants are
willing to become accountable for, and to report to us on, the quality,
cost, and overall care of the Medicare FFS beneficiaries assigned to
the ACO. We further proposed that this certification would be included
as part of the ACO's application and participation agreement.
Comment: A commenter suggested that providers should not be held
liable for unmanageable patients and/or those patients that refuse
treatment altogether. Other commenters recommended that we not hold an
ACO accountable for those patients who choose to decline to have CMS
share their claims data with the ACO. Another commenter suggested that
CMS require ACOs to state specifically in their applications the
processes used to assure that Medicare patients have access to
relatively costly but medically necessary procedures, such as
transplantation.
Response: In order to retain beneficiary freedom of choice under
traditional FFS Medicare, the basis for beneficiary assignment to ACOs
is where, and from whom, they choose to receive a plurality of their
primary care services during the performance year. ACOs must be willing
to become accountable for total quality, cost, and overall care of
these Medicare FFS beneficiaries. An ACO will not receive an assignment
of those beneficiaries that choose not to receive care from ACO
providers. Beneficiaries who choose to receive care from ACO providers,
regardless of whether they are ``unmanageable'' or noncompliant with
treatment recommendations may become part of the ACO's assigned
population. Since patient-centeredness is an integral part of this
program, we believe such beneficiaries represent an excellent
opportunity for ACOs to create, implement, and improve upon patient-
centered processes that improve patient engagement. We note that
avoidance of such beneficiaries, as described in more detail in section
II.H.3. of this final rule, will result in termination of an ACO's
participation agreement. Similarly, in the interest of beneficiary
engagement and transparency, we believe it is important to provide
beneficiaries with an opportunity to decline data sharing. As discussed
in greater detail in section II.B.4. of this final rule, a process for
beneficiaries to decline data sharing provides an opportunity for ACOs
to explain to patients how access to their personal health information
will help the ACO improve the quality of its care. We believe that
requiring an ACO executive who has the authority to bind the ACO to
certify to the best of his or her knowledge, information, and belief
that the ACO participants are willing to become accountable for, and to
report to us on, the quality, cost, and overall care of the Medicare
FFS beneficiaries assigned to the ACO provides sufficient assurance
that the ACO will be accountable for its assigned beneficiaries. By
allowing ACOs to determine how they will satisfy this requirement, we
will afford ACOs the flexibility needed to demonstrate their
[[Page 67807]]
commitment to beneficiary accountability in a manner which is most
suited to their own ACO model.
Final Decision: We are finalizing our policy regarding
certification of accountability for beneficiaries described in (76 FR
19544) as proposed without change (Sec. 425.100 and 425.204).
b. Agreement Requirement
Section 1899(b)(2)(B) of the Act requires participating ACOs to
``enter into an agreement with the Secretary to participate in the
program for not less than a 3-year period * * *.'' For the first round
of the Shared Savings Program, we proposed to limit participation
agreements to a 3-year period. We sought comments on this proposal
regarding the initial consideration of a longer agreement period.
If the ACO is approved for participation, we proposed that an
authorized executive--specifically, an executive who has the ability to
bind the ACO must certify to the best of his or her knowledge,
information, and belief that its ACO participants and its ACO
providers/suppliers agree to the requirements set forth in the
agreement between the ACO and us, and sign a participation agreement
and submit the signed agreement to us. We proposed that the
participation agreement would also include an acknowledgment that all
contracts or arrangements between or among the ACO, ACO participants,
ACO providers/suppliers, and other entities furnishing services related
to ACO activities would require compliance with the ACO's obligations
under the agreement. Additionally, we expressed our intention that all
ACOs, ACO participants, and ACO providers/suppliers Shared Savings
Program would be subject to the requirements of the agreement between
the ACO and CMS and that all certifications submitted on behalf of the
ACO in connection with the Shared Savings Program application,
agreement, shared savings distribution or otherwise extend to all
parties with obligations to which the particular certification applies.
An authorized executive of the ACO would sign the participation
agreement after its approval for participation. Finally, we proposed
that the ACO would be responsible for providing a copy of the agreement
to its ACO participants and ACO providers/suppliers. We solicited
comment on this proposal, including any additional measures or
alternative means that we should consider to fulfill this requirement.
Comment: Commenters requested that CMS define the term authorized
executive when stating that an authorized executive of the ACO must
sign the participation agreement.
Response: As we stated in the proposed rule, an authorized
executive is an executive of the ACO who has the ability to bind the
ACO to comply with all of the requirements for participation in the
Shared Savings Program.
Final Decision: We are finalizing this proposal regarding
agreements as described previously under Sec. 425.208 and Sec.
425.210.
Further, as described in Sec. 425.200, the ACO's agreement period
will be for not less than 3 years, consistent with statute, although
some agreement periods may be longer than 3 years.
c. Sufficient Number of Primary Care Providers and Beneficiaries
Section 1899(b)(2)(D) of the Act requires participating ACOs to
``include primary care ACO professionals that are sufficient for the
number of Medicare FFS beneficiaries assigned to the ACO * * *'' and
that at a minimum, ``the ACO shall have at least 5,000 such
beneficiaries assigned to it * * *.'' Physician patient panels can vary
widely in the number of FFS Medicare beneficiaries served. In section
II.E. of this final rule, we discuss our assignment methodology and how
its use in the assignment of beneficiaries during the baseline years in
order to establish a historical per capita cost benchmark against which
the ACO's evaluation during each year of the agreement period would
take place. In the proposed rule, we stated we believed it would be
reasonable to assume that if by using this assignment algorithm the ACO
demonstrates a sufficient number of beneficiaries to fulfill this
eligibility requirement for purposes of establishing a benchmark, then
the ACO would also demonstrate that it contains a sufficient number of
primary care professionals to provide care to these beneficiaries. We
stated we believed it was also reasonable to assume the ACO would
continue to approximate this number of beneficiaries in each year of
the agreement period. Thus, we proposed that for purposes of
eligibility under section 1899(b)(2)(D) of the Act, an ACO would be
determined to have a sufficient number of primary care ACO
professionals to serve the number of Medicare beneficiaries assigned to
it if the number of beneficiaries historically assigned over the 3-year
benchmarking period using the ACO participant TINs exceeds the 5,000
threshold for each year. We solicited comment on this proposal as well
as any additional guidance to consider for meeting these requirements.
We recognize that while an ACO could meet the requirements in
section 1899(b)(2) of the Act when it applies to participate in the
Shared Savings Program, circumstances may change during the course of
the agreement period. We discussed the importance of maintaining at
least 5,000 assigned beneficiaries with respect to both eligibility of
the ACO to participate in the program and the statistical stability for
purposes of calculating per capita expenditures and assessing quality
performance. Therefore, we considered what action, if any, should be
taken in the event the number of beneficiaries assigned to the ACO
falls below 5,000 in a given performance year. Specifically, we
considered whether an ACO's participation in the program should be
terminated or its eligibility for shared savings be deferred if the
number of beneficiaries drops below 5,000. We considered several
options including immediate termination, termination following a CAP,
scaling shared savings payments to reflect the population change, or
taking no action against the ACO. After weighting all these options, we
concluded that a reasonable compromise would balance the statutory
requirements and program incentives, while still recognizing expected
variations in an ACO's assigned population. Thus, if an ACO's assigned
population falls below 5,000 during the course of the agreement period,
we proposed to issue a warning and place the ACO on a corrective action
plan (CAP). For the performance year for which we issued the warning to
the ACO, we proposed that the ACO would remain eligible for shared
savings. We further proposed termination of the ACO's participation
agreement if the ACO failed to meet the eligibility criterion of having
more than 5,000 beneficiaries by the completion of the next performance
year. The ACO would not be eligible to share in savings for that year.
We also reserved the right to review the status of the ACO while on the
corrective action plan and terminate the agreement on the basis that
the ACO no longer meets eligibility requirements. We requested comment
on this proposal and on other potential options for addressing
situations where the assigned beneficiary population falls below 5,000
during the course of an agreement period.
Comment: Commenters generally agreed that an ACO must have a strong
primary care foundation with a sufficient number of providers to meet
the needs of the population it serves. Additionally, commenters
suggested
[[Page 67808]]
that there must be strong collaboration among multidisciplinary team
members to ensure care coordination and patient centered care.
Some commenters recommended that ACOs should be required to
demonstrate sufficiency in the number, type, and location of providers
available to provide care to the beneficiaries. Other commenters noted
that the proposed rule did not mention any requirement that the ACO
demonstrate sufficiency in the number, type and location of all
providers available to provide multi-disciplinary care to the
beneficiaries.
Some commenters recommended that the minimum threshold of
beneficiaries be increased to as high as 20,000 beneficiaries to reduce
uncertainties in achieving program goals while other commenters
believed that the 5,000 beneficiary threshold will preclude smaller and
rural entities from participating in the Shared Savings Program as
forfeiture of any shared savings and termination in the year following
the corrective action plan would be too financially risky when the
initial start up costs are taken into account.
One commenter suggested that rather than maintain a strict 5,000
beneficiary threshold requirement, we should provide leeway to ACOs to
allow for a 10 percent variation from the beneficiary minimum
threshold.
Response: Congress established the 5,000 beneficiary requirement
under section 1899(b)(2)(D) of the Act. A minimum threshold is
important with respect to both the eligibility of the ACO to
participate in the program and to the statistical stability for
purposes of calculating per capita expenditures and assessing quality
performance as described in section II.D. of this final rule. However,
the expanded assignment methodology discussed in section II.E. of this
final rule should allow more beneficiaries to be assigned to those ACOs
that might have initially been ``too close'' to the threshold,
increasing the ability for smaller ACOs to participate. We do not
believe this warrants an increase in the threshold number of assigned
beneficiaries as that could prohibit the formation of ACOs in both
smaller and rural health care markets, and possibly considered contrary
to statutory intent. Additionally, the expanded assignment methodology
discussed in section II.E. of this final rule should allow the
assignment of more beneficiaries which should make the additional
flexibility offered by allowing for a 10 percent variation in the
assigned population unnecessary.
We do not believe that we should be prescriptive in setting any
requirements for the number, type, and location of the providers/
suppliers that are included as ACO participants. Unlike managed care
models that lock in beneficiaries to a network of providers,
beneficiaries assigned to an ACO may receive care from providers and
suppliers both inside and outside the ACO. ACOs represent a new model
for the care of FFS beneficiaries and for practitioners to focus on
coordination of care efforts. During the initial implementation of the
Shared Savings Program, we believe that potential ACOs should have the
flexibility to create an organization and design their models in a
manner they believe will achieve the three-part aim without instituting
specific requirements.
Final Decision: We are finalizing our proposals without change
(Sec. 425.110).
d. Identification and Required Reporting on Participating ACO
Professionals
Section 1899(b)(2)(E) of the Act requires ACOs to ``provide the
Secretary with such information regarding ACO professionals
participating in the ACO as the Secretary determines necessary to
support the assignment of Medicare fee-for-service beneficiaries to an
ACO, the implementation of quality and other reporting requirements * *
*, and the determination of payments for shared savings * * *.'' As
discussed in this section of the final rule, we are defining an ACO
operationally as a legal entity that is comprised of a group of ACO
participants as defined in Sec. 425.20.
Based on our experience, we recognized that the TIN level data
alone would not be entirely sufficient for a number of purposes in the
Shared Savings Program. In particular, National Provider Identifier
(NPI) data would be useful to assess the quality of care furnished by
an ACO. For example, NPI information would be necessary to determine
the percentage of registered HITECH physicians and other practitioners
in the ACO (discussed in section II.F. of this final rule). NPI data
would also be helpful in our monitoring of ACO activities (which we
discuss in section II.H. of this final rule). Therefore, we proposed to
require that organizations applying to be an ACO must provide not only
their TINs but also a list of associated NPIs for all ACO
professionals, including a list that separately identifies physicians
that provide primary care.
We proposed that the ACO maintain, update, and annually report to
us the TINs of its ACO participants and the NPIs associated with the
ACO providers/suppliers. We believe that requiring this information
offers the level of transparency needed to implement the Shared Savings
Program. We welcomed comments on our proposal to require reporting of
TINs along with information about the NPIs associated with the ACO.
Additionally, as we discussed in the proposed rule, the first step
in developing a method for identifying an ACO, ACO participants, and
ACO providers/suppliers is to establish a clear operational method of
identifying an ACO that correctly associates its health care
professionals and providers with the ACO. The operational
identification is critical for implementation of the program and for
determining, for example, benchmarking, assignment of beneficiaries,
and other functions. Section 1899(a)(1)(A) of the Act defines ACOs as
``groups of providers of services and suppliers'' who work together to
manage and coordinate care for Medicare FFS beneficiaries. More
specifically, the Act refers to group practice arrangements, networks
of individual practices of ACO professionals, partnerships or joint
venture arrangements between hospitals and ACO professionals, hospitals
employing ACO professionals, or other combinations that the Secretary
determines appropriate.
We proposed to identify an ACO operationally as a collection of
Medicare enrolled TINs, defined as ACO participants. More specifically,
we proposed an ACO would be identified operationally as a set of one or
more ACO participants currently practicing as a ``group practice
arrangement'' or in a ``network'' such as where ``hospitals are
employing ACO professionals'' or where there are ``partnerships or
joint ventures of hospitals and ACO professionals'' as stated under
section 1899(b)(1)(A) through (E) of the Act. For example, Shared
Savings Programs TIN would identify a single group practice that
participates in the Shared Savings Program. The set of TINs of the
practices would identify a network of independent practices that forms
an ACO. We proposed to require that organizations applying to be an ACO
provide their ACO participant Medicare enrolled TINs and NPIs. We can
systematically link each TIN or NPI to an individual physician
specialty code.
We also proposed that ACO participants on whom beneficiary
assignment is based, would be exclusive to one ACO agreement in the
Shared Savings Program. Under our proposal, this exclusivity would only
apply to ACO participants who bill Medicare for the services rendered
by primary care
[[Page 67809]]
physicians (defined as physicians with a designation of internal
medicine, geriatric medicine, family practice and general practice, as
discussed later in this final rule).
However, we acknowledged the importance of competition in the
marketplace to improving quality of care, protecting access to care for
Medicare beneficiaries, and preventing fraud and abuse. Therefore,
under our proposal, ACO participants upon which beneficiary assignment
was not dependent (for example, acute care hospitals, surgical and
medical specialties, RHCs, and FQHCs) would be required to agree to
participate in the Medicare ACO for the term of the agreement, but
would not be restricted to participation in a single ACO.
Comment: Several commenters recommended that CMS maintain the list
of TINs and NPIs. Additionally, some commenters recommended that CMS
allow ACOs to verify any data reported in association with the ACO
prior to these data being made public.
Response: Section 1899(b)(2)(E) of the Act requires ACOs to
``provide the Secretary with such information regarding ACO
professionals participating in the ACO as the Secretary determines
necessary to support the assignment of Medicare fee-for-service
beneficiaries to an ACO, the implementation of quality and other
reporting requirements * * *, and the determination of payments for
shared savings * * *.'' As discussed previously, we will need both the
TINs of all ACO participants and the NPIs associated with ACO
providers/suppliers in order to assign beneficiaries to ACOs
appropriately and accurately. Because section 1899(b)(2)(E) of the Act
requires ACOs to provide us with the information we determine is
necessary to support assignment, we believe it is consistent with this
statutory requirement to require that ACOs maintain, update, and
annually report to us those TINs and NPIs that are participants of
their respective ACO. Since ACOs will be maintaining, updating, and
annually reporting these TINs and NPIs to us, they will have ultimate
review capabilities and it will not be necessary for us to provide them
an additional opportunity to verify the names of ACO participants and
ACO providers/suppliers before making this information available to the
public. We note that, in order to ensure the accurate identification of
any ACO, its participants, and its providers/suppliers, we may request
additional information (for example, CMS Certification Numbers, mailing
addresses, etc.) in the application process. We will identify any such
additional information in the application materials.
Comment: One commenter stated that our assessment of billing
practices was incorrect because ``beginning on May 23, 2008, all health
care providers, including those enrolled in the Medicare and Medicaid
program, are required by the NPI Final Rule published on January 23,
2004, to submit claims using their NPI'' but also notes that physicians
participating in the Medicare program must enroll using their NPI and
if they are billing through a group practice reassign their benefits to
the group practice.
Response: It is true that individuals and group practices must
enroll in the Medicare program under unique NPIs. It is also true that
NPIs (whether for an individual practitioner or a group practice for
reassigned benefits) must be included on bills to the Medicare program.
However, bills to the Medicare program must also include the TIN of the
billing practitioner or group practice. As we stated in the proposed
rule, not all physicians and practitioners have Medicare enrolled TINs.
In the case of individual practitioners, however, their SSN may be
their TIN. While providers are required to have an NPI for
identification and to include the NPI in billing, billing is always
through a TIN, whether that is an EIN or a SSN. We successfully
employed TINs in the PGP demonstration for purposes of identifying the
participating organizations, and the rules cited by the commenters did
not pose any obstacle to doing so. We believe that we can operationally
proceed on the same basis under the Shared Savings Program.
Comment: Some commenters supported the proposal to use TINs as an
organizing concept for ACOs. These commenters observed, for example,
that this policy was consistent with the beginning of the PGP
demonstration, under which the assignment of Medicare beneficiaries
would start with the TIN of the organization providing the plurality of
the visits with further assignment to a primary care provider. However,
a number of other commenters requested that we reevaluate the proposal
to employ TINs for identification of ACOs and assignment purposes. Some
of these commenters suggested that the use of NPIs would recognize the
realities of diverse systems, provide greater flexibility, and allow
systems to designate those portions of the system which can most
appropriately constitute an ACO. Other commenters similarly endorsed
the use of NPIs as providing greater flexibility and more precision in
identifying ACOs and assigning beneficiaries. One observed that using
NPIs would also allow CMS and ACOs to track saving and quality
improvements achieved by individual practitioners, as well as afford
greater flexibility for systems to expand an ACO gradually to
incorporate practitioners and components of the system.
Response: We are finalizing our proposal to define the ACO
operationally by its Medicare enrolled ACO participants' TINs. Using
TINs provides a direct link between the beneficiary and the
practitioner(s) providing the services for purposes of beneficiary
assignment. Using TINs also makes it possible for us to take advantage
of infrastructure and methodologies already developed for group-level
reporting and evaluation. We believe this option affords us the most
flexibility and statistical stability for monitoring and evaluating
quality and outcomes for the population of beneficiaries assigned to
the ACO. In contrast, adopting NPIs would create much greater
operational complexity because individual NPIs move much more
frequently between different organizations and practices. TINs are much
more stable, and thus provide much greater precision in identifying
ACOs. Furthermore, identifying through TINs avoids the necessity of
making the NPIs upon which assignment is based exclusive to one ACO,
thus allowing these NPIs (although not TINs) to participate in more
than one ACO.
Comment: Several commenters requested clarification about the use
of TINs in identifying ACOs and assigning beneficiaries. Some inquired
about the establishment of parameters of an ACO across a large health
system with diverse and sometimes geographically remote components.
Some of these commenters noted that large systems often employ a single
TIN, so that the use of TINs for identification purposes would require
inclusion of all the members of the system in a single ACO, even if
these members are geographically remote from each other and otherwise
diverse. One observed: ``Such remote entities may have a limited
opportunity to participate in care coordination, and may in fact be
better suited to participate in another more local ACO.'' A large
clinic similarly observed that ``the use of TINs could pose a problem
for large health systems.'' The owner of outpatient rehabilitation
clinics in several States inquired how it would choose a single ACO in
which to participate in order to serve the needs of patients in
multiple States. Another asked whether it is permissible for some
members of a
[[Page 67810]]
group practice to participate in the Shared Savings Program while
others do not, adding their ``strong belief'' that participation in an
ACO of some but not all providers in a group ``must be allowed.''
Another asked ``how CMS will account for the alignment of the
beneficiary, signed up/enrolled with the PCP if the NP or PA saw the
patient and billed using their individual NPI (which is linked to the
``PCP' physician's Tax ID), but the credit is not being assigned to the
PCP physician because s/he isn't billing for the services. This could
create a big gap and problem in the allocation process.'' Another
commenter asked how the program would handle the situation in which a
healthcare system has multiple TINs.
Response: We proposed to define an ACO operationally as a
collection of Medicare enrolled TINs (that is, ACO participants).
Therefore, in cases in which a healthcare system has multiple TINs, the
collection of the system's TINs precisely identifies the ACO which
consists of that health system. We understand the commenters' interest
in the greater flexibility of, for example, including only parts of a
large system with one TIN in an ACO. However, some level of exclusivity
is necessary in order for the assignment process to function correctly,
and especially to ensure the accurate assignment of beneficiaries to
one and only one ACO. Use of TINs rather than NPIs provides the
greatest degree of flexibility consistent with this requirement.
Therefore, we are unable to allow, for example, a large health system
with one TIN to include only parts of the system in an ACO. Systems
that extend over several States can similarly choose more than one ACO
for parts of their system only if they have multiple TINs. In order for
a beneficiary to be assigned to an ACO in which his or her primary care
physician is participating, the physician would have to bill for
primary care services furnished to the beneficiary under a TIN included
in that ACO.
Comment: Many commenters objected to the exclusivity of primary
care physicians on the grounds that that such exclusivity could be
disruptive of their current practice patterns, which may involve the
assignment of patients to a number of ACOs. Some objected that the
proposed lock in was unfair.
Another commenter complained that we did not sufficiently address
the reasons for the lock in. Some commenters suggested methods to avoid
the potential confusions that could occur in assigning beneficiary
without our proposed lock in. For example, one commenter observed
potential avoidance of this problem by creating incentives (for
example, no deductibles and reduced co-insurance for primary care
physician services) for patients to prospectively identify a primary
care physician in an ACO. The commenter maintained that patients need
to be accountable as well as the participating physicians and
providers. Furthermore, the commenter contended that identification of
a primary care physician does not have to limit patient choice in any
way, but simply provides an alternative method for identifying the
population of patients for which the ACO is responsible while getting
more engaged patients to think about having a usual source of care.
Alternatively, the commenter recommended that CMS should prospectively
allow patients to choose their own Medicare ACO. This would relieve CMS
from the proposed and flawed beneficiary attribution method that
currently limits primary care physicians to participate in only one
Medicare ACO.
Several other commenters opposed the lock in but suggested that, if
we retain it, the final rule should--
Permit primary care physicians to elect consideration as
specialists without taking into account their evaluation and management
services for the purpose of aligning beneficiaries with an ACO;
Permit specialists to elect to be treated as primary care
physicians whose evaluation and management services will be considered
for beneficiary alignment; and
Permit primary care physicians to participate in ACOs on
an individual basis, rather than through their group practice entities
or employers.
In either case, the final rule should encourage providers to work
collaboratively to achieve savings and enhance care by allowing ACOs to
arrange for medical services using contracted providers.
Another commenter requested that we revisit this requirement and
provide additional flexibility so that primary care providers could
join more than one ACO or switch ACOs on an annual basis. Commenters
suggested alternative assignment strategies that would allow
participation in more than one ACO such as default assignment to
practitioners who are only in one ACO or having practitioners assign
patients to a particular ACO based on patient needs. Some commenters
also argued for adopting a policy of voluntary beneficiary enrollment
in an ACO, arguing in part that this policy would allow us to abandon
the proposal restricting primary care physicians to participation in
one ACO, which we proposed to prevent uncertainty in the assignment
process. Other commenters specifically requested that rural physicians
and ambulance providers be able to participate in multiple ACOs.
Response: We regret that some of the language in the preamble about
the exclusivity of ACO participants (defined by the Medicare-enrolled
billing TIN) created unnecessary confusion about the proposal. The
point of our proposal was that, for us to appropriately evaluate ACO
performance, we must evaluate performance based on a patient population
unique to the ACO. Therefore, some ACO participants, specifically those
that bill for the primary care services on which we proposed to base
assignment, would have to be exclusive to an ACO, for the purpose of
Medicare beneficiary assignment, for the duration of an agreement
period. In the absence of such exclusivity and in a situation where an
ACO participant is associated with two or more ACOs, it would be
unclear which ACO would receive an incentive payment for the
participant's efforts on behalf of its assigned patient population.
Exclusivity of the assignment-based ACO participant TIN ensures unique
beneficiary assignment to a single ACO. However, exclusivity of an ACO
participant TIN to one ACO is not necessarily the same as exclusivity
of individual practitioners (ACO providers/suppliers) to one ACO. We
did state somewhat imprecisely in the preamble to the proposed rule
that ``ACO professionals within the respective TIN on which beneficiary
assignment is based, will be exclusive to one ACO agreement in the
Shared Savings Program. This exclusivity will only apply to the primary
care physicians.'' This statement appears to be the basis of the
concerns expressed by many commenters, and we understand the reasons
for those concerns. However, we stated the policy (76 FR 19563) we
intended to propose more precisely elsewhere in the preamble, when we
stated that ``[t]his exclusivity will only apply to primary care
physicians (defined as physicians with a designation of internal
medicine, geriatric medicine, family practice and general practice, as
discussed later in this final rule) by whom beneficiary assignment is
established when billing under ACO participant TINs. (Emphasis added).
Similarly, in the proposed regulations text at Sec. 425.5(c), we
stated that ``each ACO must report to CMS the TINs of the ACO
participants comprising the ACO along with a list of associated NPIs,
at the beginning of each performance year and at other such times as
specified by CMS. For purposes
[[Page 67811]]
of the Shared Savings Program, each ACO participant TIN upon which
beneficiary assignment is dependent is required to commit to a 3-year
agreement with CMS and will be exclusive to one ACO. ACO participant
TINs upon which beneficiary assignment is not dependent are required to
commit to a 3 year agreement to the ACO, and cannot require the ACO
participant to be exclusive to a single ACO.''
Thus, the exclusivity necessary for the assignment process to work
accurately requires a commitment of each assignment-based ACO
participant to a single ACO for purposes of serving Medicare
beneficiaries. It does not necessarily require exclusivity of each
primary care physician (ACO provider/supplier) whose services are the
basis for such assignment. For example, exclusivity of an ACO
participant leaves individual NPIs free to participate in multiple ACOs
if they bill under several different TINs. Similarly, an individual NPI
can move from one ACO to another during the agreement period, provided
that he or she has not been billing under an individual TIN. A member
of a group practice that is an ACO participant, where billing is
conducted on the basis of the group's TIN, may move during the
performance year from one group practice into another, or into solo
practice, even if doing so involves moving from one ACO to another.
This degree of flexibility is, in fact, one reason for our preference
to use TINs to identify ACO participants over NPIs: adopting NPIs in
place of TINs would result in the much stricter exclusivity rules for
individual practitioners to which so many commenters objected, than the
use of TINs to identify ACOs. This flexibility is limited, once again,
only in cases where the ACO participant billing TIN and individual TIN
are identical, as in the case of solo practitioners. Even in those
cases, moreover, it was not our intent (and it is no part of the policy
that we are adopting in this final rule) that an individual
practitioner may not move from one practice to another. But while solo
practitioners who have joined an ACO as an ACO participant and upon
whom assignment is based may move during the agreement period, they may
not participate in another ACO for purposes of the Shared Savings
Program unless they will be billing under a different TIN in that ACO.
We are therefore finalizing our proposal that each ACO participant
TIN is required to commit to an agreement with us. In addition, each
ACO participant TIN upon which beneficiary assignment is dependent must
be exclusive to one ACO for purposes of the Shared Savings Program. ACO
participant TINs upon which beneficiary assignment is not dependent are
not required to be exclusive to a single ACO for purposes for the
Shared Savings Program. As we discuss in section E found later in this
final rule we are also providing for consideration of the primary care
services provided by specialist physicians, PAs, and NPs in the
assignment process subsequent to the identification of the
``triggering'' physician primary care services. We are therefore also
extending our exclusivity policy to these ACO participants. That is,
the TINs under which the services of specialists, PAs, and NPs are
included in the assignment process would have to be exclusive to one
ACO for purposes of the Shared Savings Program. (We emphasize that we
are establishing this policy for purposes of Shared Savings Program
ACOs only: Commercial ACOs may or may not wish to adopt a similar
policy for their purposes.)
Comment: One commenter supported our use of primary care physicians
for alignment and urged us to retain the policy of non-exclusivity for
specialists in the final rule: ``CMS's use of primary care physicians
to align beneficiaries with an ACO is an important design element and
we urge the agency to retain this provision in the final rule. As
constructed, an ACO participant upon which beneficiary assignment is
not dependent must not be required to be exclusive to an ACO (Sec.
425.5(c)(3)). In the newly proposed Pioneer ACO regulation however,
beneficiary assignment could be made on the basis of several categories
of specialist physicians. Extending this Pioneer attribution scheme to
the proposed Medicare Shared Savings/ACO program could result in
decreased availability of specialist physicians and/or a reluctance of
non-ACO providers to refer to those specialists who are concerned that
patients will be diverted to other ACO providers. We urge CMS to
maintain the current rules aligning beneficiaries solely on the basis
of their use of primary care physicians.''
Response: We appreciate the comment. However, in the light of our
decision to employ a step-wise assignment process (as discussed in
section II.E. of this final rule), this final exclusivity policy will
also apply to ACO participants upon which assignment is based in either
the first or second steps of the assignment process. As a result, this
exclusivity will apply to ACO participants under which both primary
care physicians and specialists bill for primary care services
considered in the assignment process. However, we emphasize again that
individual provider NPIs are not exclusive to one ACO, only the ACO
participant TINs under which providers bill for services that are
included in the assignment of beneficiaries. When providers whose
services are the basis of assignment bill under two or more TINs, each
TIN would be exclusive to only one ACO, assuming they have both joined
as participants, but the provider (primary care physician or
specialist) would not be exclusive to one ACO.
Comment: Many commenters objected to our proposal that FQHCs and
RHCs could not form independent ACOs, but only participate in ACOs that
included other eligible entities (for example, hospitals, and physician
group practices). However, one commenter welcomed the opportunity for
FQHCs to participate in multiple ACOs.
Response: As we discuss in section II.E. of this final rule, we are
revising our proposed policy to allow FQHCs and RHCs to form
independent ACOs. We have also revised our proposed assignment
methodology in order to permit claims for primary care services
submitted by FQHCs and RHCs to be considered in the assignment process
for any ACO that includes an FQHC or RHC (whether as an independent ACO
or in conjunction with other eligible entities). As a consequence of
this revised policy, the exclusivity of the ACO participants upon which
beneficiary assignment is dependent also extends to the TINs of FQHCs
and RHCs upon which beneficiary assignment will be dependent under the
new policies discussed in section II.E. of this final rule.
Final Decision: We are finalizing our proposals regarding
operational definition of an ACO as a collection of Medicare-enrolled
TINs, the obligation of the ACO to identify their ACO participant TINs
and NPIs on the application, the obligation of the ACO to update the
list, and the required exclusivity of ACO participants upon whom
assignment is based without change under sections 425.20, 425.204(5),
425.302(d), 425.306, respectively. We clarify that ACO participants
upon which beneficiary assignment is not dependent are not required to
be exclusive to a single Medicare Shared Savings Program ACO. This
final exclusivity policy extends to the ACO participant TINs of FQHCs,
RHCs and ACO participants that include NP, PAs, and specialists upon
which beneficiary assignment will be dependent under the revised
assignment methodology discussed in section II.E. of this final rule.
[[Page 67812]]
2. Eligible Participants
Section 1899(b) of the Act establishes eligibility requirements for
ACOs participating in the Shared Savings Program. Section 1899(b)(1) of
the Act allows several designated groups of providers of services and
suppliers to participate as an ACO under this program, ``as determined
appropriate by the Secretary,'' and under the condition that they have
``established a mechanism for shared governance.'' The statute lists
the following groups of providers of services and suppliers as eligible
to participate as an ACO:
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.
Such other groups of providers of services and suppliers
as the Secretary determines appropriate.
Section 1899(h)(1) of the Act defines an ``ACO professional'' as a
physician (as defined in section 1861(r)(1) of the Act, which refers to
a doctor of medicine or osteopathy), or a practitioner (as defined in
section 1842(b)(18)(C)(i) of the Act, which includes physician
assistants, nurse practitioners, and clinical nurse specialists).
Section 1899(h)(2) of the Act also provides that, for purposes of the
Shared Savings Program, the term ``hospital'' means a subsection (d)
hospital as defined in section 1886(d)(1)(B) of the Act, thus limiting
the definition to include only acute care hospitals paid under the
hospital inpatient prospective payment system (IPPS). Other providers
of services and suppliers that play a critical role in the nation's
health care delivery system, such as federally qualified health centers
(FQHCs), rural health centers (RHCs), skilled nursing facilities
(SNFs), nursing homes, long-term care hospitals (LTCHs), critical
access hospitals (CAHs), nurse midwives, chiropractors, and
pharmacists, among others, are not specifically designated as eligible
participants in the Shared Savings Program under section 1899(b)(1) of
the Act. Furthermore, while the statute enumerates certain kinds of
provider and supplier groups that are eligible to participate in this
program, it also provides the Secretary with discretion to tailor
eligibility in a way that narrows or expands the statutory list of
eligible ACO participants. Therefore, we explored several options: (1)
Permit participation in the program by only those ACO participants that
are specifically identified in the statute; (2) restrict eligibility to
those ACO participants that would most effectively advance the goals of
the program; or (3) employ the discretion provided to the Secretary
under section 1899(b)(1)(E) of the Act to expand the list of eligible
groups to include other types of Medicare-enrolled providers and
suppliers identified in the Act. After evaluating the three
alternatives, we decided to propose the third option.
Since the statute requires that beneficiary assignment be
determined on the basis of utilization of primary care services
provided by ACO professionals that are physicians, we considered
whether it would be feasible for CAHs, FQHCs, and RHCs to form an ACO
or whether it would be necessary for these entities to join with one of
the four groups specified in section 1899(b)(1)(A)-(D) of the Act in
order to meet statutory criteria. We especially considered the
circumstances of CAHs, FQHCs, and RHCs because these entities play a
critical role in the nation's health care delivery system, serving as
safety net providers of primary care and other health care and social
services. At the same time, we noted that the specific payment
methodologies, claims billing systems, and data reporting requirements
that apply to these entities posed some challenges in relation to their
independent participation in the Shared Savings Program. In order for
an entity to be able to form an ACO, it is necessary that we obtain
sufficient data in order to carry out the necessary functions of the
program, including assignment of beneficiaries, establishment and
updating of benchmarks, and determination of shared savings, if any. As
we discuss in section II.E. of this final rule, section 1899(c) of the
Act requires the assignment of beneficiaries to an ACO based on their
utilization of primary care services furnished by a physician. Thus, as
required by the statute, the assignment methodology requires data that
identify the precise services rendered (that is, primary care HCPCS
codes), type of practitioner providing the service (that is, a MD/DO as
opposed to NP, PA, or clinical nurse specialist), and the physician
specialty in order to be able to assign beneficiaries to ACOs.
We proposed that because of the absence of certain data elements
required for assignment of beneficiaries, it would not be possible for
FQHCs and RHCs to participate in the Shared Savings Program by forming
their own ACOs. We stated that as the Shared Savings Program developed,
we would continue to assess the possibilities for collecting the
requisite data from FQHCs and RHCs, and in light of any such
developments, we would consider whether it would be possible at some
future date for Medicare beneficiaries to be assigned to an ACO on the
basis of services furnished by an FQHC or RHC, thereby allowing these
entities to have their Medicare beneficiaries included in the ACO's
assigned population.
In the proposed rule, we further considered whether CAHs could
participate in the Shared Savings Program by forming an independent
ACO. We noted the situation is somewhat more complicated with regard to
CAHs because section 1834(g) of the Act provides for two payment
methods for outpatient CAH services. We described the payment methods
in detail and determined that current Medicare payment and billing
policies could generally support the formation of an ACO by a CAH
billing under section 1834(g)(2) (referred to as method II).
In summary, we proposed that the four groups specifically
identified in section 1899(b)(1)(A)-(D) of the Act (various
combinations of physicians, nurse practitioners, physician assistants,
clinical nurse specialists, and acute care hospitals), and CAHs billing
under method II, would have the opportunity, after meeting the other
eligibility requirements, to form ACOs independently. In addition, the
four statutorily identified groups, as well as CAHs billing under
method II, could establish an ACO with broader collaborations by
including additional ACO participants that are Medicare enrolled
entities such as FQHCs and RHCs and other Medicare-enrolled providers
and suppliers not originally included in the statutory definition of
eligible entities.
We indicated in the proposed rule that we would consider whether it
would be appropriate to expand the list of entities eligible to
participate in the Shared Savings Program, either in the final rule or
in future rulemaking, if we determined that it was feasible and
consistent with the requirements of the program for more entities to
participate as ACOs independently. In the interim, and until such time
as FQHCs and RHCs would be eligible to form ACOs or have their patients
assigned to an ACO, we proposed to provide an incentive for ACOs to
include RHCs and FQHCs as ACO participants, by allowing ACOs that
include such entities to receive a higher percentage of any shared
savings under the program. We discuss our final policies regarding the
determination of shared savings under the program in section II.G. of
this final rule.
[[Page 67813]]
Comment: A large number of commenters requested an expansion of
those entities eligible to participate in the Shared Savings Program.
The commenters requested that entities such as, but not limited to,
integrated delivery systems, emergency medical technicians (EMTs),
paramedics, health plans, Medicare Advantage (MA) plans, Medicaid
Managed Care Organizations, AEMTs, community based hospitals, DME
Suppliers, home health agencies (HHAs), long-term care (LTC)
facilities, in-patient rehabilitation facilities, hospice facilities,
patient-centered medical homes, RHCs, FQHCs, and Method I CAHs be
included as eligible entities. We received one comment inquiring
whether non-PECOS (Provider Enrollment, Chain, and Ownership System)
enrolled providers can participate as ACO providers/suppliers. PECOs is
a directory containing the names, addresses, phone numbers, and
specialties of physicians enrolled in Medicare. Other comments
suggested that we establish ESRD and cancer care specific ACOs. We
received a few comments in support of limiting those entities eligible
to participate in the program. These comments suggested that
implementation of the Shared Savings Program will demand significant
changes to health care delivery, data sharing, and data integration
among providers and disparate groups. Providing clear guidance on who
can participate reduces confusion and uncertainty within the provider
and hospital community.
Response: We agree that limiting eligibility could potentially
reduce confusion but also agree that the inclusion of some additional
entities as eligible to independently participate in the program could
significantly increase the opportunity for success. Although the
entities referenced in the comment, with the exception of CAHs billing
under method II, RHCs and FQHCs, are not able to independently form
ACOs, these entities are not prohibited from participating in the
Shared Savings Program so long as they join as an ACO participant in an
ACO containing one or more of the organizations that are eligible to
form an ACO independently and upon which assignment could be made
consistent with the statute and the assignment methodology discussed in
section II.E. of this final rule. Thus, although we do not see the need
to design distinct ESRD or cancer specific ACOs, neither of these
providers types are in any manner excluded from participation in an
ACO. This allows for the four groups specifically identified in section
1899(b)(1)(A) through (D) of the Act, and CAHs billing under method II,
RHCs, and FQHCs to form ACOs independently. In addition, the four
statutorily identified groups, as well as CAHs billing under method II,
RHCs, and FQHCs could establish an ACO with broader collaborations by
including additional Medicare-enrolled entities defined in the Act as
ACO participants. This will afford ACOs the flexibility to include all
types of providers and suppliers as ACO participants, as long as the
ACO can satisfy the required eligibility standards. Finally, enrollment
in the PECOs system, at this time, is not a condition of eligibility to
participate in the Shared Savings Program.
Comment: Many commenters, including MedPAC and commenters
representing rural health advocates and a wide range of beneficiary and
provider groups, raised concerns about the proposal which would
preclude FQHCs and RHCs from forming independent ACOs. The commenters
raised this issue in reference to eligibility, beneficiary assignment,
and benchmarking issues. There were also several comments that agreed
with the additional sharing rates for ACOs that include FQHCs and RHCs.
Commenters generally supported eligibility approaches that would
allow FQHCs/RHCs to join ACOs formed by other entities. Some commenters
also generally supported our proposal that FQHCs/RHCs would not be
required to be exclusive to a single ACO. Although commenters were
generally appreciative of the proposal to provide a higher sharing rate
for ACOs that include FQHCs and RHCs, some commenters believed this
approach was flawed, too weak to be effective, and could undercut the
objectives of the Shared Savings Program. Most commenters expressed
general concerns that the CMS interpretation of the statute was
incorrect and that the statute allows the agency to promulgate policies
that will allow for full participation of FQHCs in the Shared Savings
Program. Some commenters focused their detailed comments on FQHCs, but
the concerns/issues they raised were generally similar to those
commenters that also addressed RHCs.
Several commenters stated that CMS' conclusions are flawed and that
the law allows the agency to promulgate policies that will allow for
full FQHC participation in the Shared Savings Program. They believe
that ``a system that does not allow for meaningful FQHC involvement
undercuts the Congressional intent in establishing the ACO/Shared
Savings Program and the broader goal of assuring quality cost efficient
health care services to Medicare beneficiaries.'' They expressed fear
that other payers such as Medicaid, CHIP and private health insurers
will follow Medicare's approach and policies in developing their own
ACO rules, leading to disparities in care. Another commenter suggested
our proposal would prevent or limit dually eligible patients from
receiving integrated care at FQHCs in light of State Medicaid efforts
to create ACOs and our definition of ``at risk'' beneficiaries.
Other commenters argued that RHCs represent a particularly
compelling case for ACO formation inclusion. They believe that the
promise of better integrated outpatient care for rural Medicare
beneficiaries must begin with RHCs. These commenters believe that the
exclusion of RHCs from those eligible to form an ACO independently
would only serve to exclude rural providers and the populations they
serve from forming efficiency enhancing ACOs that might serve to
counterbalance the inpatient service-favoring skew that they believe
has developed out of many rural preferential payment provisions.
Response: In this final rule we are addressing the specific
comments regarding beneficiary assignment and the establishment of
benchmarks for ACOs that include FQHCs and/or RHCs in sections II.E.
and II.G. (Assignment and Benchmark) of this final rule while general
comments regarding the eligibility of FQHCs and RHCs to form ACOs
independently are addressed here. In the proposed rule, we proposed to
use discretion afforded by the statute under section 1899(b)(1)(E) to
allow participation of any Medicare-enrolled provider/supplier as an
ACO participant. Thus, entities such as FQHCs and RHCs were eligible to
participate in the program under our original proposal. However, we
agree that it is highly desirable to allow for FQHCs and RHCs to
participate independently and to determine a way to include their
beneficiaries in assignment. In order for this to be possible, in this
final rule we are making modifications to the proposed assignment
process to recognize the different payment methodologies and claims
data that are used by FQHCs and RHCs as compared to the payment
methodologies and claims data that are available for physician offices/
clinics that are paid under the physician fee schedule. The discussion
about assignment and benchmarking process is in sections II.E.
(Assignment) and II.G. (Benchmarking) of this final rule. As a result,
under the policies
[[Page 67814]]
established in this final rule, FQHCs and RHCs will be eligible to form
ACOs and may also be ACO participants in ACOs formed by other entities.
Additionally, Medicare enrolled entities may join independent FQHCs,
RHCs, and method II billing CAH ACOs.
Comment: Some commenters supported our proposal to allow CAHs
billing under method II to form ACOs. A few commenters also recommended
allowing CAHs billing under method I to form independent ACOs by
supplementing their normal billing information with any additional
information needed to assign beneficiaries. For example, a commenter
indicated that because most rural facilities act as de facto sole
providers for their communities, CAHs and SCH's should be able to claim
all beneficiaries in their primary catchment area. The commenter
suggested doing so by having the rural providers submit the 75th
percentile zip codes from their patient demographic data. These zip
codes could then be compared to the Medicare beneficiary claims data,
and if the claims data also show that the beneficiaries in those zip
codes receive >50 percent of their primary care services within the zip
codes of the rural ACO, then all of the beneficiaries in those zip
codes could be assigned to the rural ACO.
Response: We do not agree with allowing CAHs billing under method I
to independently form ACOs by simply claiming all beneficiaries in
their primary catchment area. We do not believe that this would be
consistent with the statutory requirement for assignment based on
beneficiary utilization of primary care services furnished by a
physician. Although we do not believe it would be appropriate for a CAH
billing under method I to independently form an ACO, we would emphasize
that we would encourage CAHs billing under method I to participate in
the Shared Savings Program by establishing partnerships or joint
venture arrangements with ACO professionals, just like other hospitals.
Comment: Some commenters suggested using CMS's demonstration
authority to include FQHCs and RHCs in the Shared Savings Program or
another Shared Savings Program. Others recommended that CMS should
continue to work with providers and patients practicing and living in
rural underserved areas to develop ACO models specifically designed to
meet the unique healthcare delivery challenges facing rural underserved
areas.
Response: We appreciate the comments suggesting the development of
ACO models to address the special needs of rural areas and have
forwarded them to our colleagues in the Innovation Center. We will
consider any additional demonstrations focused on ACOs as part of the
regular process for establishing CMS demonstrations. We note, however,
that as discussed previously, under the policies adopted in this final
rule, FQHCs and RHCs will be eligible to form an ACO independently or
to participate in an ACO formed by other eligible entities.
Comment: A few commenters suggested that CMS should refine its
strategies to facilitate development of practitioner-driven, rather
than hospital-driven ACO's. Comments further suggested that at the very
least, waiver authority should be established to enable the agency to
waive hospital-oriented requirements for ACOs that consist solely of
group practices.
Response: 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.
Final Decision: We are finalizing our proposals for identifying
groups of providers of services and suppliers that may join to form an
ACO under Sec. 425.102. Specifically, the entities identified in
section 1899(b)(1)(A) through (D) of the Act will be able to form ACOs,
provided they meet all other eligibility requirements. Additionally,
CAHs billing under method II, FQHCs, and RHCs may also form independent
ACOs if they meet the eligibility requirements specified in this final
rule. In addition, any Medicare enrolled entities not specified in the
statutory definition of eligible entities in section 1899(b)(1)(A)-(D)
of the Act can participate in the Shared Savings Program as ACO
participants by joining an ACO containing one or more of the
organizations eligible to form an ACO. Additionally, in response to
comments and after further consideration of the available information,
we have established a process by which primary care services furnished
by FQHCs and RHCs will be included in the assignment process, as
discussed in section II.E. of this final rule. As a result, FQHCs and
RHCs will also be able to form ACOs independently, provided they meet
all other eligibility requirements.
3. Legal Structure and Governance
Section 1899(b)(2)(C) of the Act requires an ACO to ``have a formal
legal structure that would allow the organization to receive and
distribute payments for shared savings'' to ``participating providers
of services and suppliers.'' As previously noted, section 1899(b)(1) of
the Act also requires ACO participants to have a ``mechanism for shared
governance'' in order to be eligible to participate in the program.
Operationally, an ACO's legal structure must provide both the basis for
its shared governance as well as the mechanism for it to receive and
distribute shared savings payments to ACO participants and providers/
suppliers.
a. Legal Entity
In order to implement the statutory requirements that ACOs have a
shared governance mechanism and a formal legal structure for receiving
and distributing shared payments, we proposed that an ACO be an
organization that is recognized and authorized to conduct its business
under applicable State law and is capable of--(1) receiving and
distributing shared savings; (2) repaying shared losses, if applicable;
(3) establishing, reporting, and ensuring ACO participant and ACO
provider/supplier compliance with program requirements, including the
quality performance standards; and (4) performing the other ACO
functions identified in the statute. We explained that it is necessary
for each ACO to be constituted as a legal entity appropriately
recognized and authorized to conduct its business under applicable
State law and that it must have a TIN. However, we did not propose to
require ACO enrollment in the Medicare program.
We did not propose that existing legal entities form a separate new
entity for the purpose of participating in the Shared Savings Program.
We stated that if the existing legal entity met the eligibility
requirements to be an ACO, it may operate as an ACO in the Shared
Savings Program. However, we proposed that if an entity, such as a
hospital employing ACO professionals would like to include as ACO
participants other providers/suppliers who are not already part of its
existing legal structure, an ACO would have to establish a separate
legal entity in order to provide all ACO participants a mechanism for
shared governance.
We also proposed that each ACO certify that it is recognized as a
legal entity under State law and authorized by the State to conduct its
business. In addition, an ACO with operations in multiple States would
have to certify that it is recognized as a legal entity in the State in
which it was established
[[Page 67815]]
and that it is authorized to conduct business in each State in which it
operates.
We solicited comment on our proposals regarding the required legal
structure and other suitable requirements that we should consider
adding in the final rule or through subsequent rulemaking. We also
requested comment on whether requirements for the creation of a
separate entity would create disincentives for the formation of ACOs
and whether there were alternative approaches that could be used to
achieve the aims of shared governance and decision making and provide
the ability to receive and distribute payments for shared savings.
Comment: Many commenters opposed requiring ACOs formed among
multiple ACO participants to form a separate legal entity, because it
was costly, inefficient, and wasteful to do so (especially for small
and medium-sized physician practices). These commenters also contend
that forming a separate entity places such ACOs at a competitive
disadvantage relative to integrated delivery systems (for example
single-entity ACOs), it will likely have a chilling effect on the
willingness of such providers and suppliers to participate in the
program, and it disadvantages hospitals in States with a prohibition on
the corporate practice of medicine.
Several commenters supported allowing multiple participant ACOs to
form an entity by contract and not require a separate new entity. These
commenters recommended that we permit ACOs comprised of multiple ACO
participants to designate one of those ACO participants to function as
the ``ACO'' for purposes of participation in the program, provided that
such entity meets the criteria required of an ACO under the final rule.
Another commenter suggested letting a division of an existing
corporation serve as the legal entity for an ACO. Specifically, this
comment noted that license-exempt, medical foundation clinics in
California are often formed as either a division of a nonprofit
corporation that owns and operates a hospital or have as their sole
corporate member a nonprofit hospital, such as a nonprofit, license-
exempt, medical foundation clinic. One commenter suggested that ACOs
that have outcome-based contracts with private payers should have
flexibility in forming their legal entities.
Many commenters supported the proposal not to require creation of a
new distinct legal entity if one is already in place that meets the
proposed criteria. Commenters stated that such a requirement is
unnecessary to meet the objectives of the Shared Savings Program. Some
commenters suggested existing organizations should not be forced to
create whole new bureaucracies just to add a few participants to form
an ACO.
Response: We continue to support our proposal that each ACO certify
that it is recognized as a legal entity under State law. An ACO formed
among two or more otherwise independent ACO participants (such as
between a hospital and two physician group practices) will be required
to establish a separate legal entity and to obtain a TIN. Although some
comments opposed this requirement as burdensome, we continue to believe
it is essential to protect against fraud and abuse and ensure that the
ACO is accountable for its responsibilities under the Shared Savings
Program by enabling us to audit and assess ACO performance. In
addition, to the extent an ACO becomes liable for shared losses, we
believe it is essential to be able to collect such monies from the ACO
and its ACO participants.
For existing legal entities that otherwise meet the eligibility
requirements, we agree with commenters that requiring the creation of a
new separate legal entity would be inefficient. Existing legal entities
which are eligible to be ACOs are permitted to continue to use their
existing legal structure as long as they meet other eligibility and
governance requirements explained in this final rule. However, as we
proposed, if an existing legal entity adds ACO participants that will
remain independent legal entities (such as through a joint venture
among hospitals or group practices), it would have to create a new
legal entity to do so. As discussed later in this section, we believe
that creation of a new legal entity would be important to allow the
newly added ACO participants to have a meaningful voice on the ACO's
governing body. A separate legal entity, with such a governing body, is
therefore essential to accomplish this policy objective.
Although we recognize that it may be possible for ACOs to establish
outcome-based contracts that reinforce some of the policy objectives
discussed in the proposed rule, we believe that the proposed legal
structure requirement is necessary to protect against fraud and abuse
and ensure the goals of the Shared Savings Program, and does not impose
too large a burden, especially in light of the flexible governance
structure discussed later in this section.
Comment: Several commenters suggested we address the interplay
between Federal and State law governing ACO formation and operation.
For example, commenters suggested we clarify whether the proposed legal
entity requirements include requiring an ACO to obtain a certificate of
authority if so required under State law. One commenter suggested that
we clarify whether we are requiring that an ACO be recognized as an ACO
under State law or whether we are requiring that the ACO be recognized
to conduct business as a partnership, corporation, etc. under State
law.
Other commenters suggested that we preempt State law or regulation
of ACOs that limit the number of ACOs in a State. By contrast, another
comment suggested that the Affordable Care Act did not preempt or
otherwise supersede State laws prohibiting the corporate practice of
medicine or otherwise alter the choice of legal entities available to
ACOs for formation in particular States. In addition, some commenters
recommended that we require that if an ACO assumes insurance risk, it
should meet all the consumer protection, market conduct, accreditation,
solvency, and other requirements consistent with State laws.
One commenter suggested that we require ACOs that operate in more
than one State to attest that they operate under each State's rules
rather than a blend of multiple States' rules for all business and
other operational functions (including health information management,
release of information, privacy/confidentiality, data quality, etc.).
Some commenters suggested that the proposed definition of ``ACO'' would
exclude entities organized pursuant to Federal and tribal law, and
recommended that we also allow ACOs to be organized under Federal or
tribal law as well.
Response: We continue to believe that an ACO should be recognized
as a legal entity under State law and authorized by the State to
conduct its business. We intended this requirement to ensure the ACO
would be licensed to do business in the State consistent with all
applicable State law requirements. Consequently, we are finalizing our
proposal that an ACO that participates in the Shared Savings Program
meet State law requirements to operate in that State. We are not
requiring an ACO be licensed as an ACO under State law unless, however,
State law requires such licensure.
We disagree with the commenters that participating in the Shared
Savings Program ultimately involves insurance risk. ACO participants
will continue to receive FFS payments for all services
[[Page 67816]]
furnished to assigned beneficiaries. It is only shared savings payments
(and shared losses in the two-sided model) that will be contingent upon
ACO performance. As a result, we believe that we will continue to bear
the insurance risk associated with the care furnished to Medicare
beneficiaries, but ACOs desiring to participate in Track 2 should
consult their State laws.
To clarify, we are not preempting any State laws or State law
requirements in this final rule. To the extent that State law affects
an ACO's operations, we expect the ACO to comply with those
requirements as an entity authorized to conduct business in the State.
We do not believe it is necessary to make ACOs attest to do what they
otherwise would be required to do under State law.
We agree with commenters that we do not want to exclude ACOs that
are licensed under Federal or tribal law. Accordingly, we are modifying
our original proposal to clarify that entities organized pursuant to
Federal and tribal law will also be allowed to participate in the
Shared Savings Program, as long as the entity is able to meet the
participation requirements as outlined in this final rule.
Final Decision: We are finalizing our proposal that an ACO must be
a legal entity for purposes of all program functions identified in this
final rule. We are also finalizing commenters' suggestion that ACOs
licensed under Federal or tribal law are eligible to participate in the
Shared Savings Program. In addition, an ACO formed among multiple ACO
participants must provide evidence in its application that it is a
legal entity separate from any of its ACO participants. (Sec. 425.104)
b. Distribution of Shared Savings
As discussed previously, an ACO must be a legal entity
appropriately recognized and authorized to conduct its business under
State, Federal, or tribal law, and must be identified by a TIN. In the
proposed rule we proposed to make any shared savings payments directly
to the ACO as identified by its TIN, we noted that unlike the ACO
participants and the ACO providers/suppliers that form the ACO, the
legal entity that is the ACO may or may not be enrolled in the Medicare
program. We acknowledged the potential for this proposal to raise
program integrity concerns, because allowing shared savings payments to
be made directly to a non-Medicare-enrolled entity would likely impede
the program's ability to recoup overpayments as there would be no
regular payments that could be offset. This is part of the rationale
for requiring safeguards for assuring ACO repayment of shared losses
described in section II.G. of this final rule. We solicited comment on
our proposal to make shared savings payments directly to the ACO, as
identified by its TIN. In addition, we solicited comment on our
proposal to make shared savings payments to a non-Medicare-enrolled
entity.
We proposed to require ACOs to provide a description in their
application of the criteria they plan to employ for distributing shared
savings among ACO participants and ACO providers/suppliers, how any
shared savings will be used to align with the three-part aim. As we
stated in the proposed rule, we believe this requirement would achieve
the most appropriate balance among objectives for encouraging
participation, innovation, and achievement of an incentive payment
while still focusing on the three-part aim.
Comment: Several commenters recommended that CMS explicitly state
that the ACO is required to demonstrate that ACO participants will be
able to share in savings and that CMS outline exactly how the savings
will be distributed while other commenters suggested that CMS work with
the provider community to develop principles that ACOs should follow to
ensure fair and equitable distribution of shared savings. Other
commenters suggested that a requirement be established that some pre-
determined portion of any shared savings be directed to improving
patient care unless there is little room for improvement for ACOs in
the final quality measures. A few commenters requested that standards
be established regarding the length of time (ranging from 15 days to 90
days) an ACO has to actually share any savings generated with its
respective providers. Finally, a commenter expressed concern that when
partnering with a hospital-based system, primary care providers would
not be rewarded for the significantly increased work that will be
required on their part in order for an ACO to be successful. Instead
this money would be used by the hospital system to replace lost revenue
on the hospital side.
Response: We will make any shared savings payments directly to the
ACO as identified by its TIN. As explained in the proposed rule, the
statute does not specify how shared savings must be distributed, only
that the ACO be a legal entity so that the ACO can accept and
distribute shared savings. We do not believe we have the legal
authority to dictate how shared savings are distributed, however, we
believe it would be consistent with the purpose and intent of the
statute to require the ACO to indicate as part of its application how
it plans to use potential shared savings to meet the goals of the
program. Consistent with the discussion found later in this final rule
regarding the shared governance of an ACO, we anticipate that ACO
participants would negotiate and determine among themselves how to
equitably distribute shared savings or use the shared savings to meet
the goals of the program.
Final Decision: We will finalize our proposals under Sec.
425.204(d) without change.
c. Governance
Section 1899(b)(1) of the Act requires that an ACO have a
``mechanism for shared governance'' and section 1899(b)(2)(F) of the
Act requires that an ``ACO shall have in place a leadership and
management structure that includes clinical and administrative
systems.'' However, the statute does not specify the elements that this
shared governance mechanism or the accompanying leadership and
management structures must possess. We proposed that such a governance
mechanism should allow for appropriate proportionate control for ACO
participants, giving each ACO participant a voice in the ACO's decision
making process, and be sufficient to meet the statutory requirements
regarding clinical and administrative systems.
We proposed that an ACO also must establish and maintain a
governing body with adequate authority to execute the statutory
functions of an ACO. The governing body may be a board of directors,
board of managers, or any other governing body that provides a
mechanism for shared governance and decision-making for all ACO
participants, and that has the authority to execute the statutory
functions of an ACO, including for example, to ``define processes to
promote evidenced-based medicine and patient engagement, report on
quality and cost measures, and coordinate care.'' We proposed that this
body must be separate and unique to the ACO when the ACO participants
are not already represented by an existing legal entity appropriately
recognized and authorized to conduct its business under applicable
State law. In those instances where the ACO is an existing legal entity
that has a pre-existing board of directors or other governing body, we
proposed that the ACO would not need to form a separate governing body.
In this case, the existing entity's governing body would be the
governing body of the ACO, and the ACO would be required to provide in
its application
[[Page 67817]]
evidence that its pre-existing board of directors or other governing
body, meets all other criteria required for ACO governing bodies. We
also proposed that the ACO have a conflicts of interest policy that
applies to members of the governing body. The conflicts of interest
policy must require members of the governing body to disclose relevant
financial interests. Further, the policy must provide a procedure for
the ACO to determine whether a conflict of interest exists and set
forth a process to address any conflicts that arise. Such a policy also
must address remedial action for members of the governing body that
fail to comply with the policy.
We requested comment on whether these requirements for the creation
of a governing body as a mechanism for shared governance would create
disincentives for the formation of ACOs and whether there were
alternative requirements that could be used to achieve the aims of
shared governance and decision making. We also acknowledged that
allowing existing entities to be ACOs would complicate our monitoring
and auditing of these ACOs, and sought comment on this issue.
Comment: Although most comments supported the principle of ACO
shared governance, many commenters opposed the separate governing body
requirement. Some commenters stated that we exceeded our authority by
imposing a separate governing body requirement. Other commenters
suggested that the separate governing body requirement would discourage
organizations from participating in the Shared Savings Program and
increase their costs to do so. Commenters explained that existing
entities already have relationships with commercial payers and it would
not make sense for them to maintain multiple boards, because it is
costly and organizationally complex to do so.
Many commenters urged us to provide flexibility so that ACOs could
use their current governance process, as long as they can demonstrate
how they will achieve shared governance on care delivery policies. Some
commenters explained that hospitals and other large physician groups
have governing bodies designed specifically for quality and outcome
reviews and oversight for clinical integration and performance
appraisal, training and discipline. Commenters suggested that ACOs can
be effectively governed by an operating committee within their existing
governance and management structure, as is a hospital medical staff
governed semi-autonomously within a hospital's governance structure.
Commenters also suggested that ACOs should be permitted to access
existing assets and systems, such as advisory boards, so long as the
ACO management committee exercises sufficient control over these
processes with respect to ACO activities to generate ACO desired
outcomes. Other commenters had specific concerns about how the separate
entity requirement would apply to their current or planned
organizational structure. One commenter, an integrated, State-wide
health system, suggested that we permit it to operate as a State wide/
multi-State ACO with various regional/local ACOs as its ACO
participants. In this structure, the corporate organization would
handle the claims processing, reporting, and distribution of savings
and the financial backing for potential loss for the regional ACO
healthcare operational units. The regional ACOs would have their own
board and each regional ACO would be represented on the State-wide/
multi-State board. This commenter claimed that this type of structure
would take advantage of the cost savings that result from economies of
scale for administrative and other functions, but would keep health
care delivery local. Another commenter suggested allowing an ACO
governing body's authority to be delegated from an existing governing
body that possesses broad reserved powers.
One commenter suggested we clarify the responsibilities of the
board as distinct from those of management. In this commenter's view,
governing board's role should be one of oversight and strategic
direction, holding management accountable to meeting goals of ACO.
Another commenter suggested that the governance structure be organized
more like a scientific advisory board that will analyze the results of
the particular ACO's methodology for treating its patients.
Response: Our proposal to require an ACO to have a separate
governing body unless it is an existing legal entity that has a pre-
existing governing body is consistent with the proposed and final
requirements regarding legal entity requirements discussed previously.
Thus, we disagree with the commenters that suggested that such a
requirement would discourage participation in the Shared Savings
Program or disrupt existing relationships with commercial payers.
Moreover, for ACOs formed among otherwise independent ACO
participants, we will finalize our proposal that these ACOs create an
identifiable governing body. This requirement is consistent with our
final rule that requires such ACOs to create a separate legal entity.
Notwithstanding this requirement, we agree with commenters that ACOs
formed among multiple otherwise independent ACO participants, should
have flexibility to establish a mechanism for shared governance as
required by statute. As discussed later in this section of this final
rule, we are revising our specific proposals to provide ACO greater
flexibility in the composition of their governing bodies.
We also agree with commenters who suggested that we should clarify
the governing body's responsibilities. An ACO's governing body shall
provide oversight and strategic direction, holding management
accountable for meeting the goals of the ACO, which include the three-
part aim. This responsibility is broader than ``care delivery
processes'' as suggested by numerous commenters and, in fact,
encompasses not only care delivery, but also processes to promote
evidence-based medicine, patient engagement, reporting on quality and
cost, care coordination, distribution of shared savings, establishing
clinical and administrative systems, among other functions. We believe
that because of these broad responsibilities, the governing body is
ultimately responsible for the success or failure of the ACO.
We believe that an identifiable governing body is a reasonable
prerequisite for eligibility to participate in the Shared Savings
Program. As discussed previously, an existing legal entity is permitted
to use its current governing body. An ACO formed among otherwise
independent ACO participants must establish an identifiable governing
body. A governing body that is identifiable can help insulate against
conflicts of interest that could potentially put the interest of an ACO
participant (in an ACO formed among otherwise independent ACO
participants) before the interest of the ACO. In fact, we believe an
identifiable governing body will facilitate accomplishing the ACO's
mission.
Comment: Numerous commenters expressed support for the requirement
that the governing body include all ACO participants. For example, one
commenter supported the proposal, because such a requirement would also
aid CMS, FTC, and DOJ in their efforts to thwart anti-competitive
behavior among ACOs.
By contrast, many commenters suggested it would be unwieldy to have
representatives from each participant on the governing body, because
the governing body would be difficult to operate effectively. Other
commenters
[[Page 67818]]
stated that an ACO should not, for example, have to include each solo-
practitioner physician participant on the board. Some commenters
suggested that a requirement for each ACO participant to be on the
governing body would permit competitors to be on each other's boards
and, thus, could be anticompetitive. Many commenters indicated that we
should be concerned with the outcome of the program, not with who is on
an ACO's board. One commenter suggested that ACO participants be
shareholders, members, or other owners of the ACO, and the ACO
participants would select the governing body members. Another commenter
suggested that we require an ACO to demonstrate how ACO participants
have a super-majority on a medical standards committee that has
responsibility to define processes to promote evidenced-based medicine
and patient engagement, report on quality and cost measures, and
coordinate care. However, one commenter suggested that limiting a
governance voice to physicians and hospitals reduces the chances that
the aim CMS expresses of reduced dependence on inpatient care will be
realized. Several commenters suggested that the requirement that all
participants be on the governing body may conflict with State law
requirements.
Response: Although we believe that each ACO participant should have
a voice in the ACO's governance, we are convinced by the comments that
there are many ways to achieve this objective without requiring that
each ACO participant be a member of the ACO's governing body. Thus, we
will not finalize our proposal that each Medicare-enrolled ACO
participant TIN, or its representative, be on the ACO's governing body.
We agree with commenters that the governing bodies could become
unwieldy and lose their effectiveness if we were to finalize this
proposal. Such a requirement, as the commenters explained, could
conflict with State law requirements regarding governing body
requirements. Instead we will require an ACO to provide meaningful
participation in the composition and control of the ACO's governing
body for ACO participants or their designated representatives. We
disagree, however, with the comment that ACO participants who may be
competitors outside of the ACO's activities necessarily raise
competitive concerns when they jointly participate on the ACO's
governing body. The ACO requires an integration of economic activity by
ACO participants, and participants' participation in the governing body
is in furtherance of that integration. Nonetheless, as explained in the
final Antitrust Policy Statement, ACOs should refrain from, and
implement appropriate firewalls or other safeguards against, conduct
that may facilitate collusion among ACO participants in the sale of
competing services outside the ACO.
Comment: Commenters were divided in their support for the
proportionate control requirement. Many commenters suggested that the
proportionate share requirement is too rigid and inflexible. Several
commenters stated that the concept of constituent or representative
governance is antithetical to the most basic tenants of State
corporation law, including the requirement of undivided loyalty
applicable to members of a corporation's board of directors and the
right of the shareholders of the for-profit corporation and members of
nonprofit corporations to elect the governing body that is otherwise
responsible for overseeing and directing the management of the
corporation. Other commenters explained that the requirements are
unnecessary because fiduciary decisions should be made in the best
interests of the ACO as an entire organization and should not represent
the individual interests of the ACO participants or any specific
agendas. Other comments suggested that they would have to reconstitute
their boards if we applied such a requirement. By contrast, many
commenters supported this requirement if it were applied on a per
participant basis, while others supported it if it were based on
capital contributions.
Several commenters sought clarification as to how proportionate
share should be assessed and suggested that we provide guidance to
avoid tangled power struggles. Commenters suggested various methods,
including: distribution of Medicare costs among the various
participants in the ACO, capital contributions, per participant, equity
dollars, dollars received, savings generated from operations, RVUs
delivered, number of Medicare lives attributed, physicians within a
TIN, or on any reasonable basis. One commenter suggested that
proportionate control means representation of all specialists that
provide care to an ACO's beneficiaries.
Response: In light of our decision to allow ACOs flexibility in how
they establish their governing bodies, we will not finalize our
proposal that each ACO participant have proportionate control of the
ACO governing body.
Comment: Several commenters suggested that we require specialty
practitioner representatives on the governing body, including
specialists who have experience and expertise in hospice and palliative
care, hematology, cataract surgery, endocrinology, surgery, mental
health. Other commenters suggested that we require governing body
representation of home health care and long-term care providers, the
allied professions, and community stakeholders. One commenter sought a
specific role for nurses on the governing body.
Another commenter suggested encouraging representation from local
high-level public health officials on ACO governing bodies to help
inform population health and cost-containment goals. One commenter
suggested that at least one stakeholder on the board be a
representative of a local hospital, regardless of whether any hospital
is a participant in the ACO, because all care settings should be
considered. One commenter suggested that we require ACO governing
bodies to include local employers and multi-State large employer plan
sponsors with experience in quality improvement and reporting and
providing timely information to consumers on ACOs' governance boards to
successfully improve quality, reduce unnecessary costs and drive
through transformational change. Other commenters urged us to state
that every professional service involved with the ACO be represented on
the governing body.
Response: In light of our decision to allow ACOs flexibility in how
they establish their governing bodies, we will not require
representation of particular categories of providers and suppliers or
other stakeholders.
Comment: Several commenters suggested we provide broad guidance on
desired ACO outcomes and processes without specifying how an ACO's
governing body achieves these outcomes. Other commenters suggested that
we articulate the attributes of governance that we believe are
important to ACOs (for example, importance of ACO participant input,
the role of non-ACO participants in governance, or that ACOs that are
tax-exempt entities would be expected to comply with exemption
requirements) and then require the ACO to include a description in its
application on how governance of ACO would align with these attributes.
Other commenters suggested similar approaches, such as requiring the
ACO applicant to describe its governing body and general rationale for
its composition, how ACO participants and providers will achieve shared
governance and decision-making such that they have significant input
and control over decisions about how
[[Page 67819]]
care will be delivered and beneficiaries' voices heard. Commenters
suggested that this flexibility would permit the ACO to determine the
appropriate balance of incorporating direct participant involvement in
the governance of the ACO, including board involvement, and also using
operating committees where a more limited group of ACO participants
would have significant input, direction and involvement in specific
activities the ACO. Another commenter urged us to deem the governance
structure of entities that are qualified for tax exemption under
section 501(c)(3) of the Internal Revenue Code to meet the proposed
governance requirements.
One commenter recommended that we require all ACOs: (1) To enact
policies and procedures to ensure that physicians who participate in
the ACO are free to exercise independent medical judgment; and (2) to
adopt a conflict-of-interest disclosure policy to ensure that the
governing body appropriately represents the interests of the ACO. One
commenter suggested the ACO be governed by a Board of Directors that is
elected by physicians in the ACO. Another commenter suggested in those
cases where a hospital is part of an ACO, the governing board should be
separate and independent of the hospital governing body. Several
commenters urged us to require a majority of the ACO's governing body
to be approved by ACO participants.
Response: We agree with commenters that we should articulate our
views related to governance. We will finalize the requirement that the
governing body provides oversight and strategic direction for the ACO,
holding management accountable for meeting the goals of the ACO, which
include the three-part aim. Members of the governing body shall have a
fiduciary duty to put the ACO's interests before the interests of any
one ACO participant or ACO provider/supplier. The governing body also
must have a transparent governing process to ensure that we are able to
monitor and audit the ACO as appropriate.
Final Decision: In sum, we are finalizing the requirement that an
ACO must maintain an identifiable governing body with authority to
execute the functions of the ACO as defined in this final rule,
including but not limited to, the definition of processes to promote
evidence-based medicine and patient engagement, report on quality and
cost measures, and coordinating care. The governing body must have
responsibility for oversight and strategic direction of the ACO,
holding ACO management accountable for the ACO's activities. The
governing body must have a transparent governing process. The governing
body members shall have a fiduciary duty to the ACO and must act
consistent with that fiduciary duty. The ACO must have a conflicts of
interest policy for the governing body. 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. (Sec. 425.106).
d. Composition of the Governing Body
As we explained in the proposed rule, we believe that the ACO
should be operated and directed by Medicare-enrolled entities that
directly provide health care services to beneficiaries. We
acknowledged, however, that small groups of providers often lack both
the capital and infrastructure necessary to form an ACO and to
administer the programmatic requirements of the Shared Savings Program
and could benefit from partnerships with non-Medicare enrolled
entities. For this reason, we proposed that to be eligible for
participation in the Shared Savings Program, the ACO participants must
have at least 75 percent control of the ACO's governing body. In
addition, each of the ACO participants must choose an appropriate
representative from within its organization to represent them on the
governing body. We explained that these requirements would ensure that
ACOs remain provider-driven, but also leave room for both non-providers
and small provider groups to participate in the program.
Additionally, we proposed that ACOs provide for patient involvement
in their governing process. We proposed that in order to satisfy this
requirement, ACOs must include a Medicare FFS beneficiary serviced by
the ACO on the ACO governing body. In order to safeguard against any
conflicts of interest, we proposed that any patients included on an
ACO's governing body, or an immediate family member, must not have a
conflict of interest, and they must not be an ACO provider/supplier. We
believed a conflict of interest standard was necessary to help
effectuate our intent to ensure beneficiaries have a genuine voice in
ACO governance. We sought comment on whether the requirement for
beneficiary participation on the governing body should include a
minimum standard for such participation. We also sought comment on the
possible role of a Medicare beneficiary advisory panel to promote
patient engagement in ACO governance.
Comment: Numerous commenters supported the proposed 75 percent
threshold requirement for ACO participants and suppliers because they
believe ACOs should be provider driven. Other commenters supported the
75 percent threshold because they believed that more than 25 percent
non-participant investment could lead to disparities among Shared
Savings Program stakeholders, create a conflict of interest, and impede
the goal of efficient care delivery. One commenter urged us to clarify
that up to 25 percent of the board can be represented by health plans
and management companies. Several commenters sought clarification about
how to assess the 75 percent requirement in the situation of hospital
employment of providers, and whether it is the employer or the employee
that must be represented.
By contrast, several commenters urged us to eliminate the 75
percent threshold because it is overly prescriptive, will prevent many
existing integrated systems from applying, fails to acknowledge that
governing bodies will balance representation across all the populations
it covers for multiple payers that may, for instance, encourage
participation of local businesses on the governing body, and will be
unnecessarily disruptive to many organizations, especially those with
consumer-governed boards. Several commenters suggested that we should
recognize that each governing body will need to be structured
differently depending on its historical makeup, the interest in
participation, and other market dynamics. One commenter suggested that
requiring the exact same governance structure for all ACOs risks
creating inefficient bureaucracy that does not improve quality or
reduce costs.
Several commenters also suggested that this restriction is likely
to restrict ACO access to, and effective use of, multiple streams of
capital for investing in high-value care. Other commenters argued that
the restriction is likely to hinder formation of primary care
physician-led organizations because they will not be able to implement
effective care management and advanced information technology
implementation, and lack the ability to negotiate and administer
provider contracts without the participation of outside entities.
Another commenter suggested the 75 percent requirement could have a
chilling effect on the willingness of private payers to invest in and
partner with ACOs.
Some commenters stated that the 75 percent requirement may conflict
with IRS policy that requires governing bodies of tax-exempt entities
to be comprised of a broad spectrum of
[[Page 67820]]
community members. Another commenter suggested that 501(c)(3) hospitals
or health systems would find it difficult to form an ACO as a joint
venture because the IRS requires those nonprofits to demonstrate that
the joint venture is in the charity's interest and that charitable
assets are not used for private inurement. Other commenters noted that
the 75 percent requirement could conflict with State law requirements
such as ones requiring governing boards of public hospitals to be
elected, or that in order for nonprofit health care entities to
maintain an exemption from certain State's business and occupation tax,
paid employees cannot serve on the governing board. Other commenters
suggested that we extend the same flexibility we proposed to provide to
ACOs with regard to leadership and management structures to our
governance requirements.
Response: We continue to believe that the 75-percent control
requirement is necessary to ensure that ACOs are provider driven, as
requested by the comments. The implication of this requirement is that
non-Medicare enrolled entities, such as management companies and health
plans may have less than 25 percent voting control of the ACO governing
body. For example, if a hospital, two physician groups, and a health
plan formed an ACO, the hospital and two physician groups must control
at least 75 percent of the ACO governing body. We decline, as
previously discussed, to require how the voting control of the hospital
and two physicians groups is apportioned among them. Although we
recognize commenters' concern that this threshold could reduce the
amount of investment capital available to ACOs, we believe it strikes
an appropriate balance to incent and empower ACO participants to be
accountable for the success of the ACO's operations.
We also clarify that existing entity ACOs, such as a hospital
employing ACO professionals, by definition, would have 100 percent
control of the governing body, because the existing entity is the only
member of the governing body.
Notwithstanding this requirement, we also agree with commenters
that we should provide ACOs with flexibility regarding the composition
of the ACO's governing body. This flexibility is discussed later in
this section of this final rule and provides a means for an ACO to
compose its governing body to involve ACO participants in innovative
ways in ACO governance. We believe this flexibility obviates the
commenters' concerns that the 75 percent threshold would conflict with
laws governing the composition of tax-exempt or State-licensed
entities.
Comment: In response to our request for comments on whether our
requirement that 75 percent control of the governing body be held by
ACO participants was an appropriate percentage, commenters suggested a
variety of different percentage requirements on the governing body for
certain types of ACO physicians and other health care providers.
Commenters suggested that physicians occupy at least one-third, one-
half, or greater than one-half of governing body seats. Other
commenters suggested that primary care physicians comprise at least 50
percent of the ACO governing body and independent practices have
representation proportionate to their percentage of ACO physicians,
while another commenter suggested that the governing body include an
equal number of primary care and specialty physicians to guarantee that
ACOs' leadership structures focus on primary care, prevention, care
coordination and disease management. Another commenter suggested that
50 percent of the governing body consist of physicians who have their
own practice and not physicians who are employed directly or indirectly
by a hospital system.
By contrast, some commenters suggested that we require a more
balanced composition, with 50 percent ACO participant representation, a
majority of which should be primary care providers, and 50 percent key
community stakeholders who do not derive livelihood from the ACO or one
of its products. Some commenters suggested that the inclusion of
employer and/or labor representatives in the community stakeholder
portion would also serve as a way to help prevent cost-shifting to the
private sector. Another commenter suggested a bare minimum of provider
representation, because anything more may bring in members to the board
who do not have the requisite skill and experience to function in a
leadership role.
Response: For the reasons previously discussed, we will finalize
our proposal to require 75 percent control by ACO participants that are
Medicare-enrolled TINs. We decline, as previously discussed, to require
how the voting control will be apportioned among ACO participants.
Comment: Some commenters supported the requirement that each ACO
participant choose an appropriate representative from within its
organization to represent them on the governing body. Several
commenters sought clarification about the requirement. For example, one
commenter sought clarification that an employee of an IPA (which is a
member of an ACO) can be the representative on the board. Other
commenters sought clarification about the word ``organization'' in the
phrase ``from within its organization,'' specifically whether
organization meant each and every ACO participant's organization or the
ACO as an organization.
Response: Under our proposal, we intended that a representative
from each ACO participant would be included on the ACO's governing
body. But, as previously discussed, we believe that ACOs should have
flexibility to construct their governing bodies in a way that allows
them to achieve the three-part aim in the way they see fit.
Accordingly, we will eliminate the requirement that each ACO
participant choose an appropriate representative from within its
organization to represent it on the governing body.
Comment: Several commenters were unclear whether we were requiring
that all entities with which an ACO contracts would be considered an
ACO participant and therefore have a seat on the governing body. In
particular, some commenters sought clarification about the interaction
between an ACO and a third party that would develop the technology,
systems, processes and administrative functions for the ACO. Other
comments sought clarification of whether we will consider a provider
system one ACO or multiple ACO participants, because the individuals
within the system each have separate TINs that are eligible as ACOs in
their own right.
Response: We expect that ACOs, in some instances, will contract
with third parties to provide technology, systems, processes, and
administrative functions for the ACO. These entities are not ACO
participants as that term is defined in Sec. 425.20 of these
regulations. Accordingly, we are not requiring these third parties to
be represented on the governing body. A provider system made up of
multiple Medicare-enrolled TINs will have flexibility to use its
existing governing body (assuming it is an existing legal entity with a
pre-existing governing body) or to structure a new governing body in a
way that meets the requirements for meaningful representation of its
ACO participants while also enabling it to accomplish the three-part
aim.
Comment: Many commenters strongly supported our proposal to require
ACOs to include a beneficiary on the governing body so that the person
would advocate for the local community, patient safety issues,
[[Page 67821]]
provide a strong, independent voice, and be part of ACO decision
making. Other commenters suggested requiring even more consumer or
community-based organization representation such as a plurality of the
board or proportional representation based on the number of Medicare
beneficiaries, such as two Medicare beneficiary representatives for
every 5,000 patients assigned to the ACO, but no less than 15 percent
beneficiary representation, or three beneficiaries and three local
community organization representatives.
Several commenters suggested that one beneficiary on the board is
insufficient. Other commenters argued that together beneficiaries and
consumer advocates must possess a sufficient number of seats on the
governing body to enable them to substantively influence an ACO and its
operations, because beneficiary representatives and consumer advocates
bring distinct perspectives to the table. Other commenters suggested
that the ACO describe in its application how it would have diverse,
balanced, and effective consumer representation in the ACO's
governance.
Other commenters objected to our proposal to deem ACOs as having
met the requirement to partner with community stakeholders simply by
including a community stakeholder on the governing board. These
comments argue that ACOs will serve a diverse population with a range
of needs, preferences, and values and, thus, one representative will
not be able to speak for the entire community on all issues. These
commenters urged us to require that ACOs develop partnerships with
community-based organizations that--(1) operate within a single local
or regional community; (2) are representative of a community or
significant segments of a community; and (3) provide health,
educational, personal growth, and improvement, social welfare, self-
help for the disadvantaged or related services to individuals in the
community.
Several commenters expressed concern about how the beneficiary
representative would be chosen. For example, one commenter sought
clarification on how we would know that the chosen beneficiary is truly
representative of the beneficiary population served by the ACO. Another
commenter expressed concern about the potential influence of this board
on the consumer representative. Some commenters stated it would make
more sense for the beneficiary representative to have healthcare
knowledge or business experience. One commenter suggested that non-
medical oriented individuals will likely promote their special projects
that they perceive as beneficial to their own goals and aims.
One commenter sought clarification about whether beneficiary and/or
community organization is counted toward the 75 percent threshold or if
it is in the 25 percent non-participant group.
By contrast, many comments stated our proposed requirement was too
prescriptive. Commenters indicated that such a requirement could: (1)
Mean that a clinically integrated physician network would have to
restructure its bylaws and thus re-contract with its entire physician
network; (2) place the beneficiary in an inappropriate position to be
voting on decisions of the organization's non-ACO lines of business;
(3) conflict with State law which requires only licensed medical
professionals to govern the professional corporation; (4) conflict with
State and local laws that dictate composition of public hospital/health
system boards and/or restrict the authority those boards may be able to
delegate (given their authority over taxpayer funds); or (5) result in
a potential HIPAA violation.
These commenters suggested that there are more effective ways to
obtain beneficiary representation such as through creation of a
committee of participants and/or beneficiaries which could accomplish
the same purpose without the necessity of a board role. They
recommended creating non-voting and ongoing advisory groups of
beneficiaries rather than requiring an ACO to include a single
beneficiary on the governing body. One commenter suggested that we
define lack of a ``conflict of interest.''
Response: We continue to believe that a focus on the beneficiary in
all facets of ACO governance will be critical for ACOs to achieve the
three-part aim. Therefore, we finalize our proposal to require
beneficiary representation on the governing body, with an option
(discussed later in this final rule) to allow for flexibility for those
ACOs that seek innovative ways to involve beneficiaries in ACO
governance.
We decline the suggestions to increase the beneficiary
representation requirement, because we believe the proposal achieves
our objective but still permits ACOs flexibility to structure their
governing bodies appropriately. We encourage all ACOs to consider
seriously how to provide other opportunities for beneficiaries to be
involved further in ACO governance in addition to the seat on the
governing body. We also clarify that, as we proposed, the beneficiary
representative (like all members on the governing body as discussed
previously) must not have a conflict of interest, such that he or she
places his or her own interest, or an interest of an immediate family
member, above the ACO's mission. In addition, the beneficiary
representative cannot be an ACO provider/supplier within the ACO's
network.
We recognize commenters' concerns that requiring a beneficiary on
the governing body could conflict with State corporate practice of
medicine laws or other local laws regarding, for instance, governing
body requirements for public health or higher education institutions.
In addition, there could be other reasons that beneficiary
representation on an ACO's governing body may not be feasible. For
these reasons, we agree with commenters that it is appropriate to
provide flexibility regarding the composition of ACO governing bodies.
Accordingly, an ACO that seeks to compose its governing body in such a
way that it does not meet either the requirement regarding 75 percent
ACO participant control or the requirement regarding beneficiary
representation on the governing body would be able to describe in its
application how the proposed structure of its governing body would
involve ACO participants in innovative ways in ACO governance and
provide a meaningful opportunity for beneficiaries to participate in
the governance of the ACO. For example, this flexibility would allow
ACOs that operate in States with Corporate Practice of Medicine
restrictions to structure beneficiary representation accordingly and it
also would allow for consumer-driven boards that have more than 25
percent consumer representation. This option could also be used by
existing entities to explain why they should not be required to
reconfigure their board if they have other means of addressing the
consumer perspective in governance.
Final Decision: In summary, we will finalize our proposals that at
least 75 percent control of the ACO's governing body must be held by
the ACO's participants. The governing body of the ACO must be separate
and unique to the ACO in the cases where the ACO comprises multiple,
otherwise independent entities that are not under common control (for
example, several independent physician group practices). However, the
members of the governing body may serve in a similar or complementary
manner for a participant in the ACO. Each ACO should provide for
beneficiary representation on its governing body. In cases in which the
composition of an ACO's governing
[[Page 67822]]
body does not meet the 75 percent ACO participant control threshold or
include the required beneficiary governing body representation, the ACO
must describe why it seeks to differ from the established requirements
and how the ACO will involve ACO participants in innovative ways in ACO
governance and/or provide for meaningful participation in ACO
governance by Medicare beneficiaries. (Sec. 425.106).
4. Leadership and Management Structure
Section 1899(b)(2)(F) of the Act requires an eligible ACO to ``have
in place a leadership and management structure that includes clinical
and administrative systems.'' In the proposed rule, we stated that we
believed an ACO's leadership and management structure should align with
and support the goals of the Shared Savings Program and the three-part
aim of better care for individuals, better health for populations, and
lower growth in expenditures.
We drew from two sources to develop our proposals for ACO
leadership and management structures. We first highlighted those
factors that participants in the PGP demonstration identified as
critical to improving quality of care and the opportunity to share
savings. Second, we discussed the criteria developed by the Antitrust
Agencies to assess whether collaborations of otherwise competing health
care providers are likely to, or do, enable their collaborators jointly
to achieve cost efficiencies and quality improvements. We explained
that the intent of the Shared Savings Program and the focus of
antitrust enforcement are both aimed at ensuring that collaborations
between health care providers result in improved coordination of care,
lower costs, and higher quality, including through investment in
infrastructure and redesigned care processes for high quality and
efficient service delivery. We stated in the proposed rule that the
Antitrust Agencies' criteria provide insight into the leadership and
management structures, including clinical and administrative systems,
necessary for ACOs to achieve the three-part aim of better care for
individuals, better health for populations, and lower growth in
expenditures.
We stated that it is in the public interest to harmonize the
eligibility criteria for ACOs that wish to participate in the Shared
Savings Program with the similar antitrust criteria on clinical
integration, because competition between ACOs is expected to have
significant benefits for Medicare beneficiaries. Further, because ACOs
that operate in the Shared Savings Program are likely to use the same
organizational structure and clinical care practices to serve both
Medicare beneficiaries and consumers covered by commercial insurance,
the certainty created by harmonizing our eligibility criteria with
antitrust criteria will help to reduce the likelihood that an ACO
organization participating in the Shared Savings Program will be
challenged as per se illegal under the antitrust laws, which could
prevent the ACO from fulfilling the term of its agreement under the
Shared Savings Program.
Thus, in order to meet the requirements in section 1899(b)(2)(F) of
the Act that an ACO have a leadership and management structure that
includes clinical and administrative systems, we proposed that an ACO
meet the following criteria:
The ACO's operations would be managed by an executive,
officer, manager, or general partner, whose appointment and removal are
under the control of the organization's governing body and whose
leadership team has demonstrated the ability to influence or direct
clinical practice to improve efficiency processes and outcomes.
Clinical management and oversight would be managed by a
senior-level medical director who is a board-certified physician,
licensed in the State in which the ACO operates, and physically present
on a regular basis in an established location of the ACO.
ACO participants and ACO providers/suppliers would have a
meaningful commitment to the ACO's clinical integration program to
ensure its likely success.
The ACO would have a physician-directed quality assurance
and process improvement committee that would oversee an ongoing quality
assurance and improvement program.
The ACO would develop and implement evidence-based medical
practice or clinical guidelines and processes for delivering care
consistent with the goals of better care for individuals, better health
for populations, and lower growth in expenditures.
The ACO would have an infrastructure, such as information
technology, that enables the ACO to collect and evaluate data and
provide feedback to the ACO providers/suppliers across the entire
organization, including providing information to influence care at the
point of service.
In order to determine an ACO's compliance with these requirements,
as part of the application process, we proposed that an ACO would
submit all of the following:
ACO documents (for example, participation agreements,
employment contracts, and operating policies) that describe the ACO
participants' and ACO providers/suppliers' rights and obligations in
the ACO, how the opportunity to receive shared savings will encourage
ACO participants and ACO providers/suppliers to adhere to the quality
assurance and improvement program and the evidenced-based clinical
guidelines.
Documents that describe the scope and scale of the quality
assurance and clinical integration program, including documents that
describe all relevant clinical integration program systems and
processes.
Supporting materials documenting the ACO's organization
and management structure, including an organizational chart, a list of
committees (including the names of committee members) and their
structures, and job descriptions for senior administrative and clinical
leaders.
Evidence that the ACO has a board-certified physician as
its medical director who is licensed in the State in which the ACO
resides and that a principal CMS liaison is identified in its
leadership structure.
Evidence that the governing body includes persons who
represent the ACO participants, and that these ACO participants hold at
least 75 percent control of the governing body.
Additionally, upon request, the ACO would also be required to
provide copies of the following documents:
Documents effectuating the ACO's formation and operation,
including charters, by-laws, articles of incorporation, and
partnership, joint venture, management, or asset purchase agreements.
Descriptions of the remedial processes that will apply
when ACO participants and ACO providers/suppliers fail to comply with
the ACO's internal procedures and performance standards, including
corrective action plans and the circumstances under which expulsion
could occur.
We also proposed to allow ACOs with innovative leadership and
management structures to describe an alternative mechanism for how
their leadership and management structure would conduct the activities
noted previously in order to achieve the same goals so that they could
be given consideration in the application process. That is, an
organization that does not have one or more of the following: An
executive, officer, manager, or general partner; senior-level medical
director; or
[[Page 67823]]
physician-directed quality assurance and process improvement committee,
would be required in its application to describe how the ACO will
perform these functions without such leadership. Additionally, we
sought comment on the requirement for submission of certain documents
as noted previously and whether an alternative method could be used to
verify compliance with requirements. We also requested comment on the
leadership and management structure and whether the compliance burden
associated with these requirements would discourage participation,
hinder innovative organizational structures, or whether there are other
or alternative leadership and management requirements that would enable
these organizations to meet the three-part aim.
Comment: Some commenters suggested that we require that a physician
or a surgeon licensed in the State in which the ACO is organized serve
as either the CEO or president of the ACO and that a physician or a
surgeon licensed in the State in which the ACO is organized serve as
the Chair of the Board of Directors of the ACO. Other commenters
recommended that CMS require that primary care physicians be in
executive leadership positions of the ACO. Other commenters suggested
that we require personnel with health information management experience
to be part of the ACO's leadership.
Response: In light of our decision to allow ACOs flexibility in how
they establish their governing bodies, we also believe that ACOs should
have flexibility to determine their leadership and management
structure. We understand commenters' concerns, but we decline to
specify additional requirements as suggested by the commenters for ACO
leadership and management.
Comment: Many commenters strongly supported the proposed
requirement of senior-level medical director with responsibility for
clinical management and oversight. Several commenters suggested
removing the full-time requirement, because the ACO may not have the
volume to support a full-time position, it is costly and inconsistent
with the diverse needs of each ACO, and there is little evidence to
suggest that a small to mid-size ACO is likely to need a full time
senior-level medical director who is physically present on a regular
basis at an established ACO location.
Many commenters supported a part-time requirement, flexible time
requirement, or no time requirement. One commenter suggested that the
duties of a ``full time medical director'' include the provision of
direct clinical care to patients. One commenter suggested eliminating
the full time requirement, as long as the medical director devotes
sufficient time to fulfilling their ACO related responsibilities.
Another commenter suggested that the focus should be on whether the
required coordination of care processes are in place and functional at
a core level, rather than who is directing them.
Several comments suggested removing the requirement that the
medical director be a physician because the Act does not require
physician leadership, nor is there evidence suggesting physician
leadership is necessary. Several commenters suggested the medical
director could be any qualified health care professional.
A few comments suggested strengthening the requirements for
clinical oversight and requiring that the director demonstrate an
understanding of the core concepts of medical management or have
managerial experience, advanced management degree, or certification in
medical management and system leadership. One commenter suggested that
physician leadership show that it has geriatric competencies, to ensure
that patients with dementia and Alzheimer's disease do not receive
poorer care.
A few comments suggested that we: (1) Not require the medical
director to be licensed in the State because if a medical director has
been effective in excelling in services in one State and seeks to
expand those services into another State, CMS would be ill-advised to
prevent this from occurring; and (2) not require board certification
but instead allow a physician who has acquired certification in medical
management or quality improvement to be the medical director.
Some commenters sought clarification as to whether the medical
director must be licensed in every State in which a multi-State ACO
operates and whether the medical director must be on-site at each
location at which the ACO provides services (if a multi-site ACO).
Response: We believe physician leadership of clinical management
and oversight is important to an ACO's ability to achieve the three-
part aim and we will finalize the proposed requirement that an ACO have
a senior-level medical director who is a board-certified physician.
However, we understand that this requirement may pose an additional
financial burden, particularly in small or rural ACOs. Therefore, we
are modifying our original proposal to eliminate the full time
requirement. Instead, we will require that clinical management and
oversight be managed by a senior-level medical director who is one of
the ACO's physicians. We decline to require additional qualifications
for the medical director, because such qualification may be burdensome
for small and rural ACOs. However, we are maintaining the requirement
that the medical director be board-certified and licensed in one of the
States in which the ACO operates. We believe such certification and
licensure are necessary to establish credibility among physicians in
the ACO. Further, we clarify that an ``on site'' physician is one who
is present at any clinic, office, or other location participating in
the ACO.
Comment: Some commenters supported the requirement for a physician-
directed quality assurance and process improvement committee. Several
comments stated that physician-led quality and clinical process
improvement activities are crucial to building trust and credibility
with physicians and beneficiaries, as well as necessary ingredients to
achieving the quality and beneficiary satisfaction targets set by the
program.
By contrast, other commenters believed that such a physician-led
committee would be onerous in rural areas and that safety net providers
should have some flexibility in meeting these requirements. Several
commenters suggested removing the requirement for physician leadership
and instead requiring leadership by any qualified healthcare
professional. Some comments suggested requiring the director to
demonstrate special training or certification in quality improvement.
Response: We acknowledge commenters' concerns that a committee
could be burdensome for certain ACOs and that quality improvement
activities can be directed by non-physician leadership. In particular,
we are persuaded by commenters who suggested that many existing and
successful quality improvement efforts are not physician-led.
Accordingly, we will eliminate the requirement for ACOs to establish
such a committee. Instead, as part of its application, an ACO will be
required to describe how it will establish and maintain an ongoing
quality assurance and improvement program, led by an appropriately
qualified health care professional. We believe these modifications will
provide ACOs with greater flexibility to meet this requirement.
Comment: Some commenters supported our proposal to learn from the
Antitrust Agencies' clinical integration requirements to help specify
[[Page 67824]]
the necessary ``clinical and administrative systems'' that are required
to be part of the ACO's leadership and management structure. These
commenters recognized that ``success will be determined by the
engagement and commitment of practicing physicians.'' Indeed, one
commenter explained that unregulated clinical integration was likely to
lead to the greater vertical consolidation of provider markets, which
in turn will fuel cost growth, making health care less affordable for
private payers.
By contrast, several commenters contended that the proposed rule's
decision to rely, in part, on the Antitrust Agencies' clinical
integration requirements for ``clinical and administrative'' systems
was in error. These and other commenters opposed the proposed clinical
integration requirements as overly prescriptive, unnecessary, likely to
limit innovation in design and implementation of ACOs and unrelated to
the three-part aim. However, many of these commenters acknowledge that
it is a step forward that the proposed Antitrust Policy Statement
states that an ACO that meets CMS criteria will be found to be
sufficiently ``integrated'' to meet part of the test for avoiding
antitrust enforcement actions. Several commenters also suggested that
even if there are changes to the ACO program to make it more attractive
financially, these barriers to clinical integration will impede a
robust response to the ACO program.
One commenter explained that real clinical integration is evidenced
by patient coordination of care across health care settings, providers,
and suppliers and is best shown when there is a structure in place that
is patient-focused and where clinicians collaborate on best practices
in an effort to furnish higher quality care that they likely would not
achieve if working independently. This commenter and others suggested
that we focus on the statutorily required processes regarding reporting
quality measures, promoting evidence-based patient processes, and
coordinating care, thus making separate clinical integration
requirements moot.
Several commenters suggested that we eliminate the requirements
regarding clinical integration and instead describe, at a very high
level, examples of possible ways an ACO could meet the three-part aim.
Some commenters suggested that the Antitrust Agencies specify which
criteria are related to antitrust issues and which are applicable to
all clinically integrated health care organizations. One commenter
suggested that CMS, as a purchaser of health care services, should
negotiate targets for performance at a higher level and not place
requirements on how ACOs achieve these targets. Several commenters
suggested we work with the Antitrust Agencies to create more
flexibility for physicians to join together to provide services. A
commenter argued that participation in the Shared Savings Program, in
itself, is an undertaking of meaningful financial integration, thus
rendering the need for compliance with clinical integration unnecessary
to avoid per se condemnation.
Response: We disagree with the commenters' suggestion that relying,
in part, on the Antitrust Agencies' clinical integration requirements
for ``clinical and administrative'' systems is overly prescriptive,
unnecessary, or likely to limit innovation in ACO design. As we
explained in the proposed rule, the purposes of the Shared Savings
Program and the Antitrust Agencies' clinical integration requirements
are complementary and, indeed, mutually reinforcing. The purposes of
the Shared Savings Program are to promote accountability for a patient
population, coordinate items and services furnished to beneficiaries
under Medicare Parts A and B, and encourage investment in
infrastructure and redesigned care processes for high quality and
efficient service delivery. The Antitrust Agencies' clinical
integration criteria require participants to show a degree of
interaction and interdependence among providers in their provision of
medical services that enables them to jointly achieve cost efficiencies
and quality improvements. We do not see how ACO participants and ACO
providers/suppliers could achieve the statutory goals of the Shared
Savings Program without showing a degree of interaction and
interdependence in their joint provision of medical services such that
they provide high quality and efficient service delivery. Many
commenters agreed with this conclusion and we disagree with the
commenters that suggested otherwise.
We also agree with commenters that the four statutorily required
processes (section 1899(b)(2)(G) of the Act) to promote evidence-based
medicine, report cost and quality metrics, promote patient engagement,
and coordinate care overlap and are consistent with our proposed
clinical integration criteria. Accordingly, we are aligning our final
requirements regarding sufficient ``clinical and administrative
systems'' with our final requirements regarding these four required
processes. These required processes are discussed later in this section
of the final rule.
We disagree with the commenter that participation in the Shared
Savings Program is an undertaking of meaningful financial integration.
Because ACO participants and ACO providers/suppliers will continue to
receive FFS payments and are required only to have a mechanism to
receive and distribute shared savings, they will not necessarily be
sharing substantial financial risk, which is the hallmark of financial
integration.
Comment: Some commenters suggested that we provide concrete
standards as to what a meaningful commitment is (especially a
meaningful human investment). Another commenter suggested that those
ACO providers/suppliers providing a meaningful financial commitment
should receive increased shared savings.
A commenter questioned whether it is sufficient to demonstrate a
meaningful commitment if a provider agrees to participate contractually
in an ACO and to comply with the ACO's clinical, performance, and
administrative standards.
A commenter suggested we revise our interpretation of ``meaningful
commitment to the ACO's clinical integration,'' because financial and
human capital are insufficient to show clinical integration; rather,
real clinical integration is evidenced in patient coordination of care
across health care settings, providers, and suppliers.
Some commenters queried how a specialist or other health care
professional can show ``meaningful commitment'' if they are in more
than one ACO. Other commenters suggested that the level of observable
commitment is neither a precursor to clinical activity nor the outcome.
Response: We continue to believe that each ACO participant and ACO
provider/supplier must demonstrate a meaningful commitment (for
example, time, effort, or financial) to the ACO's mission to ensure its
likely success so that the ACO participant and/or ACO provider/supplier
will have a stake in ensuring the ACO achieves its mission. Meaningful
commitment may include, for example, a sufficient financial or human
investment (for example, time and effort) in the ongoing operations of
the ACO such that the potential loss or recoupment of the investment is
likely to motivate the ACO participant or ACO provider/supplier to take
the actions necessary to help the ACO achieve its mission. A meaningful
commitment may be evidenced by, for example--
Financial investment such as capital contributions for ACO
infrastructure information systems, office hardware, computer software,
[[Page 67825]]
ACO staff, training program, or any other aspect of the ACO's
operations where that investment provides the ACO participant or
provider/supplier with a sufficient stake in the successful operation
of the ACO such that the potential loss or recoupment of the investment
is likely to motivate the participant or provider/supplier to achieve
the mission of the ACO; and
Human investment such as serving on the ACO's governing
body; serving on committees relating to the establishment,
implementation, monitoring or enforcement of the ACO's evidence-based
medical practice or clinical guidelines; or otherwise participating in
other aspects of the ACO's operations, such as definition of processes
to promote patient engagement, care coordination, or internally
reporting on cost and quality metrics, to a degree that evidences a
personal investment in ensuring that the ACO achieves its goals.
We also believe that a commitment can be meaningful when ACO
participants and ACO providers/suppliers agree to comply with and
implement the ACO's required processes and are accountable for meeting
the ACO's performance standards. By doing so, we believe that they will
be motivated to achieve the ACO's internal performance standards and to
comply with the processes required by section 1899(b)(2)(G) of the Act
(as discussed later in this section). Indeed, we fail to see how the
required processes discussed later in this final rule could be
effectuated unless ACO providers/suppliers meaningfully commit to
implement, adhere to, and be accountable for the ACO's evidenced-based
medical guidelines, care coordination procedures, patient engagement
processes, and reporting of cost and quality that are essential to
meeting the three-part aim.
We also clarify that an ACO provider/supplier can contractually
agree to work with one or more ACOs by agreeing to implement, adhere
to, and be accountable for that ACO's statutorily required processes.
We disagree with the commenter's suggestion that the level of
observable commitment is neither a precursor to clinical activity nor
to outcome. We do not see how an ACO could achieve its mission if its
providers and suppliers do not agree to comply with and implement the
ACO's required processes. Such a commitment is necessary, although
insufficient in and of itself, to ensure that an ACO achieves the
three-part aim.
Comment: Several commenters suggested that the requirement that
ACOs include descriptions in their applications of how they will
satisfy certain criteria and make documents available is too burdensome
and creates a barrier to participation, especially for safety net
providers and many smaller and non-hospital-based applicants. Some
commenters asked what we will do with the information (for example,
employment contracts).
But several comments suggested we strengthen the application
requirement. For example, these commenters stated that an ACO should be
required to detail how it plans to partner with community-based
organizations, and to detail the kinds of processes it will use to
coordinate the care of Medicare beneficiaries with post-acute care
providers.
Another commenter suggested self-attestation for the many requested
documents to show the leadership and management structures. Other
commenters urged us to use NCQA's ACO certification standards to deem
an ACO as acceptable and to work with NCQA to eliminate duplicating
requirements and aligning accreditations.
Response: We acknowledge commenters' concerns that the proposed
documentation requests may be burdensome for certain ACOs. Accordingly,
we have aligned our proposed documentation requests regarding clinical
and administrative systems with the statutory processes that are
described in this section. We believe that this streamlining of
document requests addresses the commenters' suggestions for additional
detail regarding certain clinical and administrative processes. It also
obviates the need to rely NCQA's ACO certification standards.
Notwithstanding this alignment, we continue to believe that ACOs should
submit certain documentation regarding their clinical and
administrative systems to ensure that the ACO meets the eligibility
requirements, has the requisite clinical leadership, and has a
reasonable chance of achieving the three-part aim. In addition, we will
use the documents to assess whether ACO participants and ACO provider/
supplier(s) have the requisite meaningful commitment to the mission of
the ACO.
Comment: Several commenters applauded our proposal to consider an
innovative ACO with a management structure not meeting the proposed
leadership and management requirements. As noted previously, many
commenters suggested that the leadership and management requirements
were overly prescriptive. Thus, many commenters supported the
innovative option proposal.
Response: We will finalize our proposal to allow ACO applicants to
describe innovative leadership and management structures that do not
meet the final rule's leadership and management structures in order to
encourage innovation in ACO leadership and management structures.
Final Decision: We will finalize the requirement that the ACO's
operations be managed by an executive, officer, manager, or general
partner, whose appointment and removal are under the control of the
organization's governing body and whose leadership team has
demonstrated the ability to influence or direct clinical practice to
improve efficiency, processes, and outcomes. In addition, clinical
management and oversight must be managed by a senior-level medical
director who is one of the ACO's physicians, who is physically present
on a regular basis in an established ACO location, and who is a board-
certified physician and licensed in one of the States in which the ACO
operates.
As part of its application, an ACO will be required to describe how
it will establish and maintain an ongoing quality assurance and
improvement program, led by an appropriately qualified health care
professional. ACO participants and ACO providers/suppliers must
demonstrate a meaningful commitment to the mission of the ACO. A
meaningful commitment can be shown when ACO participants and ACO
providers/suppliers agree to comply with and implement the ACO's
processes required by section 1899(b)(2)(G) of the Act and are held
accountable for meeting the ACO's performance standards for each
required process as defined later in this section.
As part of their applications, ACOs must submit certain
documentation regarding their leadership and management structures,
including clinical and administrative systems, to ensure that the ACO
meets the eligibility requirements. We are finalizing the following
document requests to effectuate our leadership and management structure
requirements:
ACO documents (for example, participation agreements,
employment contracts, and operating policies) sufficient to describe
the ACO participants' and ACO providers/suppliers' rights and
obligations in the ACO.
Supporting 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
[[Page 67826]]
descriptions for senior administrative and clinical leaders.
Additionally, upon request, the ACO may also be required to provide
copies of documents effectuating the ACO's formation and operation,
including charters, by-laws, articles of incorporation, and
partnership, joint venture, management, or asset purchase agreements.
We also will finalize our proposal to allow ACO applicants to
describe innovative leadership and management structures that do not
meet the final rule's leadership and management requirements. (Sec.
425.108, Sec. 425.112, and Sec. 425.204).
5. Processes To Promote Evidence-Based Medicine, Patient Engagement,
Reporting, Coordination of Care, and Demonstrating Patient-Centeredness
Section 1899(b)(2) of the Act establishes a number of requirements
which ACOs must satisfy in order to be eligible to participate in the
Shared Savings Program. Specifically, section 1899(b)(2)(G) of the Act
requires an ACO to define processes to: Promote evidence-based medicine
and patient engagement; report on quality and cost measures; and
coordinate care, such as through the use of telehealth, remote patient
monitoring, and other enabling technologies.
We proposed that to meet the requirements under section
1899(b)(2)(G) of the Act, the ACO must document in its application its
plans to: (1) Promote evidence-based medicine; (2) promote beneficiary
engagement; (3) report internally on quality and cost metrics; and (4)
coordinate care. We proposed to allow ACOs the flexibility to choose
the tools for meeting these requirements that are most appropriate for
their practitioners and patient populations. In addition, we proposed
that the required documentation present convincing evidence of concrete
and effective plans to satisfy these requirements and that the
documentation provide the specific processes and criteria that the ACO
intends to use. This documentation was necessary because we wanted to
ensure such processes would include provisions for internal assessment
of cost and quality of care within the ACO, and that the ACO would
employ these assessments in continuous improvement of the ACO's care
practices. We explained in the proposed rule that as we learn more
about successful strategies in these areas, and as we have more
experience assessing specific critical elements for success, the Shared
Savings Program eligibility requirements with regard to section
1899(b)(2)(G) of the Act may be revised. We also specifically solicited
comment on whether more prescriptive criteria may be appropriate for
meeting some or all of these requirements under section 1899(b)(2)(G)
of the Act for future rulemaking.
In addition, section 1899(b)(2)(H) of the Act requires an ACO to
``demonstrate to the Secretary that it meets patient-centeredness
criteria specified by the Secretary, such as the use of patient and
caregiver assessments or the use of individualized care plans.'' We
explained that a patient-centered, or person-centered, orientation
could be defined as care that incorporates the values of transparency,
individualization, recognition, respect, dignity, and choice in all
matters, without exception, related to one's person, circumstances, and
relationships in health care. We drew from the work of the Institute of
Medicine and the principles articulated by the National Partnership for
Women and Families to develop our proposals. We explained that the
statutory requirement for ``patient-centeredness criteria'' means that
patient-centered care must be promoted by the ACO's governing body and
integrated into practice by leadership and management working with the
organization's health care teams.
We proposed that an ACO would be considered patient-centered if it
has all of the following:
A beneficiary experience of care survey in place and a
description in the ACO application of how the survey results will be
used to improve care over time.
Patient involvement in ACO governance. The ACO would be
required to have a Medicare beneficiary on the governing board.
A process for evaluating the health needs of the ACO's
assigned population, including consideration of diversity in its
patient populations, and a plan to address the needs of its population.
A description of this process must be included in the application,
along with a description of how the ACO would consider diversity in its
patient population and how it plans to address its population needs.
Systems in place to identify high-risk individuals and
processes to develop individualized care plans for targeted patient
populations, including integration of community resources to address
individual needs.
A mechanism in place for the coordination of care (for
example, via use of enabling technologies or care coordinators). In
addition, the ACO should have a process in place (or clear path to
develop such a process) to electronically exchange summary of care
information when patients transition to another provider or setting of
care, both within and outside the ACO, consistent with meaningful use
requirements under the Electronic Health Records (EHR) Incentive
program.
A process in place for communicating clinical knowledge/
evidence-based medicine to beneficiaries in a way that is
understandable to them. This process should allow for beneficiary
engagement and shared decision-making that takes into account the
beneficiaries' unique needs, preferences, values, and priorities.
Written standards in place for beneficiary access and
communication and a process in place for beneficiaries to access their
medical records.
Internal processes in place for measuring clinical or
service performance by physicians across the practices, and using these
results to improve care and service over time.
We explained that this list provides a comprehensive set of
criteria for realizing and demonstrating patient-centeredness in the
operation of an ACO. We solicited comment on these criteria.
We also noted that there is substantial overlap and alignment
between the processes ACOs are required to define under section
1899(b)(2)(G) of the Act and both the proposed patient-centeredness
criteria (as defined by the Secretary in accordance with section
1899(b)(2)(H) of the Act) and the clinical and administrative systems
that are to be in place in the ACO's leadership and management
structure as required by section 1899(b)(2)(F) of the Act. Accordingly
the following comment and responses discussion includes a discussion of
not only the required process, but also the patient-centeredness
criteria and the necessary clinical and administrative systems.
Comment: Commenters suggested that we require a sufficient level of
detail on processes that ACOs are required to define. Several
commenters suggested that we require ACOs to evaluate their own
practices and make adjustments as necessary and hold ACOs accountable
for adhering to their stated plans. Other commenters expressed concerns
that ACOs will need clear and certain guidance, including technical
support, on the processes to promote: Evidence-based medicine, patient
engagement, reports on quality and cost measures, and the coordination
of care. Other commenters explained that patient coordination of care
across health care
[[Page 67827]]
settings, providers, and suppliers is best shown when there is a
structure in place that is patient-focused and where clinicians
collaborate on best practices in an effort to furnish higher quality
care that they likely would not achieve if working independently. These
commenters suggested that our requirements regarding the four
statutorily required processes can help ensure that there is a
structure in place to ensure the likelihood that an ACO can achieve the
three-part aim.
Response: Although we understand the request by some commenters
that we develop a more prescriptive approach to define each of the four
processes, we are concerned that such an approach would be premature
and potentially impede innovation and the goals of this program. ACOs
should retain the flexibility to establish processes that are best
suited to their practice and patient population.
Final Decision: We will finalize our proposal requiring that in
order to be eligible to participate in the Shared Savings Program, the
ACO must provide documentation in its application describing its plans
to: (1) Promote evidence-based medicine; (2) promote beneficiary
engagement; (3) report internally on quality and cost metrics; and (4)
coordinate care. As part of these processes, an ACO shall 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. These plans must include how the ACO
intends to require ACO participants and ACO providers/suppliers to
comply with and implement each process (and sub element thereof),
including the remedial processes and penalties (including the potential
for expulsion) applicable to ACO participants and ACO providers/
suppliers for failure to comply. In addition, these plans must describe
how such processes will include provisions for internal assessment of
cost and quality of care within the ACO and how the ACO would employ
these assessments in continuous improvement of the ACO's care
practices. (Sec. 425.112).
a. Processes To Promote Evidence-Based Medicine
As stated previously, section 1899(b)(2)(G) of the Act requires an
ACO to ``define processes to promote evidence-based medicine * * *.''
We explained in the proposed rule that evidence-based medicine can be
generally defined as the application of the best available evidence
gained from the scientific method to clinical decision-making. We
proposed that as part of the application, the ACO would describe the
evidence-based guidelines it intends to establish, implement, and
periodically update.
Comment: Nearly all comments received supported processes to
promote evidence-based medicine. Some commenters also suggested that
the ACO's evidence-based guidelines apply to a broad range of
conditions that are found in the beneficiary population served by the
ACO. In addition, some commenters suggested that we provide additional
guidance on the development and implementation these guidelines and
processes by: (1) Requiring sufficient level of detail on processes and
tools that will be utilized; (2) requiring ACOs to evaluate the
practices and make adjustments as necessary; (3) including measures
that assess the intended outcomes of these practices in the quality
reporting requirement; and holding ACOs accountable for adhering to
their stated plans.
Additionally, several commenters recommended that these processes
be more prescriptive and include: Measures for improvement to
functional status, suggested tools for monitoring decision support, and
specifications for baseline evidence-based guidelines. Other commenters
suggested that we establish guidelines for how ACOs should establish
their evidence-based medicine. For example, one commenter explained why
the organized medical staff of a hospital in which an ACO participates
should review and approve all medical protocols and all other quality
programs concerning inpatient care at that hospital. Other commenters
suggested that we require specialist involvement in the development of
these clinical guidelines and processes so that the guidelines reflect
appropriate standards of care for their patients and so that new
treatments are not discouraged or disadvantaged. Another commenter
suggested we require that clinical practice guidelines used by ACOs
located in the same geographical area be consistent so that specialists
may be able to participate in more than one ACO. One comment suggested
that we adopt a similar set of criteria to evaluate the evidence-based
approaches of ACOs similar to the one the Institute of Medicine (IOM)
recently released in its consensus report, ``Clinical Practice
Guidelines We Can Trust,'' that details criteria that all evidence-
based guidelines should meet.
One commenter suggested broadening the definition of the term
``evidence-based medicine'' to include best practices regarding
evidence-based psychosocial interventions not generally included as
medicine. One commenter suggested that we require that the application
specify how the leadership structure will assure linkage and
involvement with local and State health agencies.
One comment recommended that ACOs that have met requirements for
NCQA Medical Home recognition be eligible to use the same ``short
form'' of documentation of these capabilities that will be available to
the PGP demonstration practices.
Response: As discussed previously, we believe it is important that
ACOs retain the flexibility to define processes that are best suited to
their own practices and patient populations. Thus, for the requirements
under section 1899(b)(2)(G) of the Act, ACOs must provide documentation
in their respective applications describing how they plan to define,
establish, implement, and periodically update processes to promote
evidence-based medicine applicable to ACO participants and ACO
providers/suppliers as opposed to the establishment of more
prescriptive guidelines regarding the processes of evidence-based
medicine. We agree with commenters that for these guidelines to have an
impact they must cover diagnoses found in the beneficiary population
assigned to the ACO. We believe that the guidelines should address
diagnoses with significant potential for the ACO to achieve quality
improvements, while also accounting for the circumstances of individual
beneficiaries. For the reasons stated previously, we decline, however,
to establish the processes by which ACOs should develop these evidence-
based medicine guidelines. We would consider an ACO that has met the
requirements for NCQA Medical Home recognition well on its way to
demonstrating that it has processes in place that support evidence-
based guidelines, but we will still need to evaluate them in the
context of the Shared Savings Program eligibility requirements.
Final Decision: As previously discussed, to be eligible to
participate in the Shared Savings Program, the ACO must define,
establish, implement, and periodically update its processes to promote
evidence-based medicine. These guidelines must cover diagnoses with
significant potential for the ACO to achieve quality improvements,
taking into account the circumstances of individual beneficiaries.
(Sec. 425.112).
[[Page 67828]]
b. Processes To Promote Patient Engagement
Section 1899(b)(2)(G) of the Act also requires an ACO to ``define
processes to promote * * * patient engagement.'' We described in the
proposed rule that the term ``patient engagement'' is the active
participation of patients and their families in the process of making
medical decisions. We explained that measures for promoting patient
engagement may include, but are not limited to, the use of decision
support tools and shared decision making methods with which the patient
can assess the merits of various treatment options in the context of
his or her values and convictions. Patient engagement also includes
methods for fostering ``health literacy'' in patients and their
families. We proposed that as part of its application, the ACO would
describe the patient engagement processes it intends to establish,
implement, and periodically update.
Related to the process to promote patient engagement, we also
proposed that ACOs have a beneficiary experience of care survey in
place and that the ACO's application should describe how the ACO will
use the survey results to improve care over time. We explained in the
proposed rule that surveys are important tools for assessing
beneficiary experience of care and outcomes. As part of the requirement
to implement a beneficiary experience of care survey, we proposed to
require ACOs to collect and report on measures of beneficiaries'
experience of care and to submit their plan on how they will promote,
assess, and continually improve in weak areas identified by the survey.
Specifically we proposed that ACOs will be required to use the
CAHPS survey. We also proposed to require the adoption of an
appropriate functional status survey module that may be incorporated
into the CAHPS survey. As further discussed in section II.F. of this
final rule, scoring on the patient experience of care survey would
become part of the assessment of the ACO's quality performance.
Promoting patient engagement would also include a requirement that
ACOs provide for patient involvement in their governing processes. We
proposed that ACOs would be required to demonstrate a partnership with
Medicare FFS beneficiaries by having representation by a Medicare
beneficiary serviced by the ACO, in the ACO governing body. In order to
safeguard against any conflicts of interest, we proposed that any
patient(s) included in an ACO's governing body, or an immediate family
member, must not have any conflict of interest, and they may not be an
ACO provider/supplier within the ACO's network. Section II.B.3. of this
final rule discusses these issues in full.
In addition to these two proposals relating to processes for
patient engagement, we proposed four other requirements relating to
patient-centeredness that overlap substantially with our proposals
regarding patient engagement. These processes include: (1) Evaluating
the health needs of the ACO's assigned population, including
consideration of diversity in its patient populations, and a plan to
address the needs of its population; (2) communicating clinical
knowledge/evidence-based medicine to beneficiaries in a way that is
understandable to them; (3) engaging beneficiaries in shared decision-
making that takes into account the beneficiaries' unique needs,
preferences, values, and priorities; and (4) having written standards
in place for beneficiary communications and allowing beneficiary access
to their medical record.
As part of the application, we proposed that the ACO would describe
the patient engagement processes it intends to establish, implement,
and periodically update.
Comment: Commenters supported our proposal requiring that an ACO
describe, in its application, its process for evaluating the health
needs of the population, including consideration of diversity in its
patient populations, and a plan to address the needs of its Medicare
population. Several comments suggest that certain populations, such as
tribal populations, have a disproportionate share of diversity and
recommended including specific measures to account for the diversity in
their Medicare population.
Response: We agree with the comments received that certain
beneficiary populations will be more diverse than others, which is why
we proposed to provide ACOs with the flexibility to describe the
processes that will be most effective in evaluating their patient
population as opposed to prescriptively identifying specific measures
for all ACOs.
Comment: Several commenters explained that ACOs must recognize that
the needs of a diverse population are based on many factors, such as
race, gender, gender identity or expression, sexual orientation,
disability, income status, English proficiency, and others. These
commenters, and others, suggested that we develop an objective set of
criteria for the evaluation of population health needs and
consideration of diversity.
Response: We agree with commenters that true patient engagement
requires sensitivity to the many diverse factors that can affect a
specific patient population and the appropriate care to address the
health needs of that population. We explained in the proposed rule that
several institutions and associations such as the National Committee
for Quality Assurance (NCQA) and AHRQ have made recommendations
regarding evaluation of population health and diversity. Establishing
partnerships with a State or local health department which performs
community health needs assessments and applying these findings to the
ACO's population and activities may be another viable option for
meeting this criterion. Given this broad range of available resources,
we decline to develop a set of evaluation criteria to assess the health
needs of an ACO's patient population.
Comment: Commenters supported requiring ACOs to demonstrate
processes to promote patient engagement relating to communicating
clinical knowledge, shared decision making, and beneficiary access to
medical records. Some commenters expressed concern that we were
allowing too much latitude in defining these processes. These
commenters recommended more guidance in areas where there is evidence
of best practices. Comments also recommended that in order for the
benefits of adherence to processes to promote patient engagement to be
realized, patients and families need to be incentivized to actively
participate in their own health care.
Response: We believe it is important that ACOs retain the
flexibility to establish processes that are best suited to their own
practices and patient populations. Additionally, the very act of
educating and engaging patients in the decision making processes
associated with their own health care needs should sufficiently
incentivize patients to actively engage in prospective treatment
approaches in the light of their own values and convictions. Therefore,
we decline to impose additional requirements in this area.
Final Decision: To be eligible to participate in the Shared Savings
Program, the ACO must define, establish, implement, and periodically
update processes to promote patient engagement. In its application an
ACO must describe how it intends to address all of the following areas:
(a) Evaluating the health needs of the ACO's assigned population; (b)
communicating clinical knowledge/evidence-based medicine to
[[Page 67829]]
beneficiaries; (c) beneficiary engagement and shared decision-making;
and (d) written standards for beneficiary access and communication, and
a process in place for beneficiaries to access their medical record.
(Sec. 425.112).
c. Processes To Report on Quality and Cost Measures
Section 1899(b)(2)(G) of the Act requires an ACO to ``define
processes to * * * report on quality and cost measures.'' We explained
in the proposed rule that processes that may be used for reporting on
quality and cost measures may include, but are not limited to,
developing a population health data management capability, or
implementing practice and physician level data capabilities with point-
of-service (POS) reminder systems to drive improvement in quality and
cost outcomes. We stated that we expect ACOs to be able to monitor both
costs and quality internally and to make appropriate modifications
based upon their collection of such information.
In our discussion of required clinical and administrative systems,
we proposed that an ACO would have an infrastructure that enables the
ACO to collect and evaluate data and provide feedback to the ACO
providers/suppliers across the entire organization, including providing
information to influence care at the point of care.
We proposed that as part of the application, the ACO would describe
its process to report internally on quality and cost measures, and how
it intends to use that process to respond to the needs of its Medicare
population and to make modifications in its care delivery.
Comment: Several commenters suggested that we outline quality
reporting requirements for the Shared Savings Program. Other commenters
suggested that an ACO detail its plans to manage information technology
(IT) use and to identify personnel responsible for IT.
Response: As discussed previously, we believe it is important that
ACOs retain the flexibility to establish processes that are best suited
to their own practices and patient populations. Thus, consistent with
the requirements under section 1899(b)(2)(G) of the Act, Shared Savings
Program, we will require that ACOs provide documentation in their
applications describing their processes to internally report on quality
and cost measures in order to be eligible to participate in the Shared
Savings Program.
Comment: Some comments expressed concerns that, in rural settings,
hospitals will not be able to address, achieve, and implement quality
measures for patients with specific chronic conditions and that use of
these hospitals will interrupt the relationship between patients and
their respective specialty provider that are participating in the
Shared Savings Program.
Response: We believe that the Shared Savings Program provides new
incentives for providers in rural areas to develop the means to report
on cost and quality of their patients with chronic conditions in ways
that benefit their patient population.
Final Decision: We will finalize our proposal that to be eligible
to participate in the Shared Savings Program, the ACO must define,
establish, implement and periodically update its processes and
infrastructure for its ACO participants and ACO providers/suppliers to
internally report on quality and cost metrics to enable the ACO to
monitor, provide feedback, and evaluate ACO participant and ACO
provider/supplier performance and to use these results to improve care
and service over time. (Sec. 425.112).
d. Processes To Promote Coordination of Care
Section 1899(b)(2)(G) of the Act requires an ACO to ``define
processes to * * * coordinate care, such as through the use of
telehealth, remote patient monitoring, and other such enabling
technologies.'' We explained in the proposed rule that coordination of
care involves strategies to promote, improve, and assess integration
and consistency of care across primary care physicians, specialists,
and acute and post-acute providers and suppliers, including methods to
manage care throughout an episode of care and during its transitions,
such as discharge from a hospital or transfer of care from a primary
care physician to a specialist.
We also noted that the strategies employed by an ACO to optimize
care coordination should not impede the ability of a beneficiary to
seek care from providers that are not participating in the ACO, or
place any restrictions that are not legally required on the exchange of
medical records with providers who are not part of the ACO. We proposed
to prohibit the ACO from developing any policies that would restrict a
beneficiary's freedom to seek care from providers and suppliers outside
of the ACO.
In addition, the process to promote coordination of care includes
the ACOs having systems in place to identify high-risk individuals and
processes to develop individualized care plans for targeted patient
populations. We proposed that an individualized care plan be tailored
to--(1) the beneficiary's health and psychosocial needs; (2) account
for beneficiary preferences and values; and (3) identify community and
other resources to support the beneficiary in following the plan. This
plan would be voluntary for the beneficiary, privacy protected, and
would not be shared with Medicare or the ACO governing body; it would
solely be used by the patient and ACO providers/suppliers for care
coordination. If applicable, and with beneficiary consent, the care
plan could be shared with the caregiver, family, and others involved in
the beneficiary's care. An ACO would have a process in place for
developing, updating, and, as appropriate, sharing the beneficiary care
plan with others involved in the beneficiary's care, and providing it
in a format that is actionable by the beneficiary.
We requested comments on our proposal that ACOs be required to
demonstrate the processes they have in place to use individualized care
plans for targeted beneficiary populations in order to be eligible for
the Shared Savings Program. We proposed that the individualized care
plans should include identification of community and other resources to
support the beneficiary in following the plan. We also stated that we
believe that a process for integrating community resources into the ACO
is an important part of patient-centeredness.
For purposes of the application to participate in the Shared
Savings Program, we proposed that an ACO would be required to submit a
description of its individualized care program, along with a sample
care plan, and explain how this program is used to promote improved
outcomes for, at a minimum, their high-risk and multiple chronic
condition patients. In addition, the ACO should describe additional
target populations that would benefit from individualized care plans.
We also proposed that ACOs describe how they will partner with
community stakeholders as part of their application. ACOs that have a
stakeholder organization serving on their governing body would be
deemed to have satisfied this requirement. We requested comment on
these recommendations.
Comment: Comments received acknowledged that requiring ACOs to
define processes to promote coordination of care is vital to the
success of the Shared Savings Program. Commenters stressed the
importance of health information exchanges in coordination of care
activities and recommended that CMS allow ACOs the flexibility to use
any standards-based electronic care coordination tools that
[[Page 67830]]
meet their needs while other comments suggested that the proposed rule
anticipated a level of functional health information exchange and
technology adoption that may be too aggressive for deployment in
January 2012.
Response: We agree that ACOs should coordinate care between all
types of providers and across all services. We also agree that health
information exchanges are of the utmost importance for both effective
coordination of care activities and the success of the Shared Savings
Program. We understand that there will be variable ability among ACOs
to adopt the appropriate health information exchange technologies, but
underscore the importance of robust health information exchange tools
in effective care coordination. Additionally, as discussed in the
Agreement section of this regulation, we will allow for two start dates
in the first year of the agreement period. These additional start dates
will provide an ``on ramp'' for all ACOs to get the appropriate health
information exchanges in place before they enter the program.
Comment: Commenters supported our proposal to require an ACO to
submit a description of its individualized care program, along with a
sample care plan, and explain how this program is used to promote
improved outcomes for, at a minimum, their high-risk and multiple
chronic condition patients. Several comments recommended that CMS make
a stronger case for the need to integrate community resources into the
individualized care plans by requiring that ACOs have a contractual
agreement in place with community-based organizations.
Response: Although we agree with comments that the integration of
community resources into the individualized care plans is important to
the concept of patient-centeredness, we also believe it is important to
afford ACOs the flexibility to accomplish this requirement in a manner
that is most suited to their patient population.
Final Decision: We will finalize our proposal requiring ACOs to
define their care coordination processes across and among primary care
physicians, specialists, and acute and post acute providers. The ACO
must also define its methods to manage care throughout an episode of
care and during its transitions. The ACO must submit a description of
its individualized care program as part of its application along with a
sample care plan and explain how this program is used to promote
improved outcomes for, at a minimum, their high-risk and multiple
chronic condition patients. The ACO should also describe additional
target populations that would benefit from individualized care plans.
In addition, we will finalize our proposal that ACOs describe how they
will partner with community stakeholders as part of their application.
ACOs that have stakeholder organizations serving on their governing
body will be deemed to have satisfied this requirement. (Sec.
425.112).
6. Overlap With Other CMS Shared Savings Initiatives
a. Duplication in Participation in Medicare Shared Savings Programs
The statute includes a provision that precludes duplication in
participation in initiatives involving shared savings. Section 1899 of
the Act states that providers of services or suppliers that participate
in certain programs are not eligible to participate in the Shared
Savings Program. Section 1899(b)(4) of the Act states these exclusions
are ``(A) A model tested or expanded under section 1115A [the
Innovation Center] that involves shared savings under this title or any
other program or demonstration project that involves such shared
savings; (B) The independence at home medical practice pilot program
under section 1866E.''
In the proposed rule, we identified several programs or
demonstrations that we believed included a shared savings component and
would be considered duplicative. Specifically, we identified the
Independence at Home Medical Practice Demonstration program, Medicare
Health Care Quality (MHCQ) Demonstration Programs, Multipayer Advanced
Primary Care Practice (MAPCP) demonstration, and the PGP Transition
Demonstration. We also recognized that additional programs,
demonstrations, or models with a shared savings component may be
introduced in the Medicare program in the future. We recommended that
interested parties check our Web site for an updated list.
We further noted that the prohibition against duplication in
participation in initiatives involving shared savings applies only to
programs that involve shared savings under Medicare. Providers and
suppliers wishing to participate in the Shared Savings Program would
not be prohibited from participating if they are also participating in
demonstrations and initiatives established by the Affordable Care Act
that do not involve Medicare patients or do not involve shared savings,
such as State initiatives to provide health homes for Medicaid
enrollees with chronic conditions as authorized under section 2703 of
the Affordable Care Act.
As we explained in the proposed rule, we believe a principal reason
underlying the prohibition against participation in multiple
initiatives involving shared savings is to prevent a provider or
supplier from being rewarded twice for achieving savings in the cost of
care provided to the same beneficiary. Therefore, to ensure that a
provider or supplier is rewarded only once with shared savings for the
care of a beneficiary, an ACO participant may not also participate in
another Medicare program or demonstration involving shared savings.
However, in order to maintain as much flexibility as possible for ACO
providers/suppliers to participate concurrently in multiple CMS
initiatives involving shared savings, we do not believe it is
appropriate to extend this prohibition to individual providers and
suppliers. Accordingly, an ACO provider/supplier who submits claims
under multiple Medicare-enrolled TINs may participate in both the
Shared Savings Program under one ACO participant TIN and another shared
savings program under a different non-ACO participant TIN if the
patient population is unique to each program.
Finally, we proposed a process for ensuring that savings associated
with beneficiaries assigned to an ACO participating in the Shared
Savings Program are not duplicated by savings earned in another
Medicare program or demonstration involving shared savings. If such a
program assigns beneficiaries based upon the TINs of health care
providers from whom they receive care, we proposed to compare the
participating TINs in the program or demonstration with those
participating in the Shared Savings Program to ensure that TINs used
for beneficiary assignment to an ACO participating in the Shared
Savings Program are unique and that beneficiaries are assigned to only
one shared savings program. If the other program or demonstration
involving shared savings does not assign beneficiaries based upon the
TINs of the health care providers from whom they receive care, but uses
an alternate beneficiary assignment methodology, we proposed working
with the developers of the respective demonstrations and initiatives to
devise an appropriate method to ensure no duplication in shared savings
payment. We proposed that applications to the Shared Savings Program
that include TINs that are already participating in another program or
demonstration involving shared savings would be rejected.
[[Page 67831]]
Comment: Commenters generally requested clarification on what
programs and demonstrations would be considered overlapping and
disqualifying for participating in the Shared Savings Program. Some
commenters asked CMS to confirm that initiatives such as the New Jersey
gain sharing demonstration are not considered to overlap with the
Shared Savings Program. Another commenter asked CMS for an official
opinion whether the MHCQ demonstrations, specifically, the Indiana
Health Information Exchange (IHIE) demonstration and the North Carolina
Community Care Network, and an ACO could coexist and, if so, how CMS
would calculate the shared savings.
Several commenters requested that CMS remove the MAPCP
demonstration from the initiatives in which ACOs may not participate
pointing out that the demonstration is not for shared savings, but
rather one that is restricted to explicit payment for care coordination
services to medical/health care homes. One commenter stated that it is
possible to account for costs and payments in MAPCP and in an ACO so
that CMS does not reward the same savings more than once.
Some commenters asked CMS to provide guidance on whether
participation in other value-based purchasing initiatives or
demonstrations that do not involve shared savings, such as the
Community-Based Care Transitions Programs, Hospital Value-Based
Purchasing Programs, bundled payment programs, Maryland's all-payer
waiver, or other Innovation Center initiatives, would overlap with the
Shared Savings Program. Other commenters wondered whether organizations
participating in State shared savings initiatives involving Medicaid or
dually eligible beneficiaries would be ineligible to participate in the
Shared Savings Program. One commenter requested a comprehensive list of
initiatives involving shared savings for which there would be overlap.
Response: We have determined there are several ongoing
demonstrations involving shared savings that would be considered
overlapping. We have determined that currently two of the MHCQ
demonstration programs, the IHIE and North Carolina Community Care
Network (NCCCN), involve shared savings payments for a Medicare
population, therefore, providers and suppliers who participate in the
IHIE and NCCCN will not be permitted to also participate in the
Medicare Shared Savings Program. However, once a Medicare enrolled TIN
completes its participation in the IHIE or NCCCN, it may apply for the
Shared Savings Program and would no longer be prohibited from
participation because of duplication.
At the time of publication of the proposed rule, the MAPCP
demonstration offered several different payment arrangements to
participating providers. Since then, we selected the States of Maine,
Vermont, New York, Rhode Island, Pennsylvania, North Carolina,
Michigan, and Minnesota for the MAPCP Demonstration. To the extent that
any of the participating providers have chosen a shared savings
arrangement, participation in both MAPCP and the Shared Savings Program
will be prohibited. MAPCP participants who do not have shared savings
arrangements under the demonstration would not be prohibited from
participating in the Shared Savings Program.
Subsequent to publication of the proposed rule, we have determined
that the Care Management for High-Cost Beneficiaries Demonstrations
authorized by 42 U.S.C. 1395b-1 is also a shared savings program, as
well as the Pioneer ACO Model.
After due consideration, we have determined that providers would be
able to participate in both the Medicare Shared Savings Program and
programs that focus on the integration of the Medicare and Medicaid
programs for dually eligible individuals, specifically, State
initiatives to integrate care for dually eligible individuals announced
recently by the Medicare-Medicaid Coordination Office in partnership
with the Innovation Center. Due to the unique design of these
demonstrations as well as the relationship of States with providers in
the Medicaid program, it is not necessary or reasonable to prohibit
involvement in both programs. However, we will work closely with
providers and States to prevent duplication of payment. Furthermore, we
have also determined that demonstrations that do not involve shared
savings, such as the New Jersey gain sharing demonstration and others
would not be considered overlapping for purposes of participation in
the Shared Savings Program.
Comment: We received several comments regarding transitions from
demonstrations to the Shared Savings Program. A member organization of
the IHIE thanked CMS for acknowledging the demonstration as a
worthwhile project. The commenter wrote that it would be
counterproductive to halt the MHCQ demonstration after substantial
investment in that program to make it a success, especially since the
goals of the program and ACOs are consistent.
One commenter indicated that the potential transition from the IHIE
demonstration to the Shared Savings Program may be difficult because of
the asynchronous performance years under the two programs. Several
other commenters wrote in support of transitioning North Carolina's 646
demonstration program into an ACO and reported that Community Care of
North Carolina is already taking steps to establish a North Carolina
Accountable Care Collaborative. A commenter suggested that CMS clarify
at what point a Medicare-enrolled TIN previously involved in another
shared savings would be eligible for participation in an ACO under the
Shared Savings Program.
Response: We recognize that our initiatives may have different
lengths of agreement periods or different start and end dates. In the
Shared Savings Program, we sought to align with many programs that
function on a calendar year basis, such as the Physician Quality
Reporting System (PQRS). We do not believe this proposal should disrupt
ongoing participation in other shared savings initiatives, and we
encourage participants in ongoing demonstrations to complete the term
of their agreement before entering the Shared Savings Program. We
recognize that not all programs and demonstrations operate on a
calendar year basis and that, as a result, there may be some providers
and suppliers who will have gaps in time from the end of one program or
demonstration to the beginning of participation in another. An entity
must have terminated its involvement with another shared savings
program prior to participation in the ACO Shared Savings Program. After
an organization with a Medicare-enrolled TIN concludes an overlapping
shared savings demonstration, its application to the Shared Savings
Program would not be denied on the basis of duplication.
Comment: Several commenters suggested that the restriction against
participation in multiple initiatives involving shared savings would
potentially stifle creation of other leading-edge initiatives that are
well-aligned with best practices for patient quality of care. One
commenter stated that CMS should not deter ACOs from investing in other
delivery system innovations such as patient-centered medical homes and
healthcare innovation zones that share objectives. One commenter asked
if an ACO might not receive all of the potential savings if the
organization or the same patients are also participating in another
shared savings program. If so, the commenter
[[Page 67832]]
believed that this would be a significant deterrent to participation
because an organization would have to decide between Shared Savings
Program and other Innovation Center initiatives. Another commenter
encouraged CMS, if it finds that the statute is creating too many
barriers to entry for interested providers and suppliers, to approach
Congress to request that the restriction be eased. One commenter
suggested that the Secretary should consider a mechanism to provide
waivers to organizations that are especially well-suited to innovation
in care delivery and that could provide substantial benefit to CMS to
permit participation in multiple projects or trials. A commenter
questioned if there are multiple TINs in a system, whether one TIN can
participate in the Shared Savings Program and another in an Innovation
Center program for example, the independence at home project, the State
option to provide health homes and the use of community health teams.
Several commenters recommended that for groups with multiple companies
or subsidiaries, the separate divisions should be permitted to
simultaneously seek ACO contracts.
One commenter suggested that to ensure broad participation by
Medicare providers and suppliers, CMS should read section 1899(b)(4) of
the Act more narrowly than CMS has proposed. At a minimum, CMS should
only restrict ACO participants from also participating in a program or
demonstration project that is primarily intended to share savings. CMS
should not read section 1899(b)(4) of the Act to preclude a provider or
supplier's participation in an ACO by virtue of the fact that the
provider or supplier is also participating in another program that
incidentally makes payments based on cost reductions.
Another commenter stated that if a particular ACO provider/supplier
only bills Medicare under one TIN, as is the case for some physician
groups and other suppliers, and the TIN is an ACO participant, that
individual ACO provider/supplier would be unable to participate in any
other initiatives involving shared savings. This commenter suggested
the prohibition would prevent such a group from successfully
coordinating the care of Medicare beneficiaries who are not assigned to
the ACO under the Shared Savings Program but are assigned to an
organization under another shared savings model.
Response: We believe there is opportunity for providers and
suppliers to participate in multiple complementary initiatives.
However, the statute clearly states that a provider that participates
in any other program or demonstration project that involves shared
savings under Medicare is ineligible to participate in an ACO under the
Shared Savings Program. We believe our operational definition of an ACO
as a collection of Medicare enrolled TINs, combined with our assignment
methodology, discussed in section II.E of this final rule, helps ensure
a unique patient population to an ACO on the basis of services billed
by the ACO participant TINs. We recognize that health systems may be
comprised of multiple TINs that bill Medicare. It may be appropriate
for some of those TINs to apply to participate in the Shared Savings
Program while others do not. We believe organizations should have
flexibility to determine what TINs join together to form an ACO.
To ensure that a provider or supplier is rewarded only once with
shared savings for the care of a beneficiary, we proposed that an ACO
participant TIN may not also participate in another Medicare program or
demonstration involving shared savings. However, in order to maintain
as much flexibility as possible for ACO providers/suppliers to
participate concurrently in multiple CMS initiatives involving shared
savings, we do not believe it is appropriate to extend this prohibition
to individual providers and suppliers. Accordingly, an ACO provider/
supplier who submits claims under multiple Medicare-enrolled TINs may
participate in both the Shared Savings Program and another shared
savings program if the patient population is unique to each program and
if none of the relevant Medicare-enrolled TINs participate in both
programs. For example, an ACO practitioner participating in the Shared
Savings Program under an ACO participant practice TIN could also
participate in the Independence at Home Demonstration under a non-ACO
participant TIN since there would be no duplication in beneficiary
assignment; and therefore, no duplication in shared savings.
We believe our proposal identifying ongoing CMS initiatives that
involve shared savings meets both the letter and spirit of the
statutory prohibition against duplication of participation in
initiatives involving shared savings. Furthermore, we do not believe
the fact that the stated goal of a particular program is something
other than to achieve shared savings lessens the potential for
duplication in payment for the same beneficiaries or changes the
applicability of the statutory prohibition against duplicative
participation when the incentive for participation in the other program
is the provision of shared savings. As noted previously, in developing
our proposed policy, we carefully considered currently implemented
programs and sought to provide as much flexibility as possible to
potential Shared Savings Program participants while also ensuring there
is no duplication in payments for savings achieved for the same
Medicare beneficiaries.
Further, we disagree with the conclusion that the prohibition
against participating in duplicative initiatives involving shared
savings would prevent a practice or an individual practitioner that
bills under a single TIN from successfully coordinating the care of
Medicare beneficiaries who are not assigned to the ACO under the Shared
Savings Program but are assigned to an organization under another
shared savings model. We believe that the Shared Savings Program
assignment methodology, described in detail in section II.E of this
final rule, provides an incentive for participating providers and
suppliers to redesign care delivery to all their Medicare FFS
beneficiaries.
Finally, we note, as explained in section II.E of this final rule,
that certain Shared Savings Program ACO participants have the
opportunity to participate in more than one Medicare Shared Savings
Program ACO, as long as assignment of beneficiaries is not dependent on
the ACO participant TIN. We believe that participation in more than one
ACO within the Shared Savings Program is separate and distinct from
participating in multiple Medicare shared savings initiatives, and
therefore would not be subject to the statutory prohibition.
Comment: Many commenters suggested that CMS allow participation in
multiple initiatives involving shared savings provided that such
participation does not result in double counting achieved savings and
providing that the same patients are not assigned to both
demonstrations, for example, some large health systems suggested they
should be able to participate in multiple programs so long as CMS
ensures they are not being paid twice for the same care to the same
patient. A commenter encouraged CMS to consider ways to prevent
duplicative payments based on the beneficiary identification so that a
provider or supplier to whom a particular beneficiary is assigned is
only rewarded once for that beneficiary.
Response: We believe our proposed methodology ensures no
duplication in payment while adequately allowing provider flexibility.
Further, the law states that a provider may not
[[Page 67833]]
participate in this program if they are already participating in
another shared savings program, so for purposes of determining
eligibility to participate in the Shared Savings Program, we will
review the ACO participant TINs submitted on the application of a
prospective ACO and determine whether or not those TINs are already
participating in another shared savings program. Applications that have
such an overlap will be rejected. Furthermore, despite this precaution,
because assignment methodologies may differ from program to program, as
noted previously in the case of the Pioneer ACO Model, we will work
with other initiatives involving shared savings and demonstrations to
prevent duplicative payments based on beneficiary identification where
necessary. We would note that while participation in some
demonstrations, for example, the Bundled Payment for Care Improvement
Initiative, would not exclude ACO participants from participating in
the Shared Savings Program, it is our intention to ensure duplicative
payments are not being made within the design of the demonstration.
Comment: A few commenters requested clarification that this
prohibition does not apply to providers and suppliers upon whom
assignment cannot be based or to non-Medicare enrolled participants.
Response: We disagree that ACO participants upon whom assignment is
not based may participate in multiple initiatives involving shared
savings. We read section 1899(b)(4) of the Act to direct us to ensure
that ACO participants are not also participating in another initiative
involving shared savings. Furthermore, such an interpretation would be
inconsistent with the intent of the law, which is to avoid duplicate
incentive payments across initiatives. However, within the Shared
Savings Program itself, we are able to prevent duplicate payments by
ensuring unique assignment to each ACO. As described in section II.E of
this final rule, ACO participants upon whom assignment is not based
would have the opportunity to participate in more than one Medicare
Shared Savings Program ACO, that is, they would not be required to be
exclusive to a single Medicare Shared Savings Program ACO. In response
to specific requests for clarification, we note that these final rules
apply only to Medicare enrolled ACO participants and ACO providers/
suppliers. They do not apply to providers and suppliers that are not
enrolled in Medicare.
Comment: A commenter questioned whether a provider or supplier, for
example, a pharmacy, could fill prescriptions and provide health
screenings for more than one ACO.
Response: We appreciate this question; however, we are unclear
exactly what the commenter is asking. That is, it is unclear whether
the commenter is wondering whether they can participate in more than
one Medicare ACO or whether they are asking if, once in an ACO, the
services they render would be limited to ACO assigned beneficiaries. We
stress that the Medicare Shared Savings Program is not a managed care
program and as such does not require lock in of beneficiaries nor does
it require a participating provider or supplier to reassign their
billing to the ACO or render services only on behalf of the ACO or only
to beneficiaries assigned to the ACO. Medicare enrolled providers and
suppliers that are participating in an ACO or whose beneficiaries are
assigned to an ACO would continue to care for their beneficiaries and
bill Medicare for services rendered under FFS as usual.
However, for purposes of participation in the program, as described
in more detail in section II.E of this final rule, ACO participants
upon whom assignment is based must be exclusive to a single ACO. So
providers and suppliers who do not bill for primary care services and
upon whom assignment is not based, including pharmacies, would have the
opportunity to participate in multiple ACOs in the Shared Savings
Program.
Final Decision: We have identified several current initiatives in
which ACO participants receive shared savings such that they would be
prohibited from participation in the Shared Savings Program:
Independence at Home, the MHCQ IHIE and NCCCN demonstrations, MAPCP
arrangements involving shared savings, PGP Transition demonstration,
the Care Management for High-Cost Beneficiaries Demonstrations, and the
Pioneer ACO Model through the Innovation Center. We recognize, however,
that there may be other demonstrations or programs that will be
implemented or expanded as a result of the Affordable Care Act, some in
the near future. We will update our list of duplicative shared savings
efforts periodically to inform prospective Shared Savings Program
participants and as part of the application.
Additionally, we are finalizing our proposal to implement a process
for ensuring that savings associated with beneficiaries assigned to an
ACO participating in the Shared Savings Program are not duplicated by
savings earned in another Medicare program or demonstration involving
shared savings. Specifically, applications for participation in the
Shared Savings Program will be reviewed carefully to assess for
overlapping TINs. TINs that are already participating in another
Medicare program or demonstration involving shared savings will be
prohibited from participating in the Medicare Shared Savings Program.
An ACO application that contains TINs that are already participating in
another Medicare program or demonstration involving shared savings will
be rejected.
If the other program or demonstration involving shared savings does
not assign beneficiaries based upon the TINs of the health care
providers from whom they receive care, but uses an alternate
beneficiary assignment methodology, we will work with the developers of
the respective demonstrations and initiatives to devise an appropriate
method to ensure no duplication in shared savings payment. For example,
billing TINs who are participating in the Pioneer ACO Model would be
prohibited from also participating in the Shared Savings Program.
Additionally, since the Pioneer ACO Model may begin before the Shared
Savings Program and assigns beneficiaries prospectively, we will work
with the Innovation Center to ensure no beneficiaries used to determine
shared savings are assigned to both (Sec. 425.114).
b. Transition of the Physician Group Practice (PGP) Demonstration Sites
Into the Shared Savings Program
The PGP demonstration, authorized under section 1866A of the Act,
serves as a model for many aspects of the Shared Savings Program. The
Affordable Care Act provided authority for the Secretary to extend the
PGP demonstration. On August 8, 2011 we announced the PGP Transition
Demonstration which will follow many of the same parameters from the
original PGP Demonstration, with some modifications. The modifications
include: shifting spending benchmarks to the national rather than
regional level, aligning beneficiaries first with primary care
physicians (PCPs) and then specialists, and implementing a patient
experience of care survey. All 10 PGP demonstration participants have
agreed to participate in the PGP Transition Demonstration.
As discussed previously, consistent with section 1899(b)(4) of the
Act, to be eligible to participate in the Shared Savings Program, a
provider of services or supplier may not also be participating in a
demonstration project that involves shared savings, such as the PGP
[[Page 67834]]
demonstration. Thus, the PGP sites will not be permitted to participate
concurrently in the Shared Savings Program. Since assignment
methodologies are similar between the Shared Savings Program and the
PGP demonstration, we will provide for unique assignment of
beneficiaries by ensuring there is no overlap in participating
Medicare-enrolled TINs as mentioned previously.
In the proposed rule, we discussed an appropriate transition in the
event that a PGP site decides to apply for participation to the Shared
Savings Program. We proposed to give the site the opportunity to
complete a condensed application form. The condensed application form
would require the applicant to provide the information that is required
for the standard Shared Savings Program application but that was not
already obtained through its application for or via its participation
in the PGP demonstration and, if necessary, to update any information
contained in its application for the PGP demonstration that is also
required on the standard Shared Savings Program application.
Comment: One commenter noted they thought that several innovative
health care systems such as PGP demo sites have indicated that they
will forego applying to the Shared Savings Program but would instead
``apply for funding'' through the Innovation Center.
Response: We recognize there are many opportunities for
organizations to participate in our programs involving shared savings
as well as other Affordable Care Act demonstrations. We are pleased
that all 10 of the original PGP demonstration sites have contracted to
participate in the PGP Transition Demonstration which implements many
of the same policies as the Shared Savings Program.
Final Decision: We are finalizing our proposals without change
(Sec. 425.202).
c. Overlap With the Center for Medicare & Medicaid Innovation
(Innovation Center) Shared Savings Models
Section 1899(i) of the Act gives the Secretary the authority under
the Shared Savings Program to use other payment models determined to be
appropriate, including partial capitation and any additional payment
model that the Secretary determines will improve the quality and
efficiency of items and services furnished under Medicare. The purpose
of the Innovation Center, established in section 1115A of the Act, is
to test innovative payment and service delivery models to reduce
expenditures under Medicare, Medicaid, and the CHIP, while preserving
or enhancing the quality of care furnished to individuals under these
programs. Preparations are currently underway to develop this
capability. Within the Innovation Center, it may be possible to test
different payment models, provide assistance to groups of providers and
suppliers that wish to develop into an ACO, or enhance our
understanding of different benchmarking methods. As the Innovation
Center gains experience with different ACO payment models, we can use
proven methods to enhance and improve the Shared Savings Program over
time.
The Innovation Center has recently implemented or is exploring
several ACO-related initiatives:
Pioneer ACO Model--announced in a May 17, 2011 Request for
Application.
Accelerated development learning sessions (ADLS)--to
provide the executive leadership teams from existing or emerging ACO
entities the opportunity to learn about essential ACO functions and
ways to build capacity needed to achieve better care, better health,
and lower costs through improvement.
Advance Payment Model--Subsequent to the publication of
the proposed rule, the Innovation Center sought comment on providing an
advance on the shared savings ACOs are expected to earn as a monthly
payment for each preliminarily prospectively assigned Medicare
beneficiary.
As discussed previously, section 1899(b)(4) of the Act restricts
providers of services and suppliers from participating in both the
Shared Savings Program and other Medicare shared savings programs and
demonstrations. We intend to coordinate our efforts to ensure that
there is no duplication of participation in shared savings programs
through provider or supplier participation in both the Shared Savings
Program and any Medicare shared savings models tested by the Innovation
Center. Similarly, we will also take steps to ensure there is a
methodology to avoid duplication of shared savings payments for
beneficiaries aligned with providers and suppliers in both the Shared
Savings Program and any current or future models tested by the
Innovation Center.
Further, we are looking forward to applying lessons learned in the
Pioneer ACO Model that can help inform changes to the Shared Savings
Program over time.
Comment: Many commenters were supportive of the purpose of the
Innovation Center, the concept of the Advance Payment Model, and the
Pioneer Model ACO demonstration. Commenters applauded the use of
lessons learned in the Pioneer program to inform the Shared Savings
Program and noted that the Pioneer model may effectively test
innovative models that may be more effective for certain types of
providers. Some commenters made specific suggestions for improvement of
the Pioneer model.
Response: We appreciate the feedback, and have passed specific
suggestions for improvements to the Pioneer ACO Model on to the
Innovation Center.
Comment: A number of commenters expressed concerns about the
upfront costs to participate and urged CMS to address the need for
startup funding in the final rule.
Many commenters were generally supportive of providing advanced
payments to ACOs through the Innovation Center. These commenters
suggested that advance payments would make program participation more
attractive to many ACOs, particularly those comprised of networks of
smaller practices, providers that operate on small margins, or
hospitals in specific regions of the country. Several commenters
suggested that financial support from a program such as the Advance
Payment Models alone may be insufficient to allay the very high startup
costs for ACOs. Some suggested direct capital support was necessary and
suggested alternatives to the Advance Payment Model. Some commenters
asked for clarification or offered suggestions on specific aspects of
the initiative, such as the structure of the incentive or eligibility
criteria.
Many urged CMS to provide upfront capital support to ACOs to defray
start-up and operational expenses and to encourage participation, and
some suggested that based on PGP data, ACOs may require more than three
years to recoup their start up investment. Several commenters concurred
with the need for robust health information technology (HIT) in ACOs
but stated that acquisition costs create a substantial barrier to
physician ACOs. Numerous commenters urged CMS to create additional ways
to help finance physicians' acquisition of HIT. Several explained that
shared savings alone will not assist practices with upfront costs nor
provide assurance that they will recover their initial investments and
that, as a result, transitional models are needed. A few commenters
noted that providers should not have to divert resources to two similar
initiatives (for example, electronic health records incentives and
shared savings) with only technical differences. Groups identified by
commenters that may be
[[Page 67835]]
especially challenged by the upfront costs of ACO formation and
operations include: Private primary care practitioners, small to medium
sized physician practices, small ACOs, MAPCP demonstration programs,
minority physicians and physicians who see minority patients, safety
net providers (that is, RHCs, CAHs, FQHCs, community-funded safety net
clinics (CSNCs)), rural providers (that is, Method II CAHs, rural PPS
hospitals designated as rural referral centers, sole community
hospitals or Medicare dependent hospitals), and rural primary care
providers. A few commenters suggested that CMS offer special funding or
access to capital through grants or no-interest loans for ACOs formed
by rural and safety-net providers, or other providers, such as home
health or hospice providers, to enhance participation of these groups
in the Shared Savings Program. A commenter suggested that CMS offer a
rural primary care provider incentive, such as an enhanced FFS payment
or other payment methods (for example, partial capitation), for joining
a Medicare ACO to help fund the infrastructure requirements of a
Medicare ACO, buffer risk, and stimulate further participation.
Some commenters made specific suggestions for offsetting costs to
the ACO, for example, a number of comments recommended that the final
rule provide an additional financial incentive for the collection and
reporting of patient satisfaction data or other quality data.
On the other hand, some commenters noted that many high quality
organizations are likely to have already made the capital investments
to achieve high quality and efficient care delivery, and are therefore
poised to become ACOs.
Response: We recognize that a real commitment to improving care
processes for Medicare beneficiaries will require financial investment
on the part of the ACO, ACO participants, and ACO providers/suppliers.
The Shared Savings Program is designed to provide an incentive for ACOs
demonstrating high quality and improved efficiencies. We have passed
along comments related to Advance Payment to our colleagues in the
Innovation Center.
In this final rule, we have made significant changes to reduce
burden on participants and improve the opportunity to share in savings.
In section II.F. of this final rule, we note our intent to provide
funding for the patient experience of care survey for 2012 and 2013,
providing early adopters with additional upfront assistance. In section
II.G (shared savings/losses) of this final rule, we describe changes to
the financial model that benefit Shared Savings Program participants
such as removal of the 25 percent withhold, removal of the net 2
percent requirement so that ACOs may share from first dollar savings
once the MSR is overcome, and an increase to the shared savings cap.
Additionally, in response to comments, we are reducing the claims run
out period from 6 to 3 months, allowing for earlier payment of shared
savings. Finally, in section II.C. (Agreement) of this final rule, we
discuss lengthening the agreement period for early adopters. Moreover,
as noted, the Innovation Center is considering an Advance Payment model
for certain ACOs, which would test whether pre-paying a portion of
future shared savings could increase participation in the Shared
Savings Program.
Finally, we note there are also other public and private options to
offset start up costs such as financing arrangements, grants from non-
profit and existing government sources, as well as savings from non-
Medicare patient populations. Other CMS initiatives, such as the EHR
Incentive Program, provide incentives for HIT adoption. Potential
participants will want to consider all options available.
Comment: Several commenters suggested that CMS provide technical
assistance to certain ACOs such as those comprised of safety net
providers, or physician-only ACOs, or to ACOs in general.
Response: In addition to ongoing technical assistance provided for
specific program activities, such as quality measures reporting, we
will consider ways in which additional assistance can be provided to
Shared Savings Program ACOs. We note that the Innovation Center has
held several well-received ADLS sessions designed to provide the
executive leadership teams from existing or emerging ACO entities the
opportunity to learn about essential ACO functions and ways to build
capacity needed to achieve better care, better health, and lower costs
through improvement. We will also explore other opportunities to assist
Shared Savings Program ACOs.
Final Decision: We are finalizing our proposal to exclude Pioneer
ACO Model participants from participation in the Shared Savings
Program. Additionally, since the Pioneer ACO Model may begin before the
Shared Savings Program and will and assign beneficiaries prospectively,
we will work with the Innovation Center to ensure no beneficiaries used
to determine shared savings are assigned to both (Sec. 425.114).
C. Establishing the Agreement With the Secretary
1. Options for Start Date of the Performance Year
Section 1899(a)(1) of the Act requires the Shared Savings Program
to be established ``not later than January 1, 2012''. This final rule
establishes the Shared Savings Program. We will start accepting
applications from prospective ACOs shortly after January 1, 2012. For
information on the application process, please see our Notice of Intent
which will appear shortly after publication of this final rule at
https://www.cms.gov/sharedsavingsprogram/.
Section 1899(b)(2)(B) of the Act provides that an ``ACO shall enter
into an agreement with the Secretary to participate in the [Shared
Savings Program] for no less than a 3-year period * * *'' Section
1899(d)(1) of the Act provides that an ACO shall be eligible to receive
shared savings payments for each ``year of the agreement period,'' if
the ACO has met applicable quality performance standards and achieved
the requisite savings. In establishing the requirement for a minimum 3-
year agreement period, the statute does not prescribe a particular
application period or specify a start date for ACO agreement periods.
In the proposed rule we considered several options for establishing
the start date of the agreement period: annual start dates; semiannual
start dates; rolling start dates; and delayed start dates. Adopting an
annual application period and start date would create cohorts of ACO
applicants, which would allow for more streamlined processes related to
evaluation of applications, agreement renewals, and performance
analysis, evaluation, and monitoring. However, given the short
timeframe for implementation of the program and our desire to permit as
many qualified ACOs as possible to participate in the first year, we
also gave a great deal of consideration to alternative approaches that
would provide flexibility to program applicants. For instance, we
considered allowing applicants to apply throughout the course of the
year as they become ready and we could review and approve applications
and begin agreement periods on a rolling basis. We noted however that,
if ACO agreements begin more often than once a year, beneficiaries
could be assigned to two ACOs for an overlapping period. As discussed
in section II.E.3. of this final rule, we proposed that beneficiaries
[[Page 67836]]
would be assigned to ACOs based upon where they receive the plurality
of their primary care services. Since the physician associated with the
plurality of a beneficiary's primary care services could vary from year
to year, having multiple start dates could result in a beneficiary
being assigned to multiple ACOs for an overlapping period. This
scenario would result in confusion for beneficiaries and the potential
for duplicate shared savings payments for care provided to a single
beneficiary. Additionally, problems with patient assignment may cause
unintended consequences for per capita costs, making it difficult to
make comparisons of one ACO's performance to another that has a
different start date.
After evaluating various options for start dates, we proposed to
establish an application process with an annual application period
during which a cohort of ACOs would be evaluated for eligibility to
participate in the Shared Savings Program. We further proposed that the
performance years would be based on the calendar year to be consistent
with most CMS payment and quality incentive program cycles.
Specifically, we proposed that: (1) ACO applications must be submitted
by a deadline established by us; (2) we would review the applications
and approve those from eligible organizations prior to the end of the
calendar year; (3) the term of the participation agreement (``agreement
period'') would begin on the January 1 following approval of an
application; and (4) the ACO's performance years under the agreement
would begin on January 1 of each year during the agreement period.
Given our concern regarding the short time frame for implementing the
Shared Savings Program in the first year of the program, we solicited
comment on any alternatives to a January 1 start date for the first
year of the Shared Savings Program, such as an additional start date of
July 1, and allowing the term of the agreement for ACOs with a July 1,
2012 start date to be increased to 3.5 years. Under this example, the
first performance ``year'' of the agreement would be defined as 18
months in order that all of the agreement periods would synchronize
with ACOs entering the program on January 1, 2013. We proposed that if
adopted, this alternative would only be available in the first year of
the program and for all subsequent years applications would be reviewed
and accepted prior to the beginning of the applicable calendar year and
the term of all subsequent agreements would be for 3 years.
Comment: We received several comments that expressed concerns about
the feasibility of a January 1, 2012 start date. Commenters were
concerned about the ability of potential ACOs to organize, complete,
and submit an application in time to be accepted into the first cohort
as well as our ability to effectively review applications by January 1,
2012. Comments suggested that only well organized and larger integrated
health care systems would be able to meet the January 1, 2012 start
date. Alternatively, comments suggested that the January 1 start date
would preclude most small and rural health care systems from being able
to participate in the Shared Savings Program. The majority of comments
requested a delayed start date or offered support for a July 1 start
date for the first year of the program. There were also some comments
that requested a 1 or 2 year delay in the start date of the program to
allow prospective ACOs the opportunity to build their infrastructure.
There were a few comments that requested that we accept applications on
a ``rolling'' basis, allowing greater flexibility for the first year.
Response: We agree with the comments requesting additional
flexibility in the start date of the Shared Savings Program. Therefore,
based upon public comment, we will provide for two application periods
for the first year of the Shared Savings Program whereby we will accept
applications for an April 1, 2012 or July 1, 2012 start date. All ACOs
that start in 2012 will have agreement periods that terminate at the
end of 2015. We will provide sub-regulatory guidance to ACOs on the
deadlines by which applications must be received in order to be
considered for each respective start date.
We summarize the application of our final policy as follows:
ACO starts April 1, 2012: First performance year is 21 months,
ending on December 31, 2013. Agreement period is 3 performance years,
ending on December 31, 2015.
ACO starts July 1, 2012: First performance year is 18 months,
ending on December 31, 2013. Agreement period is 3 performance years,
ending on December 31, 2015.
Under this final rule, ACOs will begin receiving data immediately
upon entry to the program (historical and quarterly aggregate reports
along with rolling information on their preliminary prospective
assigned beneficiary population as described in section II.D. of this
final rule). After completing its first performance year, the ACO will
be evaluated on its performance on the ACO quality metrics and a shared
savings payment will be calculated. All ACOs will be eligible to
receive the PQRS incentive payments for each calendar year in which
they fully and completely report the Group Practice Reporting Option
(GPRO) measures, regardless of their start date. This will provide ACOs
that join the program in April or July 2012 with some working capital
in advance of the completion of the first ACO performance year,
regardless of their ability to generate shared savings.
We believe this approach fulfills several desirable goals for the
program including: (1) Establishment of the program by January 1, 2012;
(2) flexibility for newly formed ACOs to apply when ready; (3) a
partial year on-ramp for ACOs to gain experience with understanding the
assigned population through receipt of data reports and to gain
experience in reporting measures using the PQRS GPRO tool before
entering into a period of performance assessment; and (4) assurance
that no beneficiary will be double-counted for purposes of establishing
ACO performance when there is more than one ACO in a geographic region.
Comment: We received several comments requesting that we expand the
agreement period. The majority of the comments surrounding the
agreement period specifically requested that the agreement period be
expanded to 5 years. The general consensus among comments was that a 3-
year agreement period is too short and highlights the fact that the
significant capital costs and the need to marshal necessary resources
(for example, information technology infrastructure and appropriate
management and leadership personnel) make success, in terms of savings,
difficult in the early years, if not the entire proposed 3 year term.
Comments suggested a 3-year agreement period, combined with our
proposal to prohibit future participation of underperforming ACOs or
participants after the original term of the agreement has lapsed, works
against the small and rural markets that do not have the necessary
basics in place to the same extent as larger more integrated health
care systems. Commenters stated that the proposed 3-year agreement
period increases the risk of loss before any chance of reward is
available.
Even those few comments that offered support for a 3-year agreement
period recommended that ACOs should be able to withdraw from that
agreement without penalty due to the challenges associated with
realizing savings in a 3-year agreement.
Response: As discussed previously, and based upon the review of
public
[[Page 67837]]
comments, we will extend the agreement period to include an extended
agreement for those ACOs beginning on April 1, 2012 and July 1, 2012.
We believe that extending the agreement period allows for those ACOs
that are ready to begin their agreement on April 1, 2012 and July 1,
2012 will provide an on-ramp for organizations to gain experience with
measures reporting and data evaluation in the early part of the
program. As discussed in Section II.G. of this final rule, we are not
finalizing our proposal to require a 25 percent withhold of any shared
savings realized to offset any future losses or to be forfeited if an
ACO fails to complete the terms of its agreement.
Final Decision: As specified in Sec. 425.200, for the first year
of the Shared Savings Program (CY 2012), ACOs will be afforded the
flexibility to submit to begin participation in the program on April 1
(resulting in an agreement period of 3 performance years with the first
performance year of the agreement consisting of 21 months) or July 1
(resulting in an agreement period of 3 years with the first performance
year of the agreement consisting of 18 months). During all calendar
years of the agreement period, including the partial year associated
with both the April 1, 2012 and July 1, 2012 start dates, the eligible
providers participating in an ACO that meets the quality performance
standard but does not generate shareable savings will qualify for a
PQRS incentive payment (as described in sections II.F. of this final
rule and Sec. 425.504).
2. Timing and Process for Evaluating Shared Savings
Section 1899(d)(1) of the Act provides that an ACO shall be
eligible to receive shared savings payments for each year of the
agreement period, if the ACO has met the quality performance standards
established under section 1899(b)(3) of the Act and has achieved the
required percent of savings below its benchmark. However, the statute
is silent with respect to when the shared savings determination should
be made. Potential ACOs have indicated that they need timely feedback
on their performance in order to develop and implement improvements in
care delivery. In developing our proposals, we were attentive to the
importance of determining shared savings payments and providing
feedback to ACOs on their performance in a timely manner while at the
same time not sacrificing the accuracy needed to calculate per capita
expenditures.
Our determination of an ACO's eligibility to receive a payment for
shared savings will be based upon an analysis of the claims submitted
by providers and suppliers for services and supplies furnished to
beneficiaries assigned to the ACO. There is an inherent lag between
when a service is performed and when a claim is submitted to us for
payment. Additionally, there is also a time lag between when the claim
is received by us and when the claim is paid.
From the perspective of the utilization and expenditure data that
would be needed in order to determine an ACO's eligibility to receive
shared savings and to provide performance feedback reports, the longer
the claims run-out period, the more complete and accurate the
utilization and expenditure data would be for any given year. Higher
completion percentages are associated with longer run-out periods and
thus would necessitate a longer delay before we could determine whether
an ACO is eligible to receive shared savings and provide performance
feedback. Conversely, a lower completion percentage would be associated
with a shorter run-out period and thus a quicker turnaround for the
shared savings determination and for the provision of performance
feedback. Based upon historical trends, a 3-month run-out would result
in a completion percentage of approximately 98.5 percent for physician
services and 98 percent for Part A services. A 6-month run-out of
claims data results in a completion percentage of approximately 99.5
percent for physician services and 99 percent for Part A services.
Since neither a 3-month nor a 6-month run-out of claims data would
offer complete calendar year utilization and expenditure data, we
proposed to work with our Office of the Actuary to determine if the
calculation of a completion percentage would be warranted. We proposed
that if determined necessary, the completion percentage would be
applied to ensure that the shared savings determination reflects the
full costs of care furnished to assigned beneficiaries during a given
calendar year. Thus, we must balance the need to use the most accurate
and complete claims data as possible to determine shared savings with
the need to provide timely feedback to ACOs participating in the Shared
Savings Program. Additionally, regardless of whether we use a 3-month
or 6-month claims run-out period, we are concerned that some claims
(for example, high cost claims) may be filed after the claims run-out
period which would affect the accuracy of the amount of the shared
savings payment. We considered and sought comment on ways to address
this issue, including applying an adjustment factor determined by CMS
actuaries to account for incomplete claims, termination of the ACO's
agreement in cases where the ACO has been found to be holding claims
back, or attributing claims submitted after the run-out period to the
following performance year.
We proposed using a 6-month claims run-out period to calculate the
benchmark and per capita expenditures for the performance year. A 6-
month claims run-out would allow for a slightly more accurate
determination of the per capita expenditures associated with each
respective ACO; however, it would also delay the computation of shared
savings payments and the provision of feedback to participating ACOs.
We also sought comment on whether there are additional considerations
that might make a 3-month claims run-out more appropriate.
Comment: Most of the comments received on this proposal supported a
3-month claims run-out period. Several other comments focused on the
fact that ACOs will require significant start up investments to provide
adequate infrastructure. These comments suggest that the shorter the
turnaround period for feedback on both quality metrics and shared
savings reconciliation, the more likely that cash flow distortions
would not be created and the better the opportunity that ACOs will be
able to continue to operate. We received no comments that supported a
6-month claims run-out.
Response: As discussed previously, our initial analysis of this
policy focused on balancing the need for timely feedback and the
benefits of utilizing the most complete data in calculating both the
quality metrics and the shared savings reconciliation. Based upon our
review of the proposal and the input of public comments, we feel that
the minimal increased accuracy associated with 6 months of claims run-
out does not justify the additional delay in the provision of quality
metrics feedback and shared savings reconciliation. We agree that ACOs
should receive quality metric feedback as soon as possible so they can
focus their activities on potential problem areas. Additionally, public
comments have made it clear that a 3-month run-out of claims data,
especially in the first year of the agreement, would aid in ensuring
success for ACOs by allowing ACOs to offset the initial start up costs
which would in turn allow the ACOs to remain financially viable. We
agree with the comments that the decrease in the accuracy of the actual
data between 6-
[[Page 67838]]
months of claims run-out and 3-months of claims run-out can be
mitigated by the application of a completion percentage and should not
delay the delivery of either the feedback on quality metrics or the
reconciliation of any shared savings realized.
Final Decision: Based upon our review of the public comments
received on the proposed policy, we are finalizing a policy, under
Sec. 425.602, Sec. 425.604, and Sec. 425.606 of using 3-months of
claims run-out data, with the application of an appropriate completion
percentage, to calculate the benchmark and per capita expenditures for
the performance year. We will monitor ACO providers and suppliers for
any deliberate delay in submission of claims that would result in an
unusual increase in the claims incurred during the performance year,
but submitted after, the 3 month run-out period immediately following
each performance year, and as discussed in section II.H. of this final
rule, will consider such deliberate behavior grounds for termination.
3. New Program Standards Established During the Agreement Period
In the proposed rule, we stated that as we continue to work with
the stakeholder community and learn what methods and measures work most
effectively for the Shared Savings Program, we would likely make
changes and improvements to the Shared Savings Program over time. For
example, we expect to integrate lessons learned from Innovation Center
initiatives to shape and change the Shared Savings Program. Because we
expect that these changes may occur on an ongoing basis, the question
arises as to whether an ACO that has already committed to an agreement
to participate in the Shared Savings Program should be subject to
regulatory changes that become effective after the start of its
agreement period.
In the proposed rule, we weighed the pros and cons of requiring an
ACO to comply with changes in regulations that become effective before
the expiration of its agreement period. We recognized that creating an
environment in which the continued eligibility of existing program
participants is uncertain could be detrimental to the success of the
program and could deter program participation. Conversely, the ability
to incorporate regulatory changes into the agreements with ACOs would
facilitate the administration of the program because all ACOs would be
subject to the requirements imposed under the current regulations,
rather than different sets of requirements, depending upon what
regulations were in effect in the year in which the ACO entered the
program. Additionally, requiring ACOs to adhere to certain regulatory
changes related to quality measures, program integrity issues,
processes for quality management and patient engagement, and patient-
centeredness criteria that are up to date with current clinical
practice ensures that ACO activities keep pace with changes in clinical
practices and developments in evidence-based medicine. We noted that it
is not unprecedented for Medicare agreements to include a provision
requiring that the agreement is subject to changes in laws and
regulations. For example, the contracts with Medicare Advantage
organizations contain such a clause. However, these contracts are for a
term of 1 year, as opposed to 3 or more years. As a result, there are
more frequent opportunities for these organizations to reassess whether
they wish to continue to participate in the program in light of changes
to the laws and regulations governing the program.
We proposed that ACOs would be subject to future changes in
regulation with the exception of all of the following:
Eligibility requirements concerning the structure and
governance of ACOs.
Calculation of sharing rate.
Beneficiary assignment.
Thus, for example, ACOs would be subject to changes in regulation
related to the quality performance standard. The language of the ACO
agreement would be explicit to ensure that ACOs understand the dynamic
nature of this part of the program and what specific programmatic
changes would be incorporated into the agreement. We further proposed
that in those instances where regulatory modifications effectuate
changes in the processes associated with an ACO pertaining to design,
delivery, quality of care, or planned shared savings distribution the
ACO would be required to submit to us for review and approval, as a
supplement to their original application, an explanation of how it will
address key changes in processes resulting from these modifications. If
an ACO failed to effectuate the changes needed to adhere to the
regulatory modifications, we proposed that the ACO would be placed on a
corrective action plan, and if after being given an opportunity to act
upon the corrective action plan, the ACO still failed to come into
compliance, it would be terminated from the program. For a more
detailed discussion of the process for requiring and implementing a
corrective action plan, please refer to the section II.H.5 of this
final rule. We proposed that ACO participants would continue to be
subject to all requirements applicable to FFS Medicare, such as routine
CMS business operations updates and changes in FFS coverage criteria,
as they may be amended from time to time.
Comment: The commenters did not support establishing new standards
during the agreement period. Many comments suggested that in order to
create the certainty required prior to ACOs making investments in
population health management infrastructure, CMS should withdraw any
proposals that will afford the agency the ability to alter the terms or
requirements to participate in the program during an agreement period.
Commenters requested that if standards are established during the
agreement period, ACOs should be allowed to either voluntarily
terminate their agreements without penalty or should be afforded
protections against any changes that negatively affect the ACOs'
ability to achieve their obligations under the agreement or that
substantially alter the financial terms of their agreement. Other
commenters specified that in those instances where standards are
established during an agreement period, ACOs be afforded the
opportunity to develop a real-time understanding of the new standards
via a standard comment and response period. Finally, one commenter
recommended that any program changes be introduced only at the start of
a new agreement period.
Response: To ensure that ACO activities keep pace with the ever
evolving developments in clinical practices and evidence-based
medicine, it is important to retain the ability to make changes to the
Shared Savings Program on an on-going basis. However, based upon our
review of the public comments received on this policy, we agree with
allowing an ACO the choice of whether to terminate its agreement
without penalty when there are regulatory changes to the Shared Savings
Program that impact the ability of the ACO to continue to participate.
We believe this policy allows the program flexibility to improve over
time while also providing a mechanism for ACOs to evaluate how
regulatory changes impact their ability to continue participation in
the program and to terminate their agreement without penalty if
regulatory changes occur that will negatively impact the ACO.
Final Decision: Under Sec. 425.212 we will finalize our proposal
that ACOs be held responsible for all regulatory changes in policy,
with the exception of: eligibility requirements concerning the
structure and governance of ACOs, calculation of sharing rate, and
[[Page 67839]]
beneficiary assignment. However, we will modify our proposal to allow
ACOs the flexibility to voluntarily terminate their agreement in those
instances where regulatory standards are established during the
agreement period which the ACO believes will impact the ability of the
ACO to continue to participate in the Shared Savings Program.
4. Managing Significant Changes to the ACO During the Agreement Period
Aside from changes that may result from regulatory changes, the ACO
itself may also experience significant changes within the course of its
agreement period due to a variety of events, including the following:
Deviations from the structure approved in the ACO's
application, such as, if an ACO participant upon which assignment is
based drops out of the program; changes in overall governing body
composition or leadership; changes in ACO's eligibility to participate
in the program, including changes to the key processes pertaining to
the design, delivery and quality of care (such as processes for quality
management and patient engagement and patient centeredness) as outlined
in the ACO's application for acceptance into the program; or changes in
planned distribution of shared savings.
A material change, as defined in the proposed rule [76 FR
19527], in the ACO's provider/supplier composition, including the
addition of ACO providers/suppliers.
Government- or court-ordered ACO reorganization, OIG
exclusion of the ACO, an ACO participant, or an ACO provider/supplier
for any reason authorized by law; CMS revoking an ACO, ACO participant
or ACO provider/supplier's Medicare billing privileges under 42 CFR
Sec. 424.535, for noncompliance with billing requirements or other
prohibited conduct; or reorganization or conduct restrictions to
resolve antitrust concerns.
Whenever an ACO reorganizes its structure, we must determine if the
ACO remains eligible to participate in the Shared Savings Program.
Under our proposal, we noted that since an ACO is admitted to the
program based on the information contained in its application, adding
ACO participants during the course of the agreement period may result
in the ACO deviating from its approved application and could jeopardize
its eligibility to participate in the program. We therefore proposed
that the ACO may not add ACO participants during the course of the
agreement. In order to maintain flexibility, however, we proposed that
the ACO may remove ACO participants (TINs) or add or remove ACO
providers/suppliers (NPIs). We requested comment on this proposal and
how it might impact small or rural ACOs.
In addition, we proposed that ACOs must notify us at least 30 days
prior to any ``significant change,'' which we defined as an event that
causes the ACO to be unable to comply with the terms of the
participation agreement due to (1) deviation from its approved
application, such as a reorganization of the ACO's legal structure or
other changes in eligibility; (2) a material change, which was defined
in proposed Sec. 425.14 to include ``significant changes'' as well as
other changes that may affect ACO eligibility to participate in the
program, including changes in governing body composition and the
imposition of sanctions or other actions taken against the ACO by an
accrediting organization or government organization, or (3) government
or court-ordered reorganization as a result of fraud or antitrust
concerns. We proposed that, in response to such a notification, we
would make one of the following determinations:
The ACO may continue to operate under the new structure
with savings calculations for the performance year based upon the
updated list of ACO participants and ACO providers/suppliers.
The remaining ACO structure qualifies as an ACO but is so
different from the initially approved ACO structure that the ACO must
start over as a new ACO with a new agreement.
The remaining ACO structure qualifies as an ACO but is
materially different from the initially approved ACO structure because
of the inclusion of additional ACO providers/suppliers that the ACO
must obtain approval from a reviewing Antitrust Agency before it can
continue in the program.
The remaining ACO structure no longer meets the
eligibility criteria for the program, and the ACO would no longer be
able to participate in the program, for example, if the ACO's assigned
population falls below 5,000 during an performance year as discussed in
section II.B. of this final rule.
CMS and the ACO may mutually decide to terminate the
agreement.
Comment: The proposals surrounding the management of significant
changes to the ACO during the agreement period were the most commented
upon proposals in section II.C. of the proposed rule. All comments
received suggested that not being able to add ACO participants during
the agreement period runs counter to the idea of encouraging more
integrated models and thus greater coordination of care.
Commenters offered a variety of alternatives to this proposal
including the following:
Removal of this proposal altogether.
Allowing ACOs to add TINs on an monthly, quarterly, or
annual basis as long as they notify CMS of the modifications to their
structure.
One commenter recommended a ``slot'' approach in rural
areas whereby if a TIN leaves the system the ``slot'' may be filled
with another TIN.
Allowing changes in ACO participants of up to 10 percent
annually with additional changes in excess of 10 percent to be
negotiated as an amendment to the ACO participation agreement.
Response: Although it is imperative that we ensure that ACOs do not
make changes to their approved structure that would affect their
eligibility to participate in the program, we agree with those comments
suggesting that there must be some mechanism to add ACO participants
during an agreement period. Accordingly, we will finalize a policy that
affords ACOs greater flexibility to deviate from the structure approved
in their application. Specifically, we will modify this proposal such
that ACO participants and ACO providers/suppliers may be added and
subtracted over the course of the agreement period. ACOs must notify us
of any additions/subtractions within 30 days. Additionally, ACOs must
notify us within 30 days of any significant changes, defined as an
event that occurs resulting in an ACO being unable to meet the
eligibility or program requirements of the Shared Savings Program. Such
a change may cause the ACO to no longer meet the eligibility criteria,
for example, losing a large primary care practice could cause the ACOs
assigned patient population to fall below 5,000. Furthermore, such
changes may necessitate adjustments to the ACO's benchmark, or cause
changes to risk scores and preliminary prospective assignment as
described in sections II.G and II.E. of this final rule respectively,
of this final rule.
Comment: Some commenters also stated that our definitions of
significant change and material change were circular.
Response: In this final rule, we have removed the reference to
``material change'' and its accompanying definition. In response to
general comments regarding the need to strengthen program requirements,
we are finalizing our proposal to require ACOs to notify us within 30
days of any
[[Page 67840]]
``significant change,'' which is defined as an event that could cause
an ACO to be unable to meet the eligibility or program requirements of
the Shared Savings Program. For example, a significant change that
affects compliance with eligibility requirements would include losing a
large primary care practice that causes the ACO's assigned patient
population to fall below 5,000.
Final Decision: Under Sec. 425.214, we are modifying our proposal
so that ACO participants and ACO providers/suppliers may be added and
subtracted over the course of the agreement period. ACOs must notify us
of the change within 30 days of these additions/subtractions of ACO
participants or providers/suppliers. Additionally, in the event of
``significant changes'', which is defined as an event that occurs
resulting in an ACO being unable to meet the eligibility or program
requirements of the Shared Savings Program, the ACO must also notify us
within 30 days. Such changes may necessitate, for example, adjustments
to the ACO's benchmark, but allow the ACO to continue participating in
the Shared Savings Program. Such changes may also cause the ACO to no
longer meet eligibility, for example, losing a large primary care
practice could cause the ACO assignment to fall below 5,000, and result
in termination of the agreement.
5. Coordination With Other Agencies
As mentioned previously, in developing our proposals for the Shared
Savings Program, and in response to stakeholder concerns, we worked
closely with agencies across the Federal Government to facilitate
participation in the Shared Savings Program and to ensure a coordinated
and aligned inter- and intra-agency effort in connection with the
program. The result of this effort was the release of three documents,
concurrently with the Notice of Proposed Rulemaking, including: (1) A
joint CMS and DHHS Office of Inspector General (OIG) Notice with
Comment Period on Waiver Designs in Connection with the Medicare Shared
Savings Program and the Innovation Center addressing proposed waivers
of the civil monetary penalties (CMP) law, Federal anti-kickback
statute, and the physician self-referral law; (2) an Internal Revenue
Service (IRS) notice soliciting comments regarding the need for
additional tax guidance for tax-exempt organizations, including tax-
exempt hospitals, participating in the Shared Savings Program; (3) a
proposed Statement of Antitrust Enforcement Policy Regarding
Organizations Participating in the Medicare Shared Savings Program
issued by the FTC and DOJ (collectively, the Antitrust Agencies). The
comment periods for all of these documents have now closed. Some
comments received on this proposed rule were in response to these
concurrently released documents, and thus outside the scope of this
final rule. We have shared relevant comments with the appropriate
agencies.
We have continued working with these agencies while drafting this
final rule. As a result a joint CMS and OIG interim final rule with
comment period will also be published in the Federal Register
concurrently with this final rule. The Antitrust Agencies also will
publish in the Federal Register a final Statement of Antitrust
Enforcement Policy Regarding Accountable Care Organizations
Participating in the Medicare Shared Savings Program.
a. Waivers of CMP, Anti-Kickback, and Physician Self-Referral Laws
Certain arrangements between and among ACOs, ACO participants,
other owners, ACO providers/suppliers, and third parties may implicate
the CMP law (section 1128A(b)(1) and (2) of the Act), the Federal Anti-
kickback statute (section 1128B(b)(1) and (2) of the Act), and/or the
physician self-referral prohibition (section 1877 of the Act). Section
1899(f) of the Act authorizes the Secretary to waive certain fraud and
abuse laws as necessary to carry out the provisions of the Shared
Savings Program. Accordingly, pursuant to section 1899(f) of the Act,
CMS and OIG are jointly publishing an interim final rule with comment
period describing waivers applicable to ACOs, ACO participants, and ACO
providers/suppliers in the Shared Savings Program. The interim final
rule with comment period can be found elsewhere in this issue of the
Federal Register. The waivers described in the interim final rule with
comment period will also apply to the Innovation Center's Advance
Payment Model demonstration because ACOs participating in that model
will also be participating in the Shared Savings Program.
Comments received in response to the April 2011 proposed rule
directed toward the joint CMS and DHHS OIG solicitation will be
responded to in the interim final rule with comment period. We
encourage reader review of the interim final rule.
b. IRS Guidance Relating to Tax-Exempt Organizations Participating in
ACOs
Nonprofit hospitals and other health care organizations recognized
by the IRS as tax-exempt organizations are likely to participate in the
development and operation of ACOs in the Shared Savings Program.
Accordingly, the IRS issued Notice 2011-20 soliciting public comment on
whether existing guidance relating to the Internal Revenue Code
provisions governing tax exempt organizations is sufficient for those
tax-exempt organizations planning to participate in the Shared Savings
Program through ACOs and, if not, what additional guidance is needed.
For additional information, tax-exempt organizations and ACOs should
refer to Notice 2011-20 and other applicable IRS guidance available on
www.irs.gov.
We also received comments relating to the tax treatment of ACOs.
Tax issues are within the jurisdiction of IRS, not CMS. Accordingly,
those issues are not addressed in this Final Rule but we have shared
the relevant comments with IRS.
c. Antitrust Policy Statement
Concurrently with the issuance of the Shared Savings Program
proposed rule, the Antitrust Agencies issued a proposed Statement of
Antitrust Enforcement Policy Regarding Accountable Care Organizations
Participating in the Medicare Shared Savings Program (proposed
Antitrust Policy Statement). The proposed Antitrust Policy Statement
had several features relevant to the Shared Savings Program,
including--
An antitrust ``safety zone.'' The Antitrust Agencies,
absent extraordinary circumstances, would not challenge as
anticompetitive ACOs that were within the safety zone. The safety zone
also included a rural exception for ACOs operating in rural areas.
For ACOs outside the safety zone, guidance on the types of
conduct to avoid that could present competitive concerns.
A mandatory Antitrust Agency review procedure for ACOs
that met certain thresholds. The mandatory review would be triggered if
two or more ACO participants that provide a common service (as defined
in the proposed Antitrust Policy Statement) to patients from the same
Primary Service Area (``PSA'') have a combined share of greater than 50
percent for that service in each ACO participant's PSA.
The proposed Antitrust Policy Statement described the methodology
that ACO participants could use to determine whether the ACO was
required to obtain an Antitrust Agency review. Some of the data to be
used in this methodology are available at http://www.cms.gov/
sharesavingsprogram/
[[Page 67841]]
35--Calculations.asp. The proposed Antitrust Policy Statement applied
to collaborations among otherwise independent providers and provider
groups, formed after March 23, 2010 (the date on which the Affordable
Care Act was enacted) and that have otherwise been approved to
participate, or seek to participate, as ACOs in the Shared Savings
Program.
The Antitrust Agencies solicited and received comments on the
proposed Antitrust Policy Statement. The Antitrust Agencies are
releasing concurrently with this final rule a final Antitrust Policy
Statement in response to the comments. Nothing in this final rule shall
be construed to modify, impair, or supersede the applicability of any
of the Federal antitrust laws. For further guidance on antitrust
enforcement policy with respect to ACOs, ACOs should review the final
Antitrust Policy Statement.
Comment: Numerous commenters appreciated our work with the
Antitrust Agencies to facilitate participation in the Shared Savings
Program. However, several commenters suggested we provide additional
flexibility to potential ACO applicants and modify the scope of the
mandatory antitrust review.
Response: The next section of this final rule discusses our
proposals, and addresses all comments, relating to the proposed
mandatory antitrust review.
d. Coordinating the Shared Savings Program Application With the
Antitrust Agencies
We proposed to require that certain ACOs be subject to mandatory
review by the Antitrust Agencies before we would approve their
participation in the Shared Savings Program. Specifically, we proposed
this mandatory review requirement would apply to any newly formed ACO
with a PSA share above 50 percent for any common service that two or
more ACO participants provide to patients from the same PSA, and that
did not qualify for the rural exception articulated in the proposed
Antitrust Policy Statement. Those ACOs would be required to submit to
us, as part of their Shared Savings Program applications, a letter from
the reviewing Antitrust Agency confirming that it had no present intent
to challenge or recommend challenging the proposed ACO. Absent such a
letter, the proposed ACO would not be eligible to participate in the
Shared Savings Program.
In addition, the proposed Antitrust Policy Statement explained that
ACOs that are outside the safety zone and below the 50 percent
mandatory review threshold frequently may be pro-competitive. The
proposed Antitrust Policy Statement identified five types of conduct
that an ACO could avoid to reduce significantly the likelihood of an
antitrust investigation. An ACO in this category that desired further
certainty regarding the application of the antitrust laws to its
formation and planned operation also could seek an expedited review
from the Antitrust Agencies, similar to the mandatory review described
previously, and similarly would not be eligible to participate in the
Shared Savings Program if the reviewing Antitrust Agency reviews the
ACO and determines that it is likely to challenge or recommend
challenging the ACO as anticompetitive. Finally, we proposed that an
ACO that falls within the safety zone would not be required to obtain
an Antitrust Agency review as a condition of participation.
Additionally, we recognized in the proposed rule there may be
instances during the agreement period where there is a material change
(as discussed in section II.C.4. of this final rule) in the composition
of an ACO. We proposed that when a material change occurred, the ACO
must notify us of the change within 30 days and that the ACO must
recalculate and report at that time its PSA shares for common services
that two or more independent ACO participants provide to patients from
the same PSA. We proposed that if any revised PSA share is calculated
to be greater than 50 percent, the ACO would be subject to mandatory
review or re-review by the Antitrust Agencies. If the ACO failed to
obtain a letter from the reviewing Antitrust Agency confirming that it
has no present intent to challenge or recommend challenging the ACO, we
proposed that the ACO would be terminated from the Shared Savings
Program.
We explained in the proposed rule that the purpose of requiring
Antitrust Agency confirmation that it had no present intent to
challenge or recommend challenging the ACO as a condition of
participation is two-fold. First, it would ensure that ACOs
participating in the Shared Savings Program would not present
competitive problems that could subject them to antitrust challenge
that may prevent them from completing the term of their agreement with
us. Second, it would maintain competition for the benefit of Medicare
beneficiaries by reducing the potential for the creation of ACOs with
market power. In this context market power refers to the ability of an
ACO to reduce the quality of care furnished to Medicare beneficiaries
and/or to raise prices or reduce the quality for commercial health
plans and enrollees, thereby potentially increasing providers'
incentives to provide care for private enrollees of higher-paying
health plans rather than for Medicare beneficiaries. We stated that
competition in the marketplace benefits Medicare and the Shared Savings
Program because it promotes quality of care for Medicare beneficiaries
and protects beneficiary access to care. Furthermore, competition
benefits the Shared Savings Program by allowing the opportunity for the
formation of two or more ACOs in an area. Competition among ACOs can
accelerate advancements in quality and efficiency. All of these
benefits to Medicare patients would be reduced or eliminated if we were
to allow ACOs to participate in the Shared Savings Program when their
formation and participation would create market power.
Comment: A significant number of commenters opposed mandatory
review of ACOs, because an ACO is a new business model designed to
encourage collaboration and coordination of care while still providing
beneficiaries the freedom of choice of providers under FFS Medicare.
The commenters made the following points:
The Social Security Act, as amended by the Affordable Care
Act, does not authorize us either to issue regulations governing the
application of the antitrust laws or to delegate to the Antitrust
Agencies the authority to block participation in the Shared Savings
Program by certain ACOs. These commenters cited a recent article
suggesting that the proposed mandatory review confers unreviewable
authority on the Antitrust Agencies to disqualify entities from
participating in the Shared Savings Program and therefore violates the
subdelegation doctrine.\1\
---------------------------------------------------------------------------
\1\ Richard D. Raskin, Ben J. Keith, & Brenna E. Jenny,
``Delegation Dilemma: Can HHS Required Medicare ACOs to Undergo Pre-
Clearance by the Antitrust Agencies?,'' 20 Health L. Rep. 961
(2011).
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It is bad public policy to change the nature of antitrust
enforcement from law enforcement to a regulatory regime by requiring a
mandatory review for ACO applicants with PSA shares greater than 50
percent for common services.
The mandatory review should be modified such that an ACO's
actions, not its size, should be monitored, because if an ACO produces
savings while maintaining quality and patient centeredness, market
share is not an appropriate measure of anticompetitive behavior.
Require mandatory notice of the PSA shares, but do not
require those ACOs with greater than a 50 percent PSA share to obtain a
mandatory review.
[[Page 67842]]
The mandatory review imposes substantial costs on every
ACO applicant by requiring them to build their PSA calculations, with a
larger burden falling on smaller physician or other physician groups
that may not have the tools to do so, thus discouraging their
participation. Commenters suggested that we calculate each ACO's PSA
shares.
The proposed antitrust review and CMS application review
should occur simultaneously given the tight timeframes to get the
program up and running.
The proposed rule and the proposed Antitrust Policy
Statement are inconsistent because the proposed rule does not carve out
entities formed before March 23, 2010 from the mandatory review
(meaning all entities need a review), whereas the proposed Antitrust
Policy Statement does not apply to entities formed before that date.
By contrast, numerous commenters supported the mandatory review to
ensure the Shared Savings Program does not become a vehicle for ACOs to
obtain market power. Several commenters explained that the
consolidation of ACO providers/suppliers into ACOs could have a
significant impact on the commercial market. One commenter noted it was
important for us to consider ``the impact of competition (or the lack
thereof) on quality of care and access to care.'' Several commenters
suggested that we lower the threshold for mandatory antitrust review to
40 percent to ensure that there are sufficient providers to allow the
formation of competing ACOs to serve Medicare beneficiaries. Another
commenter suggested that we carefully consider favoring ACO
applications from provider groups without market power while we
calibrate and refine the Shared Savings Program.
Response: Based on the comments received, we have reconsidered our
approach to coordinating with the Antitrust Agencies. We believe that
we can achieve the same two objectives identified in the proposed rule
using a less burdensome approach that is consistent with antitrust law
enforcement norms and does not raise subdelegation concerns.
Accordingly, in this final rule we are adopting an approach that
relies on three prongs to maintain competition among ACOs. First, the
Antitrust Agencies will offer a voluntary expedited antitrust review to
any newly formed ACO (as defined in the final Antitrust Policy
Statement) before it is approved to participate in the Shared Savings
Program. We strongly encourage newly formed ACOs that may present
competitive issues or are uncertain about their legality under the
antitrust laws to take advantage of this opportunity to obtain
expedited antitrust review before participating in the Shared Savings
Program. This voluntary review will enable ACOs to assess whether they
are likely to present competitive concerns that could subject them to
an antitrust challenge and prevent them from completing the term of
their agreement with us. As noted in the final rule, CMS may terminate
an ACO's participation in the Shared Savings Program for, among other
reasons, violation of the antitrust laws.
Second, we will provide the Antitrust Agencies with aggregate
claims data regarding allowable charges and fee-for-service payments,
which will assist the Antitrust Agencies in calculating PSA shares for
ACOs participating in the Shared Savings Program. We will share these
data with the Antitrust Agencies as soon as the data become available.
In addition, we will require ACOs formed after March 23, 2010, to
agree, as part of their application to participate in the Shared
Savings Program, to permit us to share a copy of their application with
the Antitrust Agencies. Both the aggregate data and the information
contained in these applications will help the Antitrust Agencies to
assess and monitor ACOs' effects on competition and take enforcement
action, if appropriate. Third, the Antitrust Agencies will rely on
their existing enforcement processes for evaluating concerns raised
about an ACO's formation or conduct and filing antitrust complaints
when appropriate.
Thus, we are not finalizing our proposal to require mandatory
antitrust review and the submission of a letter from a reviewing
Antitrust Agency confirming that it has no present intent to challenge,
or recommend challenging, an ACO formed after March 23, 2010, that does
not qualify for the rural exception articulated in the final Antitrust
Policy Statement, and that has a PSA share above 50 percent for any
common service that two or more ACO participants provide to patients
from the same PSA. In other words, we will not condition Shared Savings
Program eligibility on whether an ACO has obtained the requisite letter
from the Antitrust Agencies. Rather, we will accept such an ACO into
the Shared Savings Program regardless of whether it voluntarily obtains
a letter from the Antitrust Agencies and regardless of the contents of
any letter it may have voluntarily obtained from the Antitrust
Agencies, assuming that the ACO meets the other eligibility
requirements set forth in this final rule. We emphasize that the
acceptance of an ACO into the Shared Savings Program represents no
judgment by CMS about the ACO's compliance with the antitrust laws or
the ACO's competitive impact in a commercial market. Moreover, we do
not believe that allowing anticompetitive ACOs to operate in commercial
markets is necessary for the Shared Savings Program to function
effectively.
Again, as noted previously, we encourage newly formed ACOs that
desire greater antitrust guidance to seek a voluntary expedited review
from the Antitrust Agencies before applying to the Shared Savings
Program. All participants in the Shared Savings Program will remain
subject to the antitrust laws. In addition, as discussed previously, we
released in June 2011 some of the information necessary for ACO
applicants to identify common services and to help calculate the
relevant PSA shares. The final Antirust Policy Statement describes the
procedures for obtaining the voluntary expedited antitrust review.
Although we are eliminating the proposed mandatory review
requirement, we still intend to coordinate closely with the Antitrust
Agencies throughout the application process and the operation of the
Shared Savings Program to ensure that the implementation of the program
does not have a detrimental impact upon competition. As discussed in
the proposed rule, competition among ACOs participating in the Shared
Savings Program will foster improvements in quality, innovation, and
choice for Medicare FFS beneficiaries. Section 1899(a)(1)(A) of the
Act, which states that ``groups of providers and suppliers meeting
criteria specified by the Secretary may work together * * * through an
accountable care organization,'' authorizes us to specify eligibility
criteria for the ACOs that participate in the Shared Savings Program.
As discussed previously, we are using that authority to specify that to
be eligible to participate in the Shared Savings Program, an ACO newly
formed after March 23, 2010 (as defined in the final Antitrust Policy
Statement), must agree to permit us to share its Shared Savings Program
application with the Antitrust Agencies. We believe this action is
necessary to ensure appropriate monitoring of the competitive effects
of ACOs that participate in the Shared Savings Program.
Comment: Several comments recommended we monitor an ACO's per
capita health care cost, for both Medicare beneficiaries and commercial
[[Page 67843]]
patients. For example, several comments explained that the
consolidation of providers to form ACOs could have a significant impact
on the commercial market. These commenters explained that through the
aggregation of market power, ACOs could have an enhanced incentive and
ability to obtain shared savings payments by reducing Medicare
expenditures to achieve ``savings'' under the Shared Savings Program,
while compensating for the reduced Medicare payments by charging higher
rates and possibly reducing quality of care in the private market. This
cost shifting could have the effect of raising premiums for enrollees
of private and employer-based health plans.
Many of these comments strongly urged us to collaborate with the
Antitrust Agencies on data collection and analysis to detect any
patterns of anti-competitive practices, including consolidation, that
could harm Medicare beneficiaries and enrollees in private markets and
threaten the viability of the Shared Savings Program. Other commenters
urged us to implement requirements for ACOs to report publicly on the
cost and price of care.
Some comments urged us to add requirements to the Shared Savings
Program to build a more robust monitoring system for costs. In
particular, these comments suggested that we could do the following:
Require that all participating ACOs have a mechanism for
assessing performance on private sector per capita costs by the second
year of the program.
Gather data regarding current market shares, market
entries and exits, and pricing trends for the ACOs during the agreement
period.
Set expectations for resource stewardship and waste
reduction, including public reporting of quality and cost metrics.
Specify a standardized set of measures for costs, with
input from consumers, purchasers, and other stakeholders.
Hold ACOs in the Shared Savings Program to a maximum
threshold of price increase with their commercial market clients.
Move to requiring ACOs to take part in all-payer claims
databases (APCD) for added transparency.
Response: We agree with commenters that suggested we provide the
Antitrust Agencies the data and information to help identify
potentially anticompetitive conduct, including consolidation, which
could be related to implementation of the Shared Savings Program.
Accordingly, we will provide the Antitrust Agencies aggregate claims
data regarding allowable charges and fee-for-service payments for ACOs
participating in the Shared Savings Program. In addition, we will share
copies of applications submitted by ACOs formed after March 23, 2010,
with the Antitrust Agencies.
In addition, we have requested that the Antitrust Agencies conduct
a study examining how ACOs participating in the Shared Savings Program
have affected the quality and price of health care in private markets.
We anticipate using the results of this study to evaluate whether we
should, in the future, expand our eligibility criteria so that we
consider competition concerns more explicitly in the Shared Savings
Program application review process.
Comment: Commenters stated that the proposed Antitrust Policy
Statement does not mention a process for re-review of the ACO by the
Antitrust Agencies for material changes in the ACO's composition.
Commenters also stated that the proposed rule's language is circular
about the conditions that trigger a ``material'' or ``significant''
change in composition, thus requiring a re-review by the Antitrust
Agencies.
Response: As discussed previously, we will no longer require an
Antitrust Agency review, such that the commenters' concerns about re-
review based on antitrust issues are moot.
Comment: Several commenters suggested that the Shared Savings
Program will lead to increased hospital employment of physicians or it
will lead to hospital purchases of physician practices, because start-
up costs are so great only large entities will be able to afford to
participate. As a result, there will be no competition and prices will
increase in the commercial sector. Other commenters suggested that
hospitals will employ specialist physicians so that they can have
patient referrals to related facilities, regardless of price and
quality.
Other commenters indicated that hospital employment of physicians
will exacerbate the inefficiency problem of physicians being paid a
higher rate for performing the same procedures in certain settings. As
a result, hospitals will use any market power they have to form
hospital-based provider departments and obtain higher rates, through
their continued fee-for-service payments, for the same services that
could be provided in a less-expensive setting. These comments suggested
we adopt policies to safeguard against these practices.
Response: As we discussed in the proposed rule, we do not believe
that mergers and acquisitions by ACO providers and suppliers are the
only way for an entity to become an ACO. The statute permits ACO
participants that form an ACO to use a variety of collaborative
organizational structures, including collaborations short of merger.
Indeed, we are also finalizing our proposal that entities that on their
own are not eligible to form an ACO can participate in the Shared
Savings Program by forming joint ventures with eligible entities. We
reject the proposition that an entity under single control, that is an
entity formed through a merger, would be more likely to achieve the
three-part aim. Moreover, the increased flexibility regarding governing
body composition and the leadership and management of an ACO that we
are adopting in this final rule demonstrates our belief that different
types of entities can be successful in this program.
Comment: Multiple comments discussed the competitive aspects of ACO
membership. For example, one commenter suggested that if an urban ACO
wants to partner with providers in rural communities, it should be
required to allow all providers in the rural community to participate
in the ACO if they so choose. Other commenters suggested that an ACO
should not be able to use its market power to require smaller providers
or suppliers to participate in the ACO (or to prohibit them from
participating in the Shared Savings Program as part of a competing ACO)
and that we should coordinate with the FTC and DOJ to thwart anti-
competitive behavior in the formation of ACOs.
Some commenters requested that we monitor whether ACOs are using
information technology requirements to prevent various allied health
professionals from participating in an ACO.
Response: We acknowledge the commenters' concerns and remind them
that the antitrust laws will continue to apply to the operations and
conduct of all ACOs participating in the Shared Savings Program. In
other words, if an entity believes that an ACO is engaging in
anticompetitive conduct, it can pursue an appropriate private action or
bring the conduct to the attention of the Antitrust Agencies.
Final Decision: In sum, we are modifying our proposal. We believe
that the voluntary expedited review approach discussed previously,
coupled with the Antitrust Agencies' traditional law enforcement
authority and our collaborative efforts to share data and information
with the Antitrust Agencies, will allow ACOs a reasonable opportunity
to obtain guidance
[[Page 67844]]
regarding their antitrust risk in an expedited fashion, while also
providing appropriate safeguards so that potential or actual
anticompetitive harm can be identified and remedied. We are finalizing
these policies at Sec. 425.202. However, we will continue to review
these policies and adjust them accordingly as we gain more experience
with the Shared Savings Program.
D. Provision of Aggregate and Beneficiary Identifiable Data
1. Data Sharing
Under section 1899(b)(2)(A) of the Act an ACO must ``be willing to
become accountable for the quality, cost, and overall care of the
Medicare fee-for-service beneficiaries assigned to it.'' Further, in
order to be eligible to participate in the Shared Savings Program,
section 1899(b)(2)(G) of the Act states an ``ACO shall define processes
to * * * report on quality and cost measures, and coordinate care * *
*.'' Section 1899 of the Act does not address what data, if any, we
should make available to ACOs on their assigned beneficiary populations
to support them in evaluating the performance of ACO participants and
ACO providers/suppliers, conducting quality assessment and improvement
activities, and conducting population-based activities relating to
improved health. In agreeing to become accountable for a group of
Medicare beneficiaries, and as a condition of participation in the
Shared Savings Program, we expect that ACOs will have, or are working
towards having, processes in place to independently identify and
produce the data they believe are necessary to best evaluate the health
needs of their patient population, improve health outcomes, monitor
provider/supplier quality of care and patient experience of care, and
produce efficiencies in utilization of services. Moreover, this ability
to self-manage is a critical skill for each ACO to develop, leading to
an understanding of the unique patient population that it serves.
However, as we discussed in the proposed rule, although an ACO
typically should have, or is moving towards having complete information
for the services it provides to its assigned beneficiaries, we also
recognize that the ACO may not have access to complete information
about all of the services that are provided to its assigned
beneficiaries by providers outside the ACO--information that would be
key to its coordinating care for its beneficiary population. Therefore,
we proposed to generate aggregate data reports, to provide limited
identifying information about beneficiaries whose information serves as
the basis for the aggregate reports (and who are preliminarily
prospectively assigned), and to share beneficiary identifiable claims
data with the ACO unless the beneficiary chooses to decline to share
their data. As we stated in the proposed rule, we believe that access
to this information would provide ACOs with a more complete picture
about the care their assigned beneficiaries receive both within and
outside the ACO. It would also enable the ACOs to ascertain their ACO
participants and ACO providers'/suppliers' patterns of care, and could
be used to assess their performance relative to their prior years'
performance.
As noted in the proposed rule, the disclosure of this information
in accordance with applicable privacy and security requirements would
enable an ACO to be better able to identify how its ACO participants
and ACO providers/suppliers measure up to benchmarks and targets, how
they perform in relation to peers internally, and to identify and
develop a plan for addressing the specific health needs of its assigned
beneficiary population.
2. Sharing Aggregate Data
In the proposed rule, we discussed supplementing the information
ACOs will be gathering as part of their internal processes for
monitoring and improving care furnished to its assigned beneficiary
population with aggregated (de-identified) data on beneficiary use of
health care services.
We proposed to provide aggregate data reports at the start of the
agreement period that would be based on data for those beneficiaries
historically assigned (hereafter referred to as preliminary
prospectively assigned beneficiaries), and included in the calculation
of the ACO's benchmark. These reports would include, when available,
aggregated metrics on the beneficiary population and beneficiary
utilization data at the start of the agreement period, based on the
historical data used to calculate the benchmark. We further proposed to
include these data in conjunction with the yearly financial and quality
performance reports. Additionally, we proposed to provide quarterly
aggregate data reports to ACOs based upon the most recent 12 months of
data from potentially assigned beneficiaries. We requested comments on
these proposals. For a comprehensive review of our proposals and
rationale, see section II.C.4. of the proposed rule (76 FR 19555).
Comment: The comments received were supportive of the proposal to
provide aggregate data to ACOs but suggested that this data would not
be useful unless it was delivered in a timely manner. Recommendations
included providing the aggregate data set prior to the submission of an
application, quarterly, immediately following the reporting period, or
in real time. A few commenters expressed concerns that aggregate
reports based upon a historical population may not provide the ACO with
sufficient information to make appropriate changes for its future fee-
for-service population.
Response: Although we intend to provide these aggregate data
reports in a timely manner, it will not be possible to provide these
reports to ACOs in ``real time.'' The aggregate reports would be
derived from provider and supplier claims data. Claims data are only
available after they have been submitted and processed. As such, there
is an inherent delay between when a service is performed and when a
claim is processed. This process delay is in addition to the time it
takes to prepare this claims level data to an aggregate level data set.
Both of these factors make it impossible to provide aggregate data
reports to ACOs in ``real time.''
It is also not possible to provide aggregate data reports prior to
the submission and approval of an ACO application and the ACO signing
its participation agreement. The aggregate data report is based upon
the ACO application itself and the TINs and NPIs that enter into an
agreement with the ACO. Until we have received and reviewed the
applications, determined the eligibility of the ACO participants and
ACO providers/suppliers to participate, and received a signed DUA from
the ACO, we cannot begin to construct the aggregate data reports.
Finally, in response to those who expressed concern about the utility
of historic data, we note that we proposed to supply the aggregate data
report historically for the benchmark, quarterly and in conjunction
with the yearly financial and quality performance reports, the
provision of this data in subsequent years of the agreement period is
already a component of our proposed policy.
Additionally, our experience with the PGP demonstration and
modeling of our proposed methodology for identifying beneficiaries
associated with the ACO suggests that a high percentage of patients who
chose ACO participants and ACO providers/suppliers in the benchmark
period will continue to receive care from these ACO participants and
ACO providers/suppliers. We believe knowing
[[Page 67845]]
individuals who would have been assigned in the past will help the ACO
participants identify the kinds of interventions that are likely to
improve care for their fee-for-service population going forward.
Comment: Several commenters were concerned about the delivery,
format, and content of the aggregate data report. Several commenters
questioned the ability of CMS to deliver accurate, relevant, and
comprehensive data to ACOs and suggested that CMS outline a detailed
plan to improve its data delivery system. Commenters felt that the data
should be standardized by CMS as aggregate data would be too complex
for many organizations to analyze. Commenters also suggested that the
aggregate data reports must include: Links to the beneficiary
identifiable data and health quality indicators, comparative regional
and national claims data, and separate aggregate data on patients that
have chosen to ``opt-out of the shared savings program.'' A few
comments suggested that we provide customized reports to each ACO.
Finally, one commenter suggested that CMS should also supply aggregate
savings/losses reports to ACOs quarterly.
Response: We proposed to deliver aggregate data reports to ACOs at
the start of the agreement period, quarterly, and in conjunction with
the annual quality and financial reports. These data extractions would
be standardized reports for all ACOs. It would not be administratively
feasible to offer customized reports for each ACO. We expect that ACOs
would be able to incorporate the aggregated data reports into their own
data processing systems for use in developing population health
management capabilities. By its nature, aggregate data cannot be linked
to individual beneficiary identifiable data as the purpose of the
aggregate data is to offer a broad view of the overall population of
assigned beneficiaries and potential areas for improvement.
Additionally, the aggregate data will not be linked to specific quality
indicators as this is not the purpose of providing the standardized
aggregate data reports. The ability to receive lists of beneficiaries
whose data were used to compile the aggregate data reports and monthly
beneficiary identifiable claims data, as discussed later in this final
rule, in conjunction with the aggregate data reports, will afford ACOs
the opportunity to use the lessons learned from the aggregate data
reports to implement delivery system reforms appropriate for their own
beneficiary populations. While we did not propose to offer regional or
national aggregate data reports or include a report on beneficiaries
that have declined to share their protected health information (PHI),
we think these suggestions merit consideration and we will keep them in
mind during future rulemaking cycles. For now, aggregate data reports
will be provided on the assigned beneficiary population, including
beneficiaries who may have declined to share their PHI data.
Finally, due to the inherent delay in receiving and processing
claims level data, it would not be feasible or accurate to supply
shared savings/loss reports to ACOs quarterly. However, the quarterly
reports will include information on per capita expenditures for
assigned beneficiaries that ACOs can use to monitor and improve their
performance.
Final Decision: We will finalize without change our proposals
related to sharing of aggregate data (see part 425 subpart H in
regulatory text of this final rule).
3. Identification of Historically Assigned Beneficiaries
Based on feedback from the PGP demonstration, the RFI comments on
the Shared Savings Program, and the Shared Savings Program Open Door
Forums, we proposed to make certain limited beneficiary identifiable
information available to ACOs at the beginning of the first performance
year. We believed ACOs would benefit from understanding which of their
FFS beneficiaries were used to generate the aggregated data reports.
Accordingly, we proposed to disclose the name, date of birth (DOB), sex
and Health Insurance Claim Number (HICN) of the preliminary prospective
assigned beneficiary population. We believed that knowing these data
elements would be useful to the ACO in two ways: First, the ACO
participants and ACO providers/suppliers could use the information to
identify the preliminary prospective assigned beneficiaries, review
their records, and identify care processes that may need to change.
Second, experience with the PGP demonstration has suggested that a high
percentage of preliminary prospective assigned beneficiaries will
continue to receive care from the ACO participants and ACO providers/
suppliers.
We recognized that there are a number of issues and sensitivities
surrounding the disclosure of individually-identifiable (patient-
specific) health information, and noted that a number of laws place
constraints on the sharing of individually identifiable health
information. We analyzed these issues and legal constraints and
concluded that the proposed disclosure of the four identifiers would be
permitted under the applicable laws and address the issues raised,
subject to the conditions described in detail in the proposed rule (76
FR 19555), and we sought comment on this proposal.
Comment: Although the majority of comments supported our proposal
to supply ACOs with the name, DOB, sex and HICN of the preliminary
prospective assigned beneficiary population, we did receive a few
comments that objected to this proposal. Of those comments that
disagreed with our proposal, the concerns were related to the confusion
that could result for ACO participants and ACO providers/suppliers
related to the provision of data on the preliminary prospective
assigned beneficiaries who may not choose to see ACO participants or
ACO providers/suppliers going forward, the potential for ACOs to use
the proposed data elements to avoid at-risk and/or high cost
beneficiaries, and the legality of disclosing this type of data. Others
suggested the four data points be expanded to include other beneficiary
identifiable information.
Response: We proposed providing limited beneficiary identifiable
information to ACOs at the start of the agreement period in order to
assist the ACO in conducting population-based activities related to
improving health or reducing costs, protocol development, case
management and care coordination. We believed that the ACO could use
the information to identify the preliminary prospective assigned
beneficiaries, review their records, and identify care processes within
its organization that may need to change. Since a high percentage of
beneficiaries who choose ACO participants and ACO providers/suppliers
in the benchmark period will continue to receive care from these ACO
participants and ACO providers/suppliers, we do not believe this data
set will generate any confusion for ACOs. As we outlined in the
proposed rule, we believe the agency has legal authority to provide
this data to ACOs. As also discussed in the proposed rule, we believe
these particular data elements will be useful to the ACO for two
reasons: (1) The ACO participants and ACO providers/suppliers could use
the information to identify the preliminary prospectively assigned
beneficiaries, review their records, and identify care processes that
may need to change, and (2) experience with the PGP demonstration has
suggested that a high percentage of preliminary prospective assigned
beneficiaries will continue to receive care from the ACO participants
and ACO providers/suppliers. We
[[Page 67846]]
believe that the proposed four data points will be sufficient to aid
ACOs in focusing their initial care redesign efforts going forward. We
also believe these four data points are the minimum data necessary for
providers to begin the process of developing care plans in an effort to
provide better care for individuals and better health for populations.
As described in section II.D.4 of this final rule, the ACO would have
the additional opportunity to request claims data for these individuals
after having given these beneficiaries the opportunity to decline such
data sharing. Finally, we agree with the comment that while providing
such information may be a benefit to both the beneficiary and the ACO,
concerns remain that ACOs could use it to avoid at-risk beneficiaries
or to stint on care. For this reason we have included in section II.H.
of this final rule a detailed discussion of the safeguards and
sanctions that have been incorporated into the program to guard against
avoidance of at-risk beneficiaries.
Comment: Several comments suggested that we provide the limited
beneficiary identifiable data set in advance of ACOs signing
agreements.
Response: The limited beneficiary identifiable data set is
constructed based upon the content of the ACO's application, including
the associated TINs that have been verified as part of the application
process. The data would be comprised of information regarding the
beneficiaries who would have met the criteria for assignment to the ACO
during the benchmark period. Without a verified list of eligible TINs
that will be associated with the ACO, we cannot construct this data
set. Additionally, as discussed later in this final rule, we will
require ACOs to enter into a Data Use Agreement (DUA) prior to receipt
of any beneficiary identifiable claims data, and this agreement can
only be executed after an applicant has been approved to participate in
the Shared Savings Program as an ACO.
Under HIPAA and the required business associate agreements, the ACO
and its participants will not be able to use or disclose any
individually identifiable health information it receives from us in a
manner in which a HIPAA covered entity would be barred from doing.
Furthermore, under the DUA, the ACO would be prohibited from sharing
the Medicare claims data that we provide through the Shared Savings
Program with anyone outside the ACO that has not co-signed the DUA as a
contractor to the ACO. In addition, ACOs must comply with the
limitations on use and disclosure that are imposed by HIPAA, the
applicable DUA, and the ACO program's statutory and regulatory
requirements. Compliance with the DUA will be a condition of the ACO's
participation in the Shared Savings Program--non-compliance with this
requirement would result in the ACO no longer being eligible to receive
data, and could lead to termination from the Shared Savings Program or
additional sanctions and penalties available under the law.
For these reasons, we cannot disclose beneficiary identifiable
information to an ACO until such time as any necessary Business
Associate Agreements (BAAs) between an ACO and its ACO participants and
ACO providers/suppliers are established in accordance with HIPAA and
there is a signed DUA in place with us.
Comment: Several comments requested that at the start of the
agreement period, we provide more detailed and robust beneficiary
identifiable data than the four data points identified and that we
update and provide to ACOs the list of the potentially assigned
beneficiary population monthly or quarterly.
Response: Although we understand that ACOs would prefer to have
more detailed beneficiary identifiable data at the start of the
agreement period, in the proposed rule (76 FR 19555) we described the
minimum necessary data elements we believed were essential to
accomplish the health care operations described in the NPRM. As
discussed in response to a previous comment, we believe that the
proposed four data points will be sufficient to aid ACOs in focusing
their care redesign efforts initially. As noted in section II.D.4. of
this final rule, however, the ACO will have the opportunity to request
additional claims data for these beneficiaries once the ACO has given
them the opportunity to decline data sharing.
As described in section II.E. of this final rule, we are modifying
our proposed assignment methodology to provide ACOs preliminary
prospective assignment of beneficiaries with retrospective
reconciliation based on actual beneficiary utilization. We agree with
commenters that providing quarterly aggregate reports on the
preliminarily prospective assigned population would assist ACOs in
conducting population-based activities relating to improving health or
reducing costs, protocol development, case management and care
coordination. Therefore, we will be providing ACOs with quarterly
listings of preliminarily prospective assigned beneficiary names, DOB,
sex, and HCINs that were to generate each quarterly aggregate data
report. We believe that the provision of the quarterly aggregate
reports and the limited identifiable information on beneficiaries used
to generate the reports, combined with the opportunity to request
monthly beneficiary identifiable claims data as discussed later in this
final rule, and our modification to allow ACOs to request claims data
of beneficiaries that appear on these reports, will provide sufficient
information for treatment and health care operations activities with
the Medicare FFS population for which it is accountable.
Final Decision: We are finalizing our proposal to provide the ACO
with a list of beneficiary names, dates of birth, sex, and HICN derived
from the beneficiaries whose data was used to generate the preliminary
prospective aggregate reports (Subsection H). We are modifying our
proposal to provide similar information in conjunction with each
quarterly aggregated data report, based upon the most recent 12 months
of data, consistent with the time frame listed in the proposed rule.
4. Sharing Beneficiary Identifiable Claims Data
While the availability of aggregate beneficiary information and the
identification of the beneficiaries used to determine the benchmark
will assist ACOs in the overall redesign of care processes and
coordination of care for their assigned beneficiary populations, we
believe that more complete beneficiary-identifiable information would
enable practitioners in an ACO to better coordinate and target care
strategies towards the individual beneficiaries who may ultimately be
assigned to them. There are recognized limits to our data, however, and
to our ability to disclose it.
After consideration of the legal limitations and policy
considerations that would be applicable to disclosure of these data,
which are discussed in detail in the proposed rule (76 FR 19557 through
19559), we proposed to give the ACO the opportunity to request certain
beneficiary identifiable claims data on a monthly basis, in compliance
with applicable laws. We proposed to limit the available claims to
those of beneficiaries who received a primary care service from a
primary care physician participating in the ACO during the performance
year, and who have been given the opportunity to decline to have their
claims data shared with the ACO but have declined to do so.
Furthermore, we proposed that beneficiary information that is subject
to the regulations governing the confidentiality of alcohol and drug
[[Page 67847]]
abuse patient records (42 CFR Part 2) would only be made available if
the beneficiary provided his or her prior written consent. Finally, we
proposed to limit the content of the claims data to the minimum data
necessary for the ACO to effectively coordinate care of its patient
population.
As a condition of receiving the data, the ACO would be required to
submit a formal data request, either at the time of application or
later in the agreement period, and explain how it intends to use these
data to evaluate the performance of ACO participants and ACO providers/
suppliers, conduct quality assessment and improvement activities, and
conduct population-based activities to improve the health of its
assigned beneficiary population.
Additionally, we proposed to require ACOs to enter into a DUA prior
to receipt of any beneficiary-identifiable claims data. Under the DUA,
the ACO would be prohibited from sharing the Medicare claims data that
we provide through the Shared Savings Program with anyone outside the
ACO. In addition, we proposed to require in the DUA that the ACO agree
not to use or disclose the claims data, obtained under the DUA, in a
manner in which a HIPAA covered entity could not without violating the
HIPAA Privacy Rule. We proposed to make compliance with the DUA a
condition of the ACO's participation in the Shared Savings Program--
non-compliance with this requirement would result in the ACO no longer
being eligible to receive data, and could lead to its termination from
the Shared Savings Program or additional sanctions and penalties
available under the law. ACOs would be required to certify to their
willingness to comply with the terms of the DUA in their application to
participate in the program or at the time they request the claims data,
we solicited comments on our analysis and proposals described
previously. For a complete discussion of our analysis of our legal
authority to disclose beneficiary-identifiable parts A, B, and D claims
data to ACOs (see 76 FR 19556 through 19559).
Comment: The majority of comments supported the provision regarding
beneficiary-identifiable data. However, some expressed concern about
the ability of CMS to provide timely data to ACOs. The majority of
comments supported the provision of this data on a monthly basis but
some comments requested a more streamlined approach that would enable
the provision of this data ``real time'' or weekly.
One commenter believed that claim-based data simply cannot be
timely, stating that by the time a claim for a service is submitted,
processed and adjudicated, and compiled and extracted, significant time
will have elapsed. Additionally, the commenter also contended that by
the time the monthly transfer is received and properly ``loaded'' on an
ACO's system, and analyzed by the ACO's or their consultant's staff,
several more months will have elapsed, rendering the data less than
useful. Another commenter suggested these data would be useful on a
quarterly basis.
Response: Although we understand that ACOs would like to obtain
data on a real time, or nearly real time basis, as we explained in the
proposed rule, there is an inherent lag between when a service is
performed and when the service is submitted for payment, for this
reason it is not feasible to provide data in real time. As noted
previously, however, we expect that ACOs will have, or will be working
towards having, processes in place to independently identify and
produce the data they believe are necessary to best evaluate the health
needs of their patient population, improve health outcomes, monitor
provider/supplier quality of care and patient experience of care, and
produce efficiencies in utilization of services. A robust health
information exchange infrastructure and improving communication among
ACO participants and the ACO's neighboring health care providers could
assist in accessing data that is closer to ``real time''.
In keeping with the ``minimum necessary'' provisions of the HIPAA
Privacy Rule, ACOs are expected only to request data from us that will
be useful to them for conducting the kinds of activities that are
described in the proposed rule. ACOs may request data as frequently as
each month but are not required to submit a request monthly. ACOs may
submit requests less frequently if monthly reports are not necessary to
suit their needs.
Comment: Several comments were concerned about the ability of ACOs
to convert a large volume of claims data into actionable information.
Some requested that CMS standardize the monthly information in a way
that is actionable for the ACO.
Response: We agree that not all ACOs may have the capability,
desire, or need to handle large volumes of claims data in a way that
will complement the ACO's activities to improve care processes. For
that reason, we are not requiring all ACOs to submit DUAs or request
monthly beneficiary identifiable claims data, as noted previously.
Accordingly, as described previously, before receiving any data, the
ACO will be required to explain how it intends to use these data to
evaluate the performance of ACO participants and ACO providers/
suppliers, conduct quality assessment and improvement activities, and
conduct population-based activities to improve the health of its
assigned beneficiary population.
Comment: A few comments requested that the data elements contained
in the monthly beneficiary identifiable data be expanded. Commenters
additionally suggested that the data elements should include detailed
information on all services received by beneficiaries who have been
treated by an ACO participant. One comment specifically requested that
the claims data include both the NPI and TIN so they can drill their
quality and cost containment efforts down to the individual provider
level while another comment specifically requested that for suppliers,
such as laboratories, the minimum necessary data set must include the
Place of Service (POS) code as the supplier ID serves no real purpose
for laboratories.
Response: In the proposed rule, we stated that we believed the
minimum necessary Parts A and B data elements would include data
elements such as: Procedure code, diagnosis code, beneficiary ID, date
of birth, gender, and, if applicable, date of death, claim ID, the form
and thru dates of service, the provider or supplier type, and the claim
payment type. (76 FR 19558). Similarly, we stated that the minimum
necessary Part D data elements could include data elements such as:
Beneficiary ID, prescriber ID, drug service date, drug product service
ID, and indication if the drug is on the formulary. (76 FR 19559). We
would like to clarify that these lists of data elements were provided
in order to offer examples of the types of data elements that might be
the minimum data necessary to permit an ACO to undertake evaluation of
the performance of ACO participants and ACO providers/suppliers,
conduct quality assessment and improvement activities with and on
behalf of the ACO participants and ACO providers/suppliers, and conduct
population-based activities relating to improved health for Medicare
beneficiaries who have a primary care visit with a primary care
physician used to assign patients to the ACO during a performance year.
We did not, however, intend that these data elements would be the only
data elements that an ACO could request. Rather, we intended that an
ACO could request additional data elements provided it could
demonstrate how the additional requested information would
[[Page 67848]]
be necessary to performing the functions and activities of the ACO,
such that they would be the minimum necessary data for these purposes.
Accordingly, in this final rule, we are clarifying that the minimum
necessary data elements may include, but are not limited to, the list
of Parts A and B data elements and the list of Part D data elements
that were specifically included in the proposed rule.
Furthermore, we agree with the request to include the provider's
identity, such as through the NPI or TIN. One of the important
functions of the ACO is to coordinate care, and without the provider's
identity, the ACO would not able to make full use of the claims data to
determine which other providers it will need to work with in order to
better coordinate the beneficiary's care. For the same reasons, the POS
code will be useful. We do agree that in order to effectively evaluate
the performance of ACO participants and ACO providers/suppliers,
conduct quality assessment and improvement activities, and conduct
population-based activities to improve the health of its assigned
beneficiary population the minimum necessary data set should be
expanded to include TIN, NPI, and POS codes.
Comment: Several commenters requested that beneficiary identifiable
data be supplied to ACOs 6 months prior to their initial agreement
start date while other comments did not specify a specific timeframe
but generally requested that beneficiary identifiable data be provided
to ACOs in advance of signing their agreements.
Response: Similar to the response provided previously related to
the provision of the four beneficiary identifiable data points
associated with the aggregate data reports, the legal bases for the
disclosure of beneficiary-identifiable information would not be
applicable prior to the start of the ACO's participation in the Shared
Savings Program.
Comment: Several comments requested that we make Medicare claims
data available to Regional Health Improvement Collaboratives as soon as
possible so that they can help providers in their community identify
successful strategies for forming ACOs and also develop other
innovative payment and delivery reforms that the Innovation Center can
support.
Response: This comment is outside the scope of this rule. In the
proposed rule, we proposed to share beneficiary-identifiable claims
data with the ACOs under the terms specified. We did not propose to
make these data available to other entities. However, we note that
under section 10332 of the Affordable Care Act certain qualified
entities, which may include existing community collaboratives, that
meet certain requirements for performance measurement and reporting can
access beneficiary identifiable claims data for the purposes of
evaluating the performance of providers and suppliers on measures of
quality, efficiency, effectiveness and resource use.
Comment: One comment recommended that ACOs should be required to
assure that health data is bi-directional with State health agency
registries. This bi-directional sharing of data is an important
resource to draw on the expertise of governmental public health in
using data to identify high risk populations. State health agencies can
provide improvements in individual and population care, resulting in
better health and reduced expenditures.
Response: We recognize the importance of encouraging health
information exchange with State health agency registries. Two of the
objectives of our Medicare EHR Incentive Program for eligible
professionals are related to sharing information with State health
agencies, such as immunization data and syndromic surveillance data.
More information about the Medicare EHR Incentive Program is available
at https://www.cms.gov/ehrincentiveprograms/30_Meaningful_Use.asp. As
discussed in section II.F. of this final rule, we have adopted a
quality measure requiring ACOs to report the percentage of primary care
providers who successfully qualify for an EHR Incentive Program
payment.
We anticipate that ACOs will participate in active health
information exchange with their State health agencies as appropriate;
however, we decline to require ACOs to send information to their State
health agencies as a condition of participation in the Shared Savings
Program. We are finalizing our proposal to share beneficiary
identifiable data with ACOs that are qualified to participate in the
program.
Comment: Several commenters were concerned that the integrated
design of ACOs could result in DUA and privacy law violations without
appropriate monitoring and safeguards in place, and would request that
CMS be more prescriptive in those policies addressing its sharing of
data, the ACOs sharing of data internally, and the ACO's suppression of
inappropriate data flowing to sources (that is adolescent/minor data to
a parent/guardian, beneficiary data to an ex-spouse, etc.).
Response: As discussed previously, we believe we have the legal
authority to share beneficiary identifiable claims data under the
conditions specified. While not required to do so under the applicable
laws, we have also elected to bar redisclosure of any CMS claims data
that are received by an ACO through the Shared Savings Program.
Furthermore, the recipients of CMS claims data under this program are
either HIPAA covered entities or business associates of HIPAA covered
entities. The HIPAA Privacy and Security rules will provide added
protections (and enforcement mechanisms) outside of the ACO program
requirements. Additionally, we have proposed, and are finalizing robust
monitoring protocols (described in section II.H. of this final rule)
that will protect beneficiary privacy interests and penalize ACOs that
misuse data.
Comment: A comment stated that CMS must assure that all ACO
participants have equal access to beneficiary identifiable data.
Another commenter recommended that pharmacists specifically be allowed
to be active partners in data sharing.
Response: We believe it is in the best interest of all ACO
participants to have a voice in the decision making and function of the
ACO. As such, we have proposed that ACO participants (defined as any
Medicare enrolled provider or supplier, including pharmacists) have a
mechanism of shared governance. Shared governance ensures all ACO
participants have the ability to jointly make decisions on how best to
use and disseminate information derived from beneficiary identifiable
claims in accordance with all applicable laws for purposes of the
health care operations of the ACO participants, and/or effectively
treating the assigned patient population of the ACO.
Comment: Several comments expressed concerns regarding how the data
for those patients that are ultimately not assigned to the ACO will be
handled. One comment specifically requests that no beneficiary
identifiable data be shared with any program until after the Medicare
Advantage open season has concluded as this would ensure that a
Medicare beneficiary has the option of electing a different health care
delivery method without having their personal information shared with
an organization through which they are not receiving health services.
Response: We recognize that some beneficiaries will not continue to
see the ACO participants because they may move or change providers.
Some beneficiaries may change providers because they have enrolled in a
Medicare Advantage plan that does not
[[Page 67849]]
include their existing provider. When beneficiaries stop receiving care
from ACO participants, for whatever reason, the ACO no longer needs to
receive claims data for these beneficiaries because the ACO would no
longer be responsible for coordinating their care. Accordingly,
consistent with Sec. 425.704(b), ACOs should not continue to request
claims data from us for beneficiaries that the ACO knows are no longer
being treated by ACO participants.
We are finalizing our proposal to share these data with the ACO
once the beneficiary has been notified and has not declined to have
their data shared. We will also monitor the ACO's compliance with the
terms of the DUA.
Comment: Several commenters recommended that we specify in the
regulation that an ACO may transmit data to a vendor or designate a
vendor to receive data from CMS on their behalf, and that this vendor
may use this data in a manner that complies with HIPAA and their
business associate agreements.
Response: In the proposed rule, we discussed the ability under
HIPAA for covered entities to share beneficiary identifiable data with
business associates. We believe based on its work on behalf of covered
entity ACO participants and ACO providers/suppliers in conducting
quality assessment and improvement activities, a vendor could qualify
as a business associate or subcontractor of a business associate.
Therefore, we believe an ACO may allow a vendor to receive claims
information on its behalf, but it must assume responsibility for that
vendor's use and disclosures of the data.
Comment: One comment suggested that the provision of beneficiary
identifiable data on a monthly basis could undermine the movement to
EHRs if ACOs instead invest in free-standing programs to analyze claims
data. Other comments state that the ability to facilitate health
information exchange among affiliated and unaffiliated providers
through the use of both EHR and HIT interoperability standards is an
important ingredient to the success of ACOs.
Response: We disagree that the movement toward adopting EHRs will
be somehow undermined by our provision of beneficiary identifiable
claims data to the ACOs. As we have explained, the beneficiary
identifiable claims data that will be furnished by us, although useful,
is not ``real time'' and is not expected to supplant the expectation
that ACOs are growing in their capability for internal analysis of data
to improve quality as well as improving coordination of care by better
communication between ACO participants and non-participant providers.
Additionally, because the ACO will be held accountable for an assigned
population of FFS Medicare beneficiaries, we expect that beneficiary
identifiable claims data will be useful in identifying services and
goods obtained from non-ACO providers and suppliers and in developing
processes to improve communication with those practitioners to improve
overall care delivery. The development of interoperable EHR and HIT
among both affiliated and unaffiliated providers would be one way to
facilitate communication with practitioners.
5. Giving Beneficiaries the Opportunity To Decline Data Sharing
Although we have the legal authority, within the limits described
previously, to share Medicare claims data with ACOs without the consent
of beneficiaries, we nevertheless believe that beneficiaries should be
notified of, and have control over, who has access to their personal
health information for purposes of the Shared Savings Program. Thus, we
proposed to require that, as part of its broader activities to notify
patients that its ACO provider/supplier is participating in an ACO, the
ACO must also inform beneficiaries of its ability to request claims
data about them if they do not object.
Specifically, we proposed that when a beneficiary has a visit with
their primary care physician, their physician would inform them at this
visit that he or she is an ACO participant or an ACO provider/supplier
and that the ACO would like to be able to request claims information
from us in order to better coordinate the beneficiary's care. If the
beneficiary objects to sharing their data, he or she would be given a
form stating that they have been informed of their physician's
participation in the ACO and explaining how to decline having their
personal data shared. The form could include a phone number and/or
email address for beneficiaries to call and request that their data not
be shared. Thus, we proposed that ACOs would only be allowed to request
beneficiary identifiable claims data for beneficiaries who have: (1)
Visited a primary care participating provider during the performance
year; and (2) have not chosen to decline claims data sharing. We noted
that it is possible that a beneficiary would choose not to have their
data shared with the ACO but would want to continue to receive care
from ACO participants or providers/suppliers. We further noted that in
such a case, the ACO would still be responsible for that beneficiary's
care, and as such, the beneficiary's data would continue to be used to
assess the performance of the ACO. To ensure a beneficiary's preference
is honored, we proposed to maintain a running list of all beneficiaries
who have declined to share their data. We proposed to monitor whether
ACOs request data on beneficiaries who have declined data sharing, and
proposed to take appropriate actions against any ACO that has been to
make such a request. For a complete discussion of our policy rationale
for these proposals (see (76 FR 19559 and 19560)).
Comment: Some comments suggested that this proposal to permit
beneficiaries to decline data sharing runs counter to the goal of
coordinated care and will make it nearly impossible for ACOs to
succeed. These comments offered various alternatives ranging from:
Eliminating the opportunity for beneficiaries to decline data sharing,
removing those beneficiaries who elect to decline to have their data
shared from ACO performance assessment, requiring beneficiaries who
choose to decline to participate in data sharing from continuing to
seek care from an ACO participant, allowing ACOs to refuse care to
beneficiaries who choose to decline data sharing, and making the
beneficiary's choice to receive care from an ACO provider/supplier an
automatic opt-in for data sharing.
Response: Although we have the legal authority, within the limits
described previously, to share Medicare claims data with ACOs without
the consent of the Medicare beneficiaries, we believe that
beneficiaries should be notified of their provider's participation in
an ACO and have some control over who has access to their personal
health information for purposes of the shared savings program.
Furthermore, we believe that a beneficiary should not be subject to any
penalties, such as being required to change their healthcare provider,
if they decide that they do not want their information shared. The
requirement that an ACO provider/supplier engage patients in a
discussion about the inherent benefits, as well as the potential risks,
of data sharing provides an opportunity for true patient-centered care
and will create incentives for ACOs, ACO participants, and ACO
providers/suppliers to develop positive relationships with each
beneficiary under their care. Additionally, this proposal will provide
ACO participants and ACO providers/suppliers the opportunity to engage
with beneficiaries by explaining the shared savings program and its
potential benefits to both the beneficiaries and the health
[[Page 67850]]
care system as a whole. FFS beneficiaries will retain their right to
seek care from any provider, including those participating in an ACO,
even if they decline to share their data. Additionally, requiring that
ACOs be accountable to all assigned beneficiaries will allow us to
compare the quality metrics and costs between those beneficiaries who
have declined to share their data and those beneficiaries who have
allowed their data to be shared in order to evaluate the effectiveness
of the data sharing provisions. We will monitor for any actions taken
on the part of the ACO to steer patients away that have declined data
sharing.
Comment: A few comments recommend that for the elderly, less
literate or tribal populations, that an opt-in approach would be more
conducive to offering beneficiaries meaningful control over their
personal health information. Commenters believe the advantage of an
opt-in approach is that consent must be sought before which time any
sharing of health information can occur. Obtaining affirmative written
permission would also provide documentation of the beneficiary's
choice. A few other comments supported our policy to afford meaningful
choice over their personal health information to beneficiaries but
recommended that we make this less burdensome on the beneficiary.
Response: We disagree that an opt-in approach would offer
beneficiaries more control over their personal health information then
an opt-out approach. We believe either approach, done well, offers
equivalent control. As discussed previously, our opt-out approach
coupled with notification of how protected health information will be
shared and used affords beneficiaries choice and will offer ACOs, ACO
participants, and ACO providers/suppliers the opportunity to develop
positive relationships with each beneficiary under their care.
Additionally, our notification and opt out approach will provide ACOs,
ACO participants, and ACO providers/suppliers the opportunity to
explain the shared savings program and its inherent benefits to both
the beneficiaries and the health care system as a whole. We recognize
that obtaining affirmative written permission would provide
documentation of the beneficiary's choice in an opt-in model. However,
we believe that under this approach significant paperwork burdens arise
as providers must track consents for the majority of their patient
population.
Comment: One comment stated that requiring beneficiaries to change
their health care delivery in order to avoid having their personal
health information shared among ACO providers is contrary to the
message delivered during the health care debate that if a beneficiary
was happy with their health care, nothing would change. Another comment
was concerned that patients may be skeptical of or not understand the
opt-out proposal and for this reason seek care outside the ACO, even if
the beneficiary has an established relationship with the ACO
participant.
Response: We disagree with this comment and contend that the
transparency provided by this proposal ensures the beneficiary may
decline data sharing while also allowing the beneficiary to continue to
receive care from an ACO provider if they are happy with the care he/
she is providing. In this way, beneficiaries retain freedom under
traditional FFS Medicare to choose their own health care providers
while also affording them the option of whether or not to share their
data.
Comment: Several comments approved of our proposal to offer all
beneficiaries the opportunity to decline to share their health data and
especially liked that it would afford providers the opportunity to
engage with patients to promote trust. Many of these comments also
suggested that this policy would allow CMS to evaluate whether or not
the sharing of beneficiary identifiable claims data is an important
factor in improving health care delivery by comparing outcomes for
beneficiaries who decline data sharing against those who do not.
Response: We agree that evaluating the outcomes of beneficiaries
who have declined data sharing versus those who have not could provide
valuable information, and will investigate the possibility of
conducting such a study. We believe comparative evaluations like this
are important for identifying potential improvements to improving the
Medicare program. We intend to study the effects of the Shared Savings
Program over time, and expect to improve the program through lessons
learned by participants and evaluations of similar initiatives, such as
those undertaken through the Innovation Center.
Comment: A few commenters recommended that CMS maintain the list of
beneficiaries who have declined to share their data, and that CMS
report to the ACOs the percentage of attributed beneficiaries who
decline data sharing to the ACO since this will directly impact data
integrity, risk assessment, validation, and potentially performance.
Response: We agree that knowing the percentage of beneficiaries
that have declined data sharing could be useful to ACOs. However,
because the ACO will be compiling and submitting the list of
beneficiaries who have not declined data sharing on a monthly basis,
the ACO will already have sufficient data to assess the percentage of
beneficiaries who decline data sharing.
Comment: A few comments suggest that CMS explore alternative
assignment methodologies that will facilitate a greater willingness by
beneficiaries to share data. Additionally, one commenter recommended
that the data sharing process proposed in the Pioneer ACO Model should
be adopted for the general Shared Savings Program.
Response: We appreciate these comments and are looking forward to
lessons learned from testing different approaches in the Pioneer ACO
Model.
Comment: Several commenters were concerned that allowing ACOs
access to beneficiary identifiable data only after: (1) The beneficiary
has visited a primary care participating provider during the
performance year; and (2) does not elect to decline to participate in
data sharing, will result in a delay in the provision of claims data to
ACOs, and may generate unnecessary office visits for the beneficiary
population as providers might attempt to pull beneficiaries into the
office for needless visits just in order to explain the Shared Savings
Program to the beneficiaries.
Response: We have considered these comments in light of our goal to
promote better physician-patient relationships, program transparency
and reduce administrative burden. We are modifying our proposed
approach to providing beneficiary identifiable data to ACOs. We will
continue to require ACOs to notify patients at the point of care that
they are participating in an ACO, that they will be requesting PHI
data, and that the beneficiary has the right to decline to share this
data with the ACO. In addition, we will also provide a mechanism by
which ACOs can notify beneficiaries and request beneficiary
identifiable data in advance of the point of care visit using the lists
of preliminary prospectively assigned patients provided to the ACO at
the start of the agreement period and quarterly during the performance
year.
As discussed previously, upon signing participation agreements and
a DUA, ACOs will be provided with a list of preliminary prospectively
assigned set of beneficiaries that would have historically been
assigned and who are likely to be assigned to the ACO in future
performance years. ACOs may utilize this initial preliminary
[[Page 67851]]
prospectively assigned list along with the quarterly lists to provide
beneficiaries with advance notification prior to a primary care service
visit of their participation in the shared savings program and their
intention to request their beneficiary identifiable data. Beneficiaries
will be given the opportunity to decline this data sharing as part of
this notification. After a period of 30 days from the date the ACO
provides such notification, ACOs will be able to request beneficiary
identifiable data from us absent an opt-out request from the
beneficiary. Although we would expect providers/suppliers to still
actively engage beneficiaries in conversation about the Shared Savings
Program and their ability to decline to share their own health data at
the beneficiaries' first primary care visit.
We believe this modification will continue to afford beneficiaries
with a meaningful choice about the sharing of their claims data, while
also allowing practitioners to have more timely access to
beneficiaries' claims data in order to begin coordinating care for
those beneficiaries as soon as possible. This additional flexibility
may be particularly important in the case of beneficiaries who do not
schedule an appointment with a primary care practitioner until later in
the year or not at all in a given year. As noted previously, under
Sec. 425.704(b) ACOs should not continue to request claims data for
beneficiaries that the ACO knows are no longer being treated by ACO
participants or who have not been assigned to the ACO during the
retrospective reconciliation.
Final Decision: We will finalize our proposal in Sec. 425.704, to
allow ACOs to request beneficiary identifiable data on a monthly basis.
Additionally, we are modifying this proposal in Sec. 425.708 to
allow the ACO the option of contacting beneficiaries from the list of
preliminarily prospectively assigned beneficiaries in order to notify
them of the ACO's participation in the program and their intent to
request beneficiary identifiable data. If, after a period of 30 days
from the date the ACO provides such notification, neither the ACO nor
CMS has received notification from the beneficiary to decline data
sharing, the ACOs would be able to request beneficiary identifiable
data. The ACO would be responsible for repeating the notification and
opportunity to decline sharing information during the next face-to-face
encounter with the beneficiary in order to ensure transparency,
beneficiary engagement, and meaningful choice.
We note that if a beneficiary declines to have their claims data
shared with the ACO, this does not preclude physicians from sharing
medical record information as allowed under HIPAA amongst themselves,
for example, a referring primary care physician providing medical
record information to a specialist.
E. Assignment of Medicare Fee-for-Service Beneficiaries
Section 1899(c) of the Act requires the Secretary to ``determine an
appropriate method to assign Medicare FFS beneficiaries to an ACO based
on their utilization of primary care services provided under this title
by an ACO professional described in subsection (h)(1)(A). Subsection
1899(h)(1)(A) constitutes one element of the definition of the term
``ACO professional.'' Specifically, this subsection establishes that
``a physician (as defined in section 1861(r)(1))'' is an ``ACO
professional'' for purposes of the Shared Savings Program. Section
1861(r)(1) of the Act in turn defines the term physician as ``* * * a
doctor of medicine or osteopathy legally authorized to practice
medicine and surgery by the State in which he performs such function or
action''. In addition, section 1899(h)(1)(B) of the Act defines an ACO
professional to include practitioners described in section
1842(b)(18)(C)(i) of the Act, such as PAs and NPs.
Assigning Medicare beneficiaries to ACOs also requires several
other elements: (1) An operational definition of an ACO (as
distinguished from the formal definition of an ACO and the eligibility
requirements that we discuss in section II.B. of this final rule) so
that ACOs can be efficiently identified, distinguished, and associated
with the beneficiaries for whom they are providing services; (2) a
definition of primary care services for purposes of determining the
appropriate assignment of beneficiaries; (3) a determination concerning
whether to assign beneficiaries to ACOs prospectively, at the beginning
of a performance year on the basis of services rendered prior to the
performance year, or retrospectively, on the basis of services actually
rendered by the ACO during the performance year; and (4) a
determination concerning the proportion of primary care services that
is necessary for a beneficiary to receive from an ACO in order to be
assigned to that ACO for purposes of this program.
The term ``assignment'' in this context refers only to an
operational process by which Medicare will determine whether a
beneficiary has chosen to receive a sufficient level of the requisite
primary care services from physicians associated with a specific ACO so
that the ACO may be appropriately designated as exercising basic
responsibility for that beneficiary's care. Consistent with section
1899(b)(2)(A) of the Act, the ACO will then be held accountable ``for
the quality, cost, and overall care of the Medicare fee-for-service
beneficiaries assigned to it.'' The ACO may also qualify to receive a
share of any savings that are realized in the care of these assigned
beneficiaries due to appropriate efficiencies and quality improvements
that the ACO may be able to implement. It is important to note that the
term ``assignment'' for purposes of this provision in no way implies
any limits, restrictions, or diminishment of the rights of Medicare FFS
beneficiaries to exercise complete freedom of choice in the physicians
and other health care practitioners and suppliers from whom they
receive their services.
Thus, while the statute refers to the assignment of beneficiaries
to an ACO, we would characterize the process more as an ``alignment''
of beneficiaries with an ACO, that is, the exercise of free choice by
beneficiaries in the physicians and other health care providers and
suppliers from whom they receive their services is a presupposition of
the Shared Savings Program. Therefore, an important component of the
Shared Savings Program will be timely and effective communication with
beneficiaries concerning the Shared Savings Program, their possible
assignment to an ACO, and their retention of freedom of choice under
the Medicare FFS program. The issues of beneficiary information and
communications are further discussed in section II.H.2.a. of this final
rule.
Comment: A commenter noted that CMS experiences savings on Medicare
Cost Contract products when admissions are avoided, but the value this
generates is not currently shared by providers. The commenter noted
that, in a Medicare Cost Contract, health plans assume risk for Part B
services while CMS retains the risk for Part A services. In the PGP
demonstration, the commenter's organization created savings for both
Medicare FFS and Cost Contract patients, and CMS received the benefit
of reduced hospital admissions. These savings were not calculated into
the gain sharing arrangement within the PGP demonstration program nor
could they be recognized in cost plan contracts since the value accrued
solely to CMS. The commenter believed that this disconnect makes it
cost prohibitive to invest in technologies to improve care across our
senior patient population. CMS should include these patients in
[[Page 67852]]
the performance calculations for ACOs with a significant Cost Contract
population''
Response: We assume that the commenter is referring to cost
contracts which exist under section 1876 of the Act. Section 1899(h)(3)
of the Act defines a ``Medicare fee-for-service beneficiary'' for
purposes of the Shared Savings Program as ``an individual who is
enrolled in the original Medicare fee-for-service program under parts A
and B and is not enrolled in an MA plan under part C, an eligible
organization under section 1876, or a PACE program under section
1894.'' Therefore, the statute precludes assignment of cost contract
beneficiaries to ACOs under the Shared Savings Program.
Comment: Another commenter cited the definition of ``Medicare fee-
for-service beneficiary'' under section 1899(h)(3) of the Act, but then
requested that Medicare beneficiaries that can participate in the ACO
should include Seniorcare enrollees. The commenter describes
``Seniorcare'' as a product for Medicare beneficiaries which falls
under section 1876 of the Act, and contends that their participation in
an ACO should be permitted because they represent a small population
that is ``important in rural areas.'' Finally, the commenter contends
that dual eligibles should be included in the program, observing that
their participation in the Shared Savings Program would require
coordination with the States, and suggesting that we gather data on the
dual eligibles who participate during the first years of the MSSP in
order to determine whether any issues arise with their participation.
Response: As we have discussed previously, section 1899(h)(3) of
the Act specifically excludes individuals ``enrolled in an eligible
organization under section 1876'' from the definition of ``Medicare
fee-for-service beneficiary'' for purposes of the Shared Savings
Program. The commenter stated that Seniorcare is a Medicare product
offered under section 1876 of the Act. Seniorcare enrollees therefore
may not be assigned to an ACO. Nothing in section 1899 of the Act,
however, precludes assignment of dual eligibles enrolled in the
original Medicare FFS program to ACOs participating in the Shared
Savings Program. CMS' goal is to promote complete integration of care
provided and align incentives for all individuals whether under
Medicare, Medicaid, or both. We agree with the commenter's suggestion
that we carefully monitor ACO care coordination, quality of care, and
costs for dual eligibles including the impact on Medicaid and will
implement this within our monitoring plans. In addition, we intend to
study the effect of assignment of dually eligible individuals to ACOs
in the MSSP on Medicaid expenditures, and may use this information in
the development of future models for testing by the Innovation Center.
Final Decision: We are finalizing our proposed policies concerning
the eligibility of Medicare FFS beneficiaries for assignment to an ACO
under the Shared Savings Program. Specifically, as required by the
statute, and consistent with the definition of Medicare fee-for-service
beneficiary in Sec. 425.20, under Sec. 425.400(a) only individuals
enrolled in the original Medicare fee-for-service program under parts A
and B, and not enrolled in an MA plan under Part C, an eligible
organization under section 1876 of the Act, or a PACE program under
section 1894 of the Act, can be assigned to an ACO.
1. Definition of Primary Care Services
Section 1899(c) of the Act requires the Secretary to assign
beneficiaries to an ACO ``based on their utilization of primary care
services'' provided by a physician. However, the statute does not
specify which kinds of services should be considered ``primary care
services'' for this purpose, nor the amount of those services that
would be an appropriate basis for making assignments. We discuss issues
concerning the appropriate proportion of such services later in the
final rule. In this section of this final rule, we discuss how to
identify the appropriate primary care services on which to base the
assignment and our final policy for defining primary care services for
this purpose.
In the proposed rule, we proposed to define ``primary care
services'' as a set of services identified by these HCPCS codes: 99201
through 99215; 99304 through 99340; and 99341 through 99350.
Additionally, we proposed to consider the Welcome to Medicare visit
(G0402) and the annual wellness visits (G0438 and G0439) as primary
care services for purposes of the Shared Savings Program.
Comment: One commenter expressed concern that an assignment
methodology based on primary care services could lead to an unintended
negative consequence: ``An attribution model based on primary care
utilization could result in a disproportionate number of high-risk
beneficiaries, as compared to low-risk beneficiaries, being assigned to
the ACO. Low-risk beneficiaries may be less likely to have visited a
PCP or other physician, resulting in that patient not being assigned to
an ACO. Therefore, the commenter encourages CMS to consider ways in
which these beneficiaries can be encouraged to seek preventive care and
become involved in an ACO.
Response: We disagree that an attribution model based on primary
care utilization could result in a disproportionate number of high-risk
beneficiaries being assigned to the ACO. Many low risk beneficiaries
still visit a PCP or other physician once or twice a year for routine
check-ups and assessments. Furthermore, we are bound by the statutory
requirement that assignment be based upon the utilization of primary
care services rendered by a physician. Nevertheless, we will keep this
concern in mind as we implement the Shared Savings Program and gain
experience in its operation during its first few years.
Comment: One commenter requested that the code sets used to
determine assignment include inpatient evaluation and management (E&M)
code: ``Observation--99218-99220/Initial, 99224-99226/Subsequent;
Hospital Inpatient--99221- 99223/Initial, 99231-99233/Subsequent; and
Hospital Inpatient Consultation--99251-99255.'' Another recommended
excluding hospital emergency visits and urgent care visits. Another
commenter noted that the proposed rule narrowly defines ``primary care
services,'' and expressed uncertainty about how we envision the
organization of care such as occupational therapy within the proposed
ACO framework. Specifically, the commenter asked whether only E&M codes
will be used to determine the plurality of care, or whether the
provision of other services will also be considered. Or will these
other services only be considered in terms of savings?
A national association recommended that certain CPT codes for
remote monitoring and care coordination be used in the assignment
process without being tied to a physician office visit. Another
association expressed concern that the method for assigning
beneficiaries should account for the patients receiving care in post-
acute settings, where the providers may not fall within the proposed
definition of primary care physician. One commenter argued that the
inclusion of skilled nursing facility (SNF) and home visit CPT codes
would be problematic for some systems because an ACO could potentially
provide the plurality of outpatient care in an office setting to a
beneficiary and yet the beneficiary still might not be assigned to that
ACO. The commenter noted that this would happen in the case where a
beneficiary is hospitalized and then discharged to a
[[Page 67853]]
nursing home not affiliated with the ACO physicians. In the view of the
commenter, this method would not result in the alignment of the
beneficiary with the correct provider. Another commenter noted that
groups that have providers practicing in skilled nursing facilities are
often assigned patients who have many visits over a short period of
time in those facilities, but who are not their primary care patients.
Response: We proposed the list of codes that would constitute
primary services for two reasons. First, we believed the proposed list
represented a reasonable approximation of the kinds of services that
are described by the statutory language (which refers to assignment of
``Medicare fee-for-service beneficiaries to an ACO based on their
utilization of primary care services''). In addition, we selected this
list to be largely consistent with the definition of ``primary care
services'' in section 5501 of the Affordable Care Act. That section
establishes an incentive program to expand access to primary care
services, and thus its definition of ``primary care services'' provides
a compelling precedent for adopting a similar list of codes for
purposes of the Shared Savings Program. We have slightly expanded the
list in section 5501 of the Affordable Care Act to include the Welcome
to Medicare visit (HCPCS code G0402) and the annual wellness visits
(HCPCS codes G0438 and G0439) as primary care services for purposes of
the Shared Savings Program. These codes clearly represent primary care
services frequently received by Medicare beneficiaries, and in the
absence of the special G codes they would be described by one or more
of the regular office visit codes that we have adopted from section
5501 of the Affordable Care Act. Finally, the statute requires that
assignment be based upon the utilization of primary care services by
physicians. For this reason, only primary care services can be
considered in the assignment process. Other services can, as one
commenter noted, only be considered in terms of determining shared
savings, if any.
With regard to the comments about the inclusion or exclusion of
certain codes, we would observe first that the codes for hospital
emergency visits (99281 through 99288) and urgent care visits (we
assume the commenter refers to 99291 and 99292, which represent
critical care services) were not included in our proposed list of codes
representing primary care services. We believe that the inclusion of
the codes for SNF visits is appropriate because beneficiaries often
stay for long periods of time in SNFs, and it is reasonable to conclude
that these codes represent basic evaluation and management services
that would ordinarily be provided in physician offices if the
beneficiaries were not residing in nursing homes. Inpatient hospital
visit codes (99221 through 99223), in contrast, are intrinsically
related to the acute care treatment of the specific condition or
conditions that required the inpatient hospital stay, and we therefore
do not believe that these codes represent the kind of general
evaluation and management of a patient that would constitute primary
care. Finally, we would observe in general that it would be impossible
to establish a list of primary care codes by considering all of the
ways in which the inclusion, or exclusion, of certain codes or sets of
codes would advantage or disadvantage different types of potential
ACOs. The code set that we are adopting in this final rule represents
the best approximation of primary care services based upon relevant
precedents and the information we currently have available. However, we
intend to monitor this issue and will consider making changes to add
(or delete) codes, if there is sufficient evidence that revisions are
warranted.
Final Decision: We are finalizing our proposal to define ``primary
care services'' in Sec. 425.20 as the set of services identified by
the following HCPCS codes: 99201 through 99215, 99304 through 99340,
99341 through 99350, the Welcome to Medicare visit (G0402), and the
annual wellness visits (G0438 and G0439) as primary care services for
purposes of the Shared Savings Program. In addition, as we will discuss
later in this final rule, in this final rule we will establish a cross-
walk for these codes to certain revenue center codes used by FQHCs
(prior to January 1, 2011) and RHCs so that their services can be
included in the ACO assignment process.
a. Consideration of Physician Specialties in the Assignment Process
Primary care services can generally be defined based on the type of
service provided, the type of provider specialty that provides the
service, or both.
In developing our proposal, we considered three options with
respect to defining ``primary care services'' for the purposes of
assigning beneficiaries under the Shared Savings Program: (1)
Assignment of beneficiaries based upon a predefined set of ``primary
care services;'' (2) assignment of beneficiaries based upon both a
predefined set of ``primary care services'' and a predefined group of
``primary care providers;'' and (3) assignment of beneficiaries in a
step-wise fashion. Under the third option, beneficiary assignment would
proceed by first identifying primary care physicians (internal
medicine, family practice, general practice, geriatric medicine) who
are providing primary care services, and then identifying specialists
who are providing these same services for patients who are not seeing
any primary care physician.
We proposed to assign beneficiaries to physicians designated as
primary care providers (internal medicine, general practice, family
practice, and geriatric medicine) who are providing the appropriate
primary care services to beneficiaries. As discussed previously, we
proposed to define ``primary care services'' on the basis of the select
set of HCPCS codes identified in the section 5501 of the Affordable
Care Act, including G-codes associated with the annual wellness visit
and Welcome to Medicare visit. We made this proposal in the belief that
this option best aligned with other Affordable Care Act provisions
related to primary care by placing an appropriate level of emphasis on
a primary care core in the Shared Savings Program. That is, we believed
that the proposed option placed priority on the services of designated
primary care physicians (for example, internal medicine, general
practice, family practice, and geriatric medicine) in the assignment
process. The option is also relatively straightforward
administratively.
However, we expressed our concern that this proposal might not
adequately account for primary care services delivered by specialists,
especially in certain areas with shortages of primary care physicians,
and that it may make it difficult to obtain the minimum number of
beneficiaries to form an ACO in geographic regions with such primary
care shortages. Therefore, while we proposed to assign beneficiaries to
physicians designated as primary care providers (internal medicine,
general practice, family practice, and geriatric medicine) who are
providing the appropriate primary care services to beneficiaries, we
invited comment on this proposal and other options that might better
address the delivery of primary care services by specialists, including
a ``step-wise approach'' under which beneficiaries could be assigned to
an ACO based upon primary care services furnished by a specialist if
they do not have any visits with a primary care physician.
Comment: We received some very strong comments supporting our
exclusion of services provided by
[[Page 67854]]
specialists in the assignment process, especially from organizations
representing primary care physicians and from individual primary care
physicians. Some endorsed our proposal because it ``supports the intent
of the ACA for primary care practitioners to reduce the fragmentation
of care and improve overall quality. Many specialists are not providing
the primary, preventive services that are the building blocks for ACOs.
Rather, specialists may tend to be quicker to refer patients to other
specialists for problems outside the scope of their practice.'' Several
other comments even urged CMS to tighten the definition of primary care
services by specifying ``general internal medicine'' rather than
``internal medicine'' to ensure that Medicare ACOs are truly based on
primary care physicians. One commenter also noted the absence of
``measures of physician competence or capability'' in a rule with an
abundance of requirements in many areas. Another commenter urged that
we include preventive medicine physicians under the definition of
primary care or the definition of general practice. Another recommended
that, rather than list ``primary care services,'' CMS go further to
state that the primary care professionals be limited to those eligible
for Primary Care Incentive Payments under section 5501 of the
Affordable Care Act as a matter of consistency and specificity across
CMS policy. This commenter maintained that specialists are not
providing continuing and comprehensive primary healthcare to their
patients, and the commenter thus opposed any further expansion of the
definition of ``primary care professional'' for purposes of assigning
patients to ACOs.
However, many commenters, including specialty societies, major
medical centers, and others, strongly advocated inclusion of primary
care codes from specialist physicians in the assignment process. Among
other points, these commenters cited the shortages of primary care
physicians in some areas. Others cited the fact that patients with
certain chronic conditions (for example, diabetes, cardiac conditions,
persons with disabilities, etc.) do receive most of their primary care
from the specialist treating their conditions. One commenter raised the
concern that the proposed definition of primary care services may not
adequately represent services provided in post-acute care settings such
as long-term care hospitals (LTCHs). The commenter noted that many LTCH
patients are seen by teams of specialists who provide the bulk of the
actual primary care services to these patients who often do not have a
primary care physician. Other commenters also advocated including
specialists in order to allow the formation of condition-specific ACOs,
such as ``renal-focused ACOs.'' One physician society advocated
expanding the definition of primary care, but retaining some
limitations related to the specialty of the physicians providing
services designated by the HCPCS basic office visit codes, on the
grounds that subspecialty physicians often fulfill the primary care
needs of their patients. This commenter and others cited subspecialty
areas such as nephrology, oncology, rheumatology, endocrinology,
pulmonology, and cardiology that might frequently be providing primary
care to their patients.
Another commenter recommended that the specialties designated as
providing primary care services be expanded to include certain
specialties, but only if the ACO demonstrates, based on its own data of
the assigned beneficiaries, that those specified specialist physicians
are indeed providing primary care services on a regular and coordinated
basis and the ACO is primary care focused and comprised of at least 30
percent primary care physicians and a maximum of 70 percent
specialists. The commenter also argued that specialist-only group
practices should not be eligible to become an ACO.
One commenter argued that the exclusion of specialists from the
assignment process is contrary to the intent of the statute by noting
that subsection 1899(h)(1)(A) of the Act defines an ``ACO
professional'' for purposes of assignment as a physician as that term
is defined in 1861(r)(1) of the Act--in other words, as an M.D. or a
D.O. The commenter maintains that it is not an oversight that neither
section 1861(r)(1) or 1899(c) of the Act mention physician specialty.
The commenter also cites the Ways & Means report on section 1301 of
H.R. 3200, the House predecessor to section 3022 of the Affordable Care
Act, which codified the Shared Saving Program at section 1899 of the
Act, which states: ``The Committee believes that physicians, regardless
of specialty, who play a central role in managing the care of their
patient populations, and who are willing and able to be held
accountable for the overall quality and costs of care for their
patients across all care settings, should be allowed to form ACOs.''
In order to account for the provision of many primary care services
by specialists to chronically ill and other patients, one commenter
suggested that the more appropriate method would be for the ACO to
notify CMS who their ``Primary Care Providers'' are for an intended
population within the ACO. In this way CMS can understand how to assign
a beneficiary and a patient can know who their primary care' physician
is within the ACO. Another commenter recommended allowing assignment to
certain specialists (nephrology, rheumatology, endocrinology,
pulmonology, neurology, and cardiology) provided the Medicare
beneficiary has other primary care services for E&M Codes of less than
10 percent. One specialty society offered this alternative definition
of primary care in support of considering pediatricians as primary care
physicians for purposes of assignment: ``Primary health care is
described as accessible and affordable, first contact, continuous and
comprehensive, and coordinated to meet the health needs of the
individual and the family being served.''
But one commenter maintained that the definition of primary care
services should be less focused on the specialty of the provider,
recommending that we should define primary care services by the
services themselves, and then define primary care practitioners as
those practitioners who primarily bill those services.
Of the commenters advocating inclusion of specialists in the
assignment methodology, most recommend the option which assigns
beneficiaries based on the plurality of primary care services
regardless of specialty, although some would accept a variation that
excludes those specialties that rarely provide primary care. One
comment said that, while they do not believe it is ideal, they could
also accept the hybrid model, in which the beneficiary is assigned to a
specialist if not otherwise assigned to a primary care physician. The
commenter emphasized that, if this option is selected, it would be
important to ensure the primary care physician is in fact serving as
the beneficiary's principal care provider. A number of other
commenters, including MedPAC, recommended that, in the final rule, we
adopt the step-wise approach that we discussed as an option in the
proposed rule. Another commenter agreed that beneficiaries with at
least one visit with a primary care physician (general practice,
internists, family medicine or geriatrician as defined by CMS) should
be assigned to an ACO based on their utilization of primary care
services.
Response: We agree with the commenters who supported our proposal
that the Shared Savings
[[Page 67855]]
Program should place a strong emphasis on primary care, which is
consistent with the statutory requirement that assignment be based on
the utilization of primary care services furnished by a physician.
However, we cannot agree with those commenters who recommended that we
tighten the definition of primary care services for purposes of the
Shared Savings Program. For example, we do not agree with the
recommendation of a few commenters that we include only ``general
internal medicine'' rather than ``internal medicine'' under the
proposed definition of primary care physician because the Medicare
enrollment and billing systems contain a specialty code (specialty code
11) only for ``internal medicine,'' and we thus have no way to
differentiate ``internal medicine'' from ``general internal medicine.''
On the merits, we also doubt that the specialty designations of
``internal medicine'' and ``general internal medicine'' selected by
physicians reflect an adequate distinction between internal medicine
specialists who primarily deliver primary care services and those who
do not. (In addition, as we discuss later in this final rule, we have
decided to include the primary care services provided by specialist
physicians in the assignment process as part of the step-wise approach
that we described in the proposed rule. As a result, to some degree, at
least, the distinction between ``general internal medicine'' and
``internal medicine'' has become less significant, since both would be
included in our new assignment methodology in any case.) We do not
agree with the suggestion to add the designation of ``preventive care
specialist'' to our list of primary care physicians, because as much as
possible we are following the designations of primary care physicians
established under section 5501 of the Affordable Care Act, which does
not include this specialty. We also believe that it would be
operationally complex, and perhaps overly onerous and restrictive to
potential participants in the Shared Savings Program, to incorporate
special competency standards into the definition of primary care
physician.
We do not agree with commenters who argued that our proposed
restriction of primary care services to those provided by primary care
physicians was contrary to the statute. Section 1899 of the Act does
not specifically define the term ``primary care services.''
Furthermore, section 1899(c) of the Act gives the Secretary discretion
to determine ``an appropriate method'' to assign beneficiaries based on
their utilization of primary care services furnished by a physician
affiliated with the ACO, and thus allows the Secretary broad discretion
in defining the term ``primary care.'' We would also note that our
proposed definition largely followed the precedent established by
section 5501(a) of the Affordable Care Act, the provision governing
primary care incentive payments, and is thus clearly consistent with
the overall intent of that Act, which also establishes the Shared
Savings Program.
However, in the proposed rule we also expressed some concerns about
the possible effects of the proposed policy in eliminating certain
genuine primary care services from consideration in the assignment
process. In particular, we noted our concern about possibly excluding
primary care services delivered by specialists, especially in some
areas with shortages of primary care physicians, where specialists
necessarily deliver the bulk of primary care services. We also noted
that, especially for beneficiaries with certain conditions (for
example, heart conditions and diabetes), specialist physicians often
take the role of primary care physicians in the overall treatment of
the beneficiaries. The commenters have confirmed these concerns, and
persuaded us that, in the end, the Shared Savings Program should not
restrict assignment purely to a defined set of primary care services
provided only by the specialties that can be appropriately considered
primary care physicians. We agree that our proposed assignment
methodology would be unduly restrictive in areas with shortages of
primary care physicians. We also agree that specialists do necessarily
and appropriately provide primary care services for many beneficiaries
with serious and/or chronic conditions.
Therefore, in this final rule we are adopting a more balanced
assignment process that simultaneously maintains the primary care-
centric approach of our proposed approach to beneficiary assignment,
while recognizing the necessary and appropriate role of specialists in
providing primary care services. As we previously noted, in the
proposed rule we discussed a step-wise approach to beneficiary
assignment. Under this approach, after identifying all patients who had
a primary care service with a physician at the ACO, beneficiary
assignment would proceed by first identifying primary care physicians
(internal medicine, family practice, general practice, geriatric
medicine) who are providing primary care services, and then identifying
specialists who are providing these same services for patients who are
not seeing any primary care physician. We hesitated to propose this
option because we were concerned that it would introduce a greater
level of operational complexity compared to the two other options we
considered. In addition, we were concerned that it could undermine our
goal of ensuring competition among ACOs by reducing the number of
specialists that can participate in more than one ACO, since the TINs
of specialists to whom beneficiaries are assigned would be required to
be exclusive to one ACO. (As noted in section II.B.1.d of this final
rule, the TINs upon which assignment is based must be exclusive to one
ACO for purposes of participation in the Medicare Shared Savings
Program. However, exclusivity of an ACO participant to one ACO is not
necessarily the same as exclusivity of individual practitioners to one
ACO. For example, exclusivity of ACO participants leaves individual
NPIs free to participate in multiple ACOs if they bill under several
different TINs. The ability of individual specialists to participate in
more than one ACO is especially important in certain areas of the
country that might not have many specialists.) On the other hand, we
acknowledged that a ``step-wise approach'' would reflect many of the
advantages of the other two approaches we discussed in the proposed
rule (including the option we proposed), balancing the need for
emphasis on a primary care core with a need for increased assignment
numbers in areas with primary care shortages. Despite our initial
misgivings regarding this approach, we have come to agree with MedPAC
and the other commenters who endorsed such an approach that it provides
the best available balance of maintaining a strong emphasis on primary
care while ultimately allowing for assignment of beneficiaries on the
basis of how they actually receive their primary care services.
Final Decision: Under Sec. 425.402, after identifying all patients
that had a primary care service with a physician who is an ACO
provider/supplier in an ACO, we will employ a step-wise approach as the
basic assignment methodology. Under this approach, beneficiaries are
first assigned to ACOs on the basis of utilization of primary care
services provided by primary care physicians. Those beneficiaries who
are not seeing any primary care physician may be assigned to an ACO on
the basis of primary care services provided by other physicians. This
final policy thus
[[Page 67856]]
allows consideration of all physician specialties in the assignment
process. We describe this step-wise approach in greater detail later in
this final rule, after further addressing other related issues,
including consideration of primary care services furnished by non-
physician practitioners, such as NPs and PAs. As also discussed later
in this final rule, we will also consider only the specific procedure
and revenue codes designated in this final rule in the assignment
process.
b. Consideration of Services Furnished By Non-Physician Practitioners
in the Assignment Process
In the proposed rule we observed that, although the statute defines
the term ``ACO professional'' to include both physicians and non-
physician practitioners, such as physician assistants (PAs), and nurse
practitioners (NPs), for purposes of beneficiary assignment to an ACO,
the statute also requires that we base assignment on beneficiaries'
utilization of primary care services provided by ACO professionals who
are physicians. As we discussed previously, section 1899(c) of the Act
requires the Secretary to ``determine an appropriate method to assign
Medicare FFS beneficiaries to an ACO based on their utilization of
primary care services provided under this title by an ACO professional
described in subsection (h)(1)(A).'' Section 1899(h)(1)(A) of the Act
constitutes one element of the definition of the term ``ACO
professional.'' Specifically, this subsection establishes that ``a
physician (as defined in section 1861(r)(1))'' is an ``ACO
professional'' for purposes of the Shared Savings Program. Section
1861(r)(1) of the Act in turn defines the term physician as ``* * * a
doctor of medicine or osteopathy legally authorized to practice
medicine and surgery by the State in which he performs such function or
action''. Therefore, for purposes of the Shared Savings Program, the
inclusion of practitioners described in section 1842(b)(18)(C)(i) of
the Act, such as PAs and NPs, in the statutory definition of the term
``ACO professional'' is a factor in determining the entities that are
eligible for participation in the program (for example, ``ACO
professionals in group practice arrangements'' under section
1899(b)(1)(A) of the Act). However, we proposed that the assignment of
beneficiaries to ACOs would be determined only on the basis of primary
care services provided by ACO professionals who are physicians.
Comment: We received numerous comments, especially from individual
practitioners and organizations representing nurses, PAs, and others,
objecting to the exclusion of primary care services provided by NPs,
certified nurse midwives, other nursing practitioners, PAs and other
non-physician practitioners from the assignment process. Many NPs and
nurse associations commented that the ``limitation will significantly
impair the ability of patients to access primary care services. It will
negatively affect not only access, but the cost and quality of the care
provided by the ACOs.'' The commenters emphasized that NPs have a long
history of providing high quality, cost effective care and that their
skills in the area of care coordination, chronic disease management,
health promotion, and disease prevention could contribute significantly
to the quality and cost savings of any shared saving program. Some
commenters urged that CMS should take any opportunity it has to
encourage the use of non-physician providers in the care of Medicare
beneficiaries.
Commenters advocated several approaches to dealing with the
statutory language under which assignment turns on primary care
services provided by ``an ACO professional described in subsection
(h)(1)(A),'' which specifies ``* * * a doctor of medicine or osteopathy
legally authorized to practice medicine and surgery by the State in
which he performs such function or action.'' Some commenters argued
that the reference to ``subsection (h)(1)(A)'' represents a drafting
error, and that that we should proceed on the assumption that the
reference should have been to ``subsection (h)(1),'' which includes not
only physicians, but also CNSs, NPs, and PAs. Other commenters argued
that it is not necessary to interpret the requirement that
beneficiaries be assigned based on primary care services ``provided''
by a physician to mean that Medicare beneficiaries are to be assigned
to ACOs solely based on services ``directly provided'' by a physician.
These commenters maintained that the statute does not require that
services be ``directly provided'' by a physician, but only that
physicians provided care, which can be done directly or indirectly.
A national nurses' association and several other commenters
acknowledged that the correct statutory reference concerning assignment
is to ``subsection (h)(1)(A),'' which allows assignment only on the
basis of physician services, but also argued that ``CMS can abide by
the statutory requirement by basing assignment on utilization of
primary care services provided by an ACO physician without requiring a
plurality. Any primary care service provided by an ACO primary care
physician should be enough to trigger assignment, as long as some other
ACO participant has provided the plurality of primary care services to
that beneficiary.''
PAs, their representative organizations, and some other commenters
disagreed with the exclusion of PAs from the assignment process. One
commenter was ``extremely disappointed'' that PAs are not included in
the definition of primary care professional. Some commenters suggest
that the discretionary authority provided to the Secretary of Health
and Human Services under section 1899(i) of the Act allowing for the
utilization of other payment models under the Shared Savings Program
could provide the means to include non-physician practitioners such as
PAs and NPs. Another commenter recommended that the care provided by a
PA, pursuant to the criteria outlined in the proposed rule, be used to
determine assignment to an ACO. Since PAs practice in a collaborative
nature with physicians, the commenter believed it appropriate that
beneficiaries who receive a plurality of primary care services from a
PA be assigned based upon these services. However, they would also
restrict recognition of care provided by non-physician providers only
to those who have a collaborative or supervisory agreement with
physicians, excluding some NPs who practice independently.
Response: We cannot agree with those commenters who maintained that
the wording of section 1899(c) of the Act with respect to considering
primary care services provided by physicians should be treated as a
``drafting error.'' We are unaware of any direct or indirect evidence
that the reference to ``an ACO professional described in subsection
(h)(1)(A)'' rather than to ``an ACO professional described in
subsection (h)(1)'' was made in error. Even if there were convincing
evidence to that effect, given the clarity of the plain language of the
statute, it would not fall within our authority to correct that error.
Therefore, in implementing the Shared Savings Program, the assignment
methodology will be based on utilization of primary care services
provided by physicians. At the same time, we agree with the many
commenters who emphasized that NPs, PAs, and clinical nurse specialists
(CNSs) have a well-established record of providing high quality and
cost-effective care. We also agree that these practitioners can be
significant assets to the ACO in the areas of quality and cost saving,
and indeed that the appropriate use of NPs, PAs, and CNSs could be an
important element in the success of an
[[Page 67857]]
ACO participating in the Shared Savings Program. As many commenters
noted, the skills of these practitioners, especially in care
coordination, chronic disease management, health promotion, and disease
prevention certainly can contribute significantly to the quality and
cost savings of any shared saving program. (We would note in this
context that nothing in the statute precludes an ACO from sharing
savings with NPs and other practitioners, whether or not their services
are included in the assignment process.)
We also cannot agree with the commenters who suggested that the
statutory language may be read to allow assignment to be based on
services provided ``indirectly'' by a physician. Although the statute
does not include the word ``directly,'' it does require that assignment
be based on services ``provided'' by physicians. The statutory
requirement that assignment be based on physician services, not
services furnished by ACO professionals more generally, would be
rendered meaningless if we were to adopt a reading of the statute that
permits physician services to be furnished ``indirectly.'' For example,
under this reading, a beneficiary could be assigned to an ACO without
ever having seen a physician in the ACO. We believe that such an
interpretation is directly contrary to the intent of section 1899(c) of
the Act, and in particular, contrary to the express statutory
requirement that assignment be based on physician services rather than
ACO professional services, more generally.
However, we took special note of one comment cited previously,
specifically the comment that: ``Any primary care service provided by
an ACO primary care physician should be enough to trigger assignment,
as long as some other ACO participant has provided the plurality of
primary care services to that beneficiary.'' This commenter suggested
that it may be possible to employ the discretion that is afforded to
the Secretary under the statute to determine ``an appropriate method''
for assigning beneficiaries to an ACO based on the utilization of
primary care services furnished by a physician by considering the
receipt of physician primary care services as a triggering factor in
the assignment process, prior to considering where the beneficiary has
received a plurality of primary care services provided by the full
range of ACO professionals, so that the beneficiary is appropriately
assigned to the ACO which bears the primary responsibility for his or
her primary care. Specifically, we could implement the statutory
requirement that assignment be based on physician services, by
assigning a beneficiary to an ACO if, and only if, the beneficiary has
received at least one primary care service from a physician who is an
ACO provider/supplier in the ACO. Therefore, as required by the
statute, we would be assigning beneficiaries to an ACO based upon the
receipt of primary care from a physician in the ACO. However, we would
apply this policy in the step-wise fashion that we have discussed
previously, that is, basing assignment in a first step on the primary
care services provided by primary care physicians (measured in terms of
allowed charges) alone. Then, in a second step, we would assign
patients who are not seeing any primary care physician either inside or
outside the ACO if they have received at least one primary care service
from an ACO physician (of any specialty) in the ACO, and taking into
account the allowed charges for primary care services provided by all
ACO professionals in the ACO. The beneficiary will be assigned to the
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 ACO professionals who are ACO providers/suppliers in any
other ACO and allowed charges for primary care services furnished by
physicians, NPs, PAs, and CNSs, who are not affiliated with an ACO.
This method would avoid, for example, assignment of beneficiaries on
the basis of receiving a few primary care services from specialist
physicians, even though the beneficiary may be receiving the plurality
of primary care services from specialist physicians, NPs or PAs who are
ACO providers/suppliers in a different ACO.
In adopting this policy, we are also extending the policy regarding
exclusivity of TINs on which assignment is based to one ACO: that is,
the TINs under which the services of specialists, PAs, and NPs are
included in the assignment process subsequent to the identification of
the ``triggering'' physician primary care services would have to be
exclusive to one ACO for purposes of the Shared Savings Program. (We
emphasize that we are establishing this policy for purposes of Shared
Savings Program ACOs only: commercial ACOs may or may not wish to adopt
a similar policy.)
Comment: We received many comments from chiropractors and
chiropractor associations recommending that the definition of ACO
professional for purposes of the Shared Savings Program should be
expanded to include chiropractors. These commenters cited the quality
and cost efficiency of chiropractic services, and many also cited other
statutory definitions of ``physician'' as precedents for including
chiropractors within the definition of ``physician'' under the Shared
Savings Program.
Response: We recognize that some other Federal and State laws
include chiropractors within the definition of physician for various
purposes. However, we are unable to consider services furnished by
chiropractors in the assignment process under the Shared Savings
Program. As previously explained, section 1899(c) of the Act requires
that assignment be based upon ``utilization of primary care services
provided * * * by an ACO professional described in subsection
(h)(1)(A).'' Section 1899(h)(1)(A) of the Act defines an ``ACO
professional'' as a physician (as defined in section 1861(r)(1) of the
Act), which includes ``* * * a doctor of medicine or osteopathy legally
authorized to practice medicine and surgery by the State in which he
performs such function or action,'' but does not include chiropractors.
Therefore, because chiropractors are not ACO professionals under
section 1899(h)(1)(A) of the Act, we are unable to consider their
services in the assignment process under the Shared Savings Program.
However, it is important to note that this restriction certainly does
not preclude Medicare-enrolled chiropractors from participating in
ACOs, or from sharing in the savings that an ACO may realize in part
because of the quality and cost-effective services they may be able to
provide.
Final Decision: Therefore, under Sec. 425.402 of this final
regulation we are adopting the following step-wise process for
beneficiary assignment. Our final step-wise assignment process takes
into account the two decisions that we have just described: (1) Our
decision to base assignment on the primary care services of specialist
physicians in the second step of the assignment process; and (2) our
decision also to take into account the plurality of all primary care
services provided by ACO professionals in determining which ACO is
truly responsible for a beneficiary's primary care in second step of
the assignment process. Our final step-wise assignment process will
thus occur in the following two steps, after identifying all patients
that received a primary care service from a physician who is a
provider/supplier in the ACO (and who are thus eligible for assignment
to the ACO under the statutory requirement to base
[[Page 67858]]
assignment on ``utilization of primary care services''):
Step 1: We will identify beneficiaries who had received at least
one physician primary care service from a primary care physician who is
a provider/supplier in an ACO. In this step, a beneficiary can be
assigned to an ACO only if he or she has received at least one primary
care service from a primary care physician who is an ACO provider/
supplier in the ACO during the most recent year (for purposes of
preliminary prospective assignment, as discussed later in this final
rule), or the performance year (for purposes of final retrospective
assignment). If this condition is met, the beneficiary will be assigned
to the ACO if the allowed charges for primary care services furnished
by primary care physicians who are providers/suppliers of that ACO are
greater than the allowed charges for primary care services furnished by
primary care physicians who are providers/suppliers of other ACOs, and
greater than the allowed charges for primary care services provided by
primary care physicians who are unaffiliated with any ACO (identified
by Medicare-enrolled TINs or other unique identifiers, as appropriate).
Step 2: This step would consider only beneficiaries who have not
received any primary care services from a primary care physician either
inside or outside the ACO. Under this step a beneficiary will be
assigned to an ACO only if he or she has received at least one primary
care service from any physician (regardless of specialty) in the ACO
during the most recent year (for purposes of preliminary prospective
assignment), or the performance year (for purposes of final
retrospective assignment). If this condition is met, the beneficiary
will be assigned to an ACO if the allowed charges for primary care
services furnished by ACO professionals who are ACO providers/suppliers
of that ACO (including specialist physicians, NPs, PAs, and CNSs), are
greater than the allowed charges for primary care services furnished by
ACO professionals who are ACO providers/suppliers of each other ACO,
and greater than the allowed charges for primary care services
furnished by any other physician, NP, PA, or CNS, (identified by
Medicare-enrolled TINs or other unique identifiers, as appropriate) who
is unaffiliated with any ACO.
c. Assignment of Beneficiaries to ACOs That Include FQHCs and/or RHCs
In the proposed rule, we also considered the special circumstances
of FQHCs and RHCs in relation to their possible participation in the
Shared Savings Program. (For purposes of this discussion, all
references to FQHCs include both section 330 grantees and so-called
``look-alikes,'' as defined under Sec. 405.2401 of the regulations.)
Our proposed methodology was to assign beneficiaries to an ACO if they
receive a plurality of their primary care services (which we proposed
to identify by a select set of E&M services defined as ``primary care
services'' for other purposes in section 5501 of the Affordable Care
Act, and including the G-codes associated with the annual wellness
visit and Welcome to Medicare visit) from a primary care physician
(defined as a physician with a primary specialty designation of general
practice, family practice, internal medicine, or geriatric medicine)
affiliated with the ACO. Thus, under the proposal, we would need data
that identify the precise services rendered (that is, primary care
HCPCS codes), type of practitioner providing the service (that is, a
physician as opposed to NP or PA), and the physician specialty in order
to be able to assign beneficiaries to the entities that wish to
participate in the Shared Savings Program.
In general, FQHCs and RHCs submit claims for each encounter with a
beneficiary and receive payment based on an interim all-inclusive rate.
These claims distinguish general classes of services (for example,
clinic visit, home visit, mental health services) by revenue code, the
beneficiary to whom the service was provided, and other information
relevant to determining whether the all-inclusive rate can be paid for
the service. The claims contain very limited information concerning the
individual practitioner, or even the type of health professional (for
example, physician, PA, or NP) who provided the service. (Starting in
2011, FQHC claims are required to include HCPCS codes that identify the
specific service provided, in order for us to develop a statutorily
required prospective payment system for FQHCs.) In the proposed rule,
we indicated that we did not believe we had sufficient data in order to
assign patients to ACOs on the basis of services furnished by FQHCs or
RHCs. Instead, recognizing the important primary care role played by
these entities, we proposed to provide an opportunity for an ACO to
share in a greater percentage of any savings if FQHCs/RHCs are included
as ACO participants.
Comment: Many commenters disagreed with our interpretation of the
statute's assignment provision (section 1899(c) of the Act) to require
a patient to be assigned to an ACO based solely on that beneficiary's
use of services furnished by specific categories of primary care
physicians. These commenters encouraged CMS to explore other approaches
that would allow FQHCs and/or RHCs to independently form ACOs and to
take on a more active role in the ACO by allowing assignment of
beneficiaries and establishment of benchmarks to be based upon services
furnished by these entities.
MedPAC commented that it would be more straightforward to allow
assignment of patients to RHCs and FQHCs and encourage their use
directly rather than to introduce special provisions for the savings
share and thresholds as the proposed rule does. They indicated that
``these are primary care provider teams often associated with a
physician and usually providing primary care services. Logically they
should be allowed to participate in ACOs and patients should be
assigned to them. In many rural areas, RHCs function as primary care
physicians' offices and, although they are paid differently under
Medicare, they are still fulfilling the same function''. MedPAC
suggested that ``CMS posit that all claims in RHCs and FQHCs are for
primary care services and use them for assignment as it would any other
primary care claim.''
Similarly, other commenters requested that CMS simply deem all FQHC
services as primary care services. Other commenters believed it is more
than reasonable to--and detrimental to the program's goals not to--
interpret 1899(c) of the Act to find that the ``provided under''
language means not only services provided by the physician personally
but also services provided by additional members of the health care
team of an FQHC, with whom physicians supervise and collaborate. In
short, they believed that the Secretary has the discretion to determine
for purposes of patient assignment that patients who receive care from
FQHCs can be treated as patients whose care is furnished by physicians
since physician services are an integral part of the FQHC service
definition, FQHC practice, and FQHC reimbursement.
Other commenters suggested that CMS could assign FQHC beneficiaries
to ACOs in other ways. Specifically, a commenter indicated that the UB-
04 billing form that FQHCs use to submit their claims contains
sufficient information (for example, patient information, revenue
codes, and ``attending physician'' information) to establish a
reasonable process for assigning FQHC beneficiaries to ACOs. This
commenter also noted that these health centers have a limited set of
services that are considered ``FQHC
[[Page 67859]]
services'' and that virtually all such services would be considered
primary care services.
Another commenter indicated that all FQHCs and RHCs should have the
capability to provide additional information about their services
beyond the information available on their claims. The commenter stated
that to be covered for a malpractice claim, a health care center must
be able to demonstrate (through appropriate documentation) that the
services at issue were within the center's scope of services, provided
at a location that was in the scope of services, were delivered to an
established patient of the health center, were documented in a
permanent medical record and were properly billed. This commenter
categorically stated that the necessary information is available, that
it is electronic, and that it can be correlated with contemporaneous
claims data.
Other commenters suggested that CMS consider other assignment
approaches, such as the methodology it is using to attribute Medicare
patients to FQHCs in the Adirondack Regional Medical Home Pilot, an
all-payer medical home demonstration project in upstate New York.
Yet other commenters suggested that assignment could be made by an
FQHC providing a list of patients for whom it considers itself
accountable. CMS could then analyze the claims history for the
identified patients and exclude those with a plurality of primary care
services associated with a provider other than the FQHC.
Regarding RHCs, a number of commenters agreed that when a clinic
submits the claim form, it is not required to identify the specific
provider who rendered the service. They conceded that the RHC service
could have been provided by a physician, a PA or an NP (and in some
circumstances, a nurse midwife). These commenters suggested various
ways to address this: (1) Require RHCs that are part of an ACO to
identify the rendering provider on their claim form using the NPI of
the rendering provider, and provide any other information needed
through various means (similar to how quality data are submitted; and/
or (2) use a patient attestation method for attributing/assigning RHC
patients to the ACO.
Response: We agree with the many comments that FQHCs and RHCs
should be allowed to participate in ACOs and have their patients
assigned to such ACOs, provided that patients can be assigned in a
manner that is consistent with the statute.
We indicated in the proposed rule that we would continue to assess
the possibilities for collecting the requisite data from FQHCs and
RHCs, and consider whether it would be possible for Medicare
beneficiaries to be assigned to an ACO on the basis of services
furnished by an FQHC or RHC, thereby allowing these entities to have
their Medicare beneficiaries included in the ACO's assigned population.
As indicated previously, MedPAC and some other commenters suggested
that CMS posit or deem that all claims in RHCs and FQHCs are for
primary care services and use them for assignment as it would any other
primary care claim. We have not accepted these comments because they do
not address the specific requirement in section 1899(c) of the Act
which requires assignment of beneficiaries to an ACO based ``on their
utilization of primary care services * * * by an ACO professional
described in subsection (h)(1)(A).'' As discussed previously, section
1899(h)(1)(A) of the Act establishes that for the purposes of
beneficiary assignment, an ``ACO professional'' is defined as a
physician as defined in section 1861(r)(1) of the Act.
Likewise, we have not accepted other commenter suggestions that
assignment could be made by an FQHC providing a list of patients for
whom it considers itself accountable. Such an approach would also not
be consistent with the statutory requirement that we develop an
assignment process that is based on utilization of primary care
services by an ACO professional, defined by the statute as a physician.
We have also not adopted commenter suggestions that CMS should adopt
the assignment processes that are being used in certain demonstration
programs because these demonstration programs are not subject to the
same statutory requirements that apply to this Shared Savings Program.
However, as explained later in this final rule, we are accepting
suggestions from other commenters that, in combination, will enable us
to adopt a policy in this final rule that will allow us to assign
beneficiaries to ACOs on the basis of services furnished by FQHCs and/
or RHCs. (As we have explained earlier in section II.B. (Eligible
Entities) of this final rule, this will also allow FQHCs and RHCs to
form an ACO independently, without the participation of other types of
eligible entities. It will also allow the beneficiaries who receive
primary care services from FQHCs and RHCs to count in the assignment
process for any ACO that includes an FQHC and/or RHC as a provider/
supplier.) As discussed previously, the assignment methodology we are
adopting in this final rule is to assign beneficiaries to an ACO using
a step-wise approach for assignment. Under this step-wise method,
beneficiaries are first assigned to an ACO if they have received a
primary care service from a primary care physician (defined as a
physician with a primary specialty designation of general practice,
family practice, internal medicine, or geriatric medicine) who is a
provider/supplier in the ACO, and also receive a plurality of their
primary care services (which we identify by a select set of E&M
services defined as ``primary care services'' in section 5501 of the
Affordable Care Act, and the G-codes associated with the annual
wellness visit and the Welcome to Medicare visit) from primary care
physicians who are providers/suppliers in the same ACO. Those
beneficiaries who have not received any primary care services from a
primary care physician can be assigned to an ACO in the second step if
they have received a primary care service from a specialist physician
(that is, a physician that does not meet the definition of a primary
care physician) who is a provider/supplier in the ACO, and also receive
a plurality of their primary care services from physicians and other
ACO professionals who are ACO providers/suppliers in the ACO. Thus,
under the final rule, in order to be able to align beneficiaries with
the entities that wish to participate in the Shared Savings Program, in
general we require data that identify all of the following:
Services rendered (that is, primary care HCPCS codes).
Type of practitioner providing the service (that is, a
physician, NP, PA, or CNS).
Physician specialty.
For services billed under the physician fee schedule, these data items
are available on the claims submitted for payment. In contrast, as
discussed in the proposed rule, FQHCs and RHCs submit claims for each
encounter with a beneficiary and receive payment based on an interim
all-inclusive rate. These FQHC/RHC claims distinguish general classes
of services (for example, clinic visit, home visit, mental health
services) by revenue code, the beneficiary to whom the service was
provided, and other information relevant to determining whether the
all-inclusive rate can be paid for the service. The claims contain very
limited information concerning the individual practitioner, or even the
type of health professional (for example, physician, PA, NP), who
provided the service.
[[Page 67860]]
(1) Identification of Primary Care Services Rendered in FQHCs and RHCs
Starting in 2011, FQHC claims are required to include HCPCS codes
that identify the specific service provided, in order for us to develop
a statutorily required prospective payment system for FQHCs. In
addition, FQHCs were required to submit a HCPCS code to receive payment
for the Welcome to Medicare visit (G0402) beginning in 2009. Therefore,
we can identify primary care services for FQHCs that are participating
in an ACO by using their HCPCS codes for services furnished on or after
January 1, 2011, and by using HCPCS code G0402 furnished on or after
January 1, 2009. RHCs are generally not required to report HCPCS codes,
except that: (1) For services furnished on or after January 1, 2009,
RHCs may submit HCPCS code G0402 to receive payment for the Welcome to
Medicare visit, and (2) for services furnished on or after January 1,
2011, RHCs may submit HCPCS codes to receive payment for the annual
wellness visits (G0438 and G0439). However, for purposes of assigning
patients and calculating the benchmark, we will also need to identify
other primary care services that were furnished by FQHCs and RHCs. In
order to identify primary care services rendered in FQHCs and RHCs that
are primary care services, and that are not required to be reported by
HCPCS codes, we are adopting the commenters' suggestions to use the
revenue center codes. We have reviewed these revenue center codes and
agree that for purposes of the Shared Savings Program, the revenue
center codes can be used as a substitute for the primary care HCPCS
codes which RHCs do not report, and which FQHCs were not required to
report prior to January 1, 2011. Specifically, we believe that it is
possible to employ these revenue codes to identify primary care
services by constructing an appropriate cross-walk between the revenue
center codes and the HCPCS primary care codes based on their
definitions.
In order to establish such a cross-walk, we compared the HCPCS
codes that are considered as being primary care services for purposes
of the Shared Savings Program with the revenue center codes that are
reported on FQHC/RHC claims. As discussed previously, the primary care
HCPCs codes used for assignment are as follows:
99201 through 99215; (office/outpatient visits).
99304 through 99340; (nursing facility visits/domiciliary
home visits).
99341 through 99350; (home visits).
Welcome to Medicare visit (G0402).
Annual wellness visits (G0438 and G0439).
FQHCs and RHCs report services on their claims using the following
revenue center codes:
0521--Clinic visit by member to RHC/FQHC
0522--Home visit by RHC/FQHC practitioner
0524--Visit by RHC/FQHC practitioner to a member, in a covered Part A
stay at the SNF
0525--Visit by RHC/FQHC practitioner to a member in an SNF (not in a
covered Part A stay) or NF or ICF MR or other residential facility
We are able to cross walk the ``primary care'' HCPCS codes to
comparable revenue center codes based on their code definitions. For
example, HCPCS codes 99201 through 99215 (office/outpatient visits)
will be cross-walked to revenue center code 0521. Because the focus of
FQHCs and RHCs is on primary care, we believe these revenue center
codes, when reported by FQHCs/RHCs, would represent primary care
services and not more specialized care. This cross-walk will allow us
to use the available revenue center codes as part of the beneficiary
assignment process for FQHC/RHC services in place of the unavailable
HCPCS codes which will be used more generally. We will establish and
update this crosswalk through contractor instructions. For FQHCs, we
will use the HCPCS codes which are included on their claims starting on
January 1, 2011.
(2) Identification of the Type of Practitioner Providing the Service in
an FQHC/RHC
Secondly, in order to be able to align beneficiaries with the
entities that wish to participate in the Shared Savings Program, we
also generally require data that identify the type of practitioner
providing the service (that is, a physician, NP, PA, or CNS). This is
because, as discussed previously, section 1899(c) of the Act requires
that assignment must be based upon services furnished by physicians. As
previously noted, FQHC/RHC claims contain limited information as to the
type of practitioner providing a service because this information is
not necessary to determine payment rates for services in FQHCs and
RHCs.
Based upon our review of the many helpful comments we received on
these issues, we now agree that we can develop a process that will
allow FQHCs and RHCs to fully participate in the Shared Savings
Program. We can do this by using the limited provider NPI information
on the FQHC/RHC claims in combination with a supplementary attestation
requirement. This would be consistent with comments we received
encouraging us to identify the provider that furnished services in
FQHCs/RHCs by using the NPI of the attending provider, supplemented by
additional information that the FQHCs/RHCs could separately submit.
More specifically, from the FQHC/RHC claims, we will use the
Attending Provider NPI field data which is defined as being: ``the
individual who has overall responsibility for the patient's medical
care and treatment reported in this claim/encounter.'' Although the
attending provider NPI is used to report the provider who is
responsible for overall care, it does not identify whether this
provider furnished the patient care for the beneficiary. Therefore, to
meet the requirement of section 1899(c) of the Act which requires that
assignment must be based upon services furnished by physicians, we will
supplement these limited claims data with an attestation that would be
part of the application process for ACOs that include FQHCs/RHCs. We
will require ACOs that include FQHCs/RHCs to provide to us, through an
attestation, a list of their physician NPIs that provide direct patient
primary care services, that is, the physicians that actually furnish
primary care services in the FQHC or RHC. Other physician NPIs for
FQHCs/RHCs will be excluded from the assignment process, such as those
for physicians whose focus is on a management or administrative role.
The attestation must be submitted as part of the application for ACOs
that include FQHCs/RHCs. Such ACOs will also be required to notify us
of any additions or deletions to the list as part of the update process
discussed in section II.C.4. of this final rule. The attestation by the
ACO will better enable us to determine which beneficiaries actually
received primary care services from an FQHC/RHC physician.
We will then use the combination of the ACO's TINs (or other unique
identifiers, where appropriate) and these NPIs provided to us through
the attestation process to identify and assign beneficiaries to ACOs
that include FQHCs/RHCs using the step-wise assignment methodology as
previously explained.
In this way, we would then be able to assign beneficiaries to ACOs
on the basis of services furnished in FQHCs and RHCs in a manner
consistent with how we will more generally assign primary care services
performed by physicians as previously described. We believe this
approach meets the statutory requirement in section 1899(c)
[[Page 67861]]
of the Act that assignment be based on the utilization of primary care
services ``provided'' by an ACO professional described as a physician
in section 1899(h)(1)(A) of the Act.
(3) Identification of the Physician Specialty for Services in FQHCs and
RHCs
As previously explained, the third type of information we generally
need under the step-wise assignment process discussed previously to
assign beneficiaries with the entities that wish to participate in the
Shared Savings Program is data that identify physician specialty.
However, we agree with commenters who pointed out that the Medicare
FQHC health benefit was established in 1991 to enhance the provision of
primary care services in underserved urban and rural communities.
Commenters pointed out that virtually all services provided under the
Medicare FQHC benefit are primary care services. We also agree with
commenters that RHCs predominantly provide primary care services to
their populations. Therefore, when a physician provides a service in an
FQHC or an RHC, we believe the physician is functioning as a primary
care physician comparable to those physicians that define themselves
with a primary specialty designation of general practice, family
practice, internal medicine, or geriatric medicine. As a result, we do
not believe it is necessary to obtain more detailed specialty
information (either through the claims NPI reporting or as part of the
attestation process) for the physicians that furnish services in FQHCs
and RHCs. Longer term, we will consider establishing definitions for
data fields on the claims submitted by FQHCs and RHCs, such as for
attending NPI or other NPI fields, which could be used to identify the
type of practitioner providing the service. This may enable us to
eliminate the attestation which will part of the application process
for ACOs that include FQHCs/RHCs.
Final Decision: In Sec. 425.404, we are modifying the policy that
we proposed in response to comments to establish a beneficiary
assignment process that will allow primary care services furnished in
FQHCs and RHCs to be considered in the assignment process for any ACO
that includes an FQHC and/or RHC. (These changes to the assignment
process will also allow FQHCs and RHCs to form ACOs independently,
without the participation of other types of eligible entities.)
Operationally we will assign beneficiaries to ACOs that include FQHCs/
RHCs in a manner consistent with how we will assign beneficiaries to
other ACOs based on primary care services performed by physicians as
previously described.
We will require that an ACO that include FQHCs and/or RHCs to
provide us, through an attestation, with a list of the physician NPIs
that provide direct patient primary care services in an FQHC or RHC.
This attestation will be part of the application process for all ACOs
that include FQHCs and/or RHCs as ACO participants. We will then use
the combination of the ACO's TINs (or other unique identifiers, where
appropriate) and these NPIs provided to us through the attestation
process to identify beneficiaries who receive a primary care service in
an FQHC or RHC from a physician, and to assign those beneficiaries to
the ACO if they received the plurality of their primary care services,
as determined based on allowed charges for the HCPCS codes and revenue
center codes listed in the definition of primary care services, from
ACO providers/suppliers.
2. Prospective vs. Retrospective Beneficiary Assignment To Calculate
Eligibility for Shared Savings
Section 1899(d)(1) of the Act provides that an ACO may be eligible
to share savings with the Medicare program if the ACO meets quality
performance standards established by the Secretary (which we discuss in
section II.F. of this final rule) and meets the requirements for
realizing savings for its assigned beneficiaries against the benchmark
established by the Secretary under section 1899(d)(1)(B) of the Act.
Thus, for each performance year during the term of the ACO's
participation agreement, the ACO must have an assigned population of
beneficiaries. Eligibility for shared savings will be based on whether
the requirements for receiving shared savings payments are met for this
assigned population. In the proposed rule, we discussed two basic
options for assigning beneficiaries to an ACO for purposes of
calculating eligibility for shared savings during a performance year.
The first option is that beneficiary assignment could occur at the
beginning of the performance year, or prospectively, based on
utilization data demonstrating the provision of primary care services
to beneficiaries in prior periods. The second option is that
beneficiary assignment could occur at the end of the performance year,
or retrospectively, based on utilization data demonstrating the
provision of primary care services to beneficiaries by ACO physicians
during the performance year. However, as we discuss later in this final
rule, these two basic approaches could be combined in any number of
ways in an attempt to realize the most positive aspects of each
approach and/or avoid the major disadvantages of each. For example,
prospective assignment of beneficiaries could be combined with a
retrospective reconciliation process that adjusts for certain
prospectively assigned beneficiaries who have moved or changed health
care providers during a performance year.
We proposed to adopt a retrospective approach for a number of
reasons. First, the actual population served by a set of physicians
changes significantly from year to year. Because Medicare FFS
beneficiaries have the right to see any enrolled physician, there is
typically more year-to-year variability in treating physicians for this
population when compared to patients in managed care programs. Analysis
of the PGP population did show approximately a 25 percent variation in
assignment from year to year. If population seen by an ACO changes by
25 percent during the year, a prospectively assigned beneficiary
population would reflect some beneficiaries who did not actually
receive the plurality of their care from physicians in the ACO during
the performance year. Final retrospective assignment of the population,
on the other hand, would include in the actual performance year
expenditures for an ACO only for those beneficiaries who received a
plurality of their care from the ACO during the performance year.
Second, identifying an assigned beneficiary population
prospectively may lead an ACO to focus only on providing care
coordination and other ACO services to this limited population,
ignoring other beneficiaries in their practices or hospitals. Given
that the goal of the Shared Savings Program is to change the care
experience for all beneficiaries, ACO participants and ACO providers/
suppliers should have incentives to treat all patients equally, using
standardized evidence-based care processes, to improve the quality and
efficiency of all of the care they provide, and in the end they should
see positive results in the retrospectively assigned population.
In the proposed rule, we acknowledged that there are merits in both
approaches. It does seem appropriate for an ACO to have information
regarding the population it will likely be responsible for in order to
target its care improvements to those patients who would benefit the
most. At the same time, we expressed our concern that we did not want
to encourage ACOs to limit their care improvement activities to the
subset of their patients that they believe may be
[[Page 67862]]
assigned to them. Finally, we considered that it was important that the
assessment of ACO performance be based on patients who received the
plurality of their primary care from the ACO in that performance year.
Even under a more prospective assignment approach, there is reason to
believe that a final retrospective redefinition of the assigned
population to account for changes from prior periods would be required
to ensure that the ACO is not held accountable for patients for whom it
was not possible to provide care during the performance year. Under a
more prospective system, the assignment would have to be adjusted every
performance year to account for beneficiaries entering and leaving FFS
Medicare and for those patients who move in and out of the geographic
area of the ACO, as well as potentially other adjustments.
Considering the merits of both approaches, we took the position in
the proposed rule that a retrospective approach to beneficiary
assignment for purposes of determining eligibility for shared savings
was preferable. We stated that the assignment process should accurately
reflect the population that an ACO is actually caring for, in order to
ensure that the evaluation of quality measures is fair and that the
calculation of shared savings, if any, accurately reflects the ACO's
success in improving the quality and efficiency of the care provided to
the beneficiaries for which it was actually accountable. However, we
also acknowledged the potential advantages of a more prospective
approach, especially in providing ACOs with information about the
patient population that is necessary for purposes of more effectively
planning and coordinating care.
In the proposed rule, we also noted that in response to the
November 17, 2010 RFI, of the few commenters favoring retrospective
assignment, a group of commenters suggested the use of retrospective
assignment for determining utilization and shared savings, but
prospective assignment for purposes of determining which beneficiary
identifiable data we would share with ACOs. We agreed that, given
appropriate safeguards for maintaining the confidentiality of patient
information, providing ACOs with meaningful information about their
``expected assigned population'' with the potential to identify an
``estimated benchmark target'' would be helpful. We discuss our
policies regarding providing information to ACOs to help them
understand their patient populations and better manage their care in
section II.D. of this final rule.
Therefore, we proposed the combined approach of retrospective
beneficiary assignment for purposes of determining eligibility for
shared savings balanced by the provision of aggregate beneficiary level
data for the historically assigned population of Medicare beneficiaries
during the benchmark period. As we discussed in section II.D. of the
proposed rule, we also proposed to provide ACOs with a list of
beneficiary names, dates of birth, sex, and HCIN derived from the
assignment algorithm used to generate the historical benchmark. We
concluded that providing data on those beneficiaries that were assigned
to an ACO in the benchmark period would be a good compromise that would
allow ACOs to have information on the population they will likely be
responsible for in order to target their care improvements to that
population while still holding ACOs accountable only for the
beneficiaries for whom they actually provided services during the
performance year. We believed that such a combined approach would
provide the best of both approaches while minimizing the disadvantages
of either. We solicited comment on this approach.
Comment: The commenters were overwhelmingly in favor of prospective
assignment. Many commenters, including MedPAC, argued that prospective
assignment was important so that beneficiaries would have full
knowledge of their inclusion in an ACO in advance and indeed that
prospective assignment is necessary to engage beneficiaries effectively
in the ACO process of more efficient and higher quality care. One
commenter argued that retrospective assignment actually denies a
beneficiary real choice, noting our observation in the proposed rule
that under retrospective assignment it is not possible to inform
beneficiaries of their assignment with an ACO in advance of the period
in which they may seek services from the ACO. Most of these commenters
also argued that prospective assignment is necessary to allow ACOs to
plan care appropriately for the patients assigned to them. One
commenter observed that a retrospective assignment method raises
concerns about the ability of ACOs to manage population health in a way
that generates savings. The commenter contended that providers need to
know which patients for whom they are responsible in order to
effectively coordinate care and implement care management program, and
as a result, retrospective assignment could discourage participation in
the Shared Savings Program.
Many commenters in favor of prospective assignment either denied
that prospective assignment would lead to higher quality care for ACO
patients than for others, or contended that the Shared Savings Program
quality measures and monitoring activities would prevent and/or correct
such behavior. One commenter argued that professional ethics and
standards require that physicians not provide a lower level of care to
one group of patients compared to another; the profession's commitment
to its own ethics therefore will mitigate against ACO's providing a
lower level of care to patients not prospectively attributed to it.
Another commenter, however, acknowledged that an ACO would have a
built-in incentive to discourage particularly high cost patients from
joining their ACO since it would put the potential savings they might
recoup at the end of the performance year in jeopardy, unless there is
adequate risk adjustment.
A health care policy institute noted that 30 percent of
beneficiaries attributed to an ACO in the current performance year were
not attributed in the prior year. This suggests that basing attribution
on data prior to the current performance year will lead to incorrect
attribution of a substantial proportion of patients; using older years
of data for attribution will lead to an even worse fit. Furthermore,
87.6 percent of patients seen by the ACO primary care physicians in a
given performance year will be attributed to the ACO, so that the vast
majority of patients utilizing services at an ACO will be attributed to
the ACO. This commenter therefore recommended that we introduce a
modified prospective methodology of attribution with current
performance year data by adopting a near concurrent attribution model
in which the ACO is held responsible only for the patients that
received the plurality of their care from the ACO professionals within
the ACO during a time period close enough to the performance year that
it approximates the population seen during the year, and does not
provide opportunities for gaming. Two commenters suggested alignment
based on the prior 2 years weighted 50/50.
One commenter asserted that retrospective assignment undermines
quality and cost objectives, and is unnecessary to avoid adverse
selection. Noting that our stated goal is to prevent avoidance behavior
around high-risk beneficiaries, this commenter recommended that an ACO
applicant submit a panel of participating providers, including
specialists, to CMS. We would use this list to look back at
[[Page 67863]]
the previous year's claims for primary care services provided by the
primary care and/or specialty physician for the ACO beneficiaries.
Patient assignment by CMS could be based on the plurality of primary
care service visits provided. The ACO would then ensure that the
individuals assigned by CMS were still the patients of the listed
providers. One commenter argued that, by seeking to evaluate ACOs only
on care actually rendered, we may be incentivizing ACOs to act directly
contrary to the goal of having ACOs redesign care processes to improve
care for all beneficiaries. Under the proposed rule, according to the
commenter, ACOs will have every incentive not to redesign care
processes so that high-risk, high-cost individuals are motivated to
receive their care outside of the ACO.
Another commenter specifically questioned whether retrospective
assignment would be appropriate for high risk populations and
beneficiaries with special needs. Specifically, the commenter
acknowledged that the methodology we proposed might be effective for
the general Medicare population, but questioned how effective it would
be for a high-risk population with complex medical problems and other
special needs, stating that special needs beneficiaries would be better
served by a more targeted approach that identifies a specific
population, develops a model of care around the target risk group and
predefines shared savings criteria in advance.
One commenter argued strongly for prospective assignment, but then
stated: ``If CMS elects to use a retrospective patient assignment, then
the Agency should consider providing the ACO with a list of `potential'
ACO patients prior to the beginning of the performance period.'' In a
follow-up comment, however, this same commenter came down firmly in
favor prospective assignment: ``We believe the final rule should
include an option for an ACO to identify its population prospectively.
With prospective assignment, ACOs can create systems to actively manage
and engage patients * * * Restricting the beneficiary assignment to a
retrospective methodology hampers ACOs' abilities to manage their
patients proactively and effectively.''
A few commenters expressed conditional support for retrospective
assignment. For example, one commenter stated that they understand the
benefits and costs of both prospective and retrospective attribution.
While recognizing the concerns that surround prospective attribution,
including potential ``cherry-picking'' of patients, the commenter
stated that patients have a legitimate interest in understanding which
providers are in charge of their care and the incentives those
providers have to provide quality care and reduce health care costs.
Some of the commenters who argued for prospective assignment
acknowledged that retrospective adjustments would be necessary to
correct for changes such as beneficiaries that had moved out of the
area, beneficiaries who had chosen to receive their services elsewhere,
and for other similar matters. One commenter stated that the basic
problem with ``pure'' prospective assignment (no reconciliation after
the end of each performance year) in the Shared Savings Program is that
it would: (1) Not give ACOs accountability for additional beneficiaries
they take responsibility for during the performance year; and (2) give
them accountability for beneficiaries they were no longer responsible
for. A commenter also accepted retrospective assignment as manageable
if the beneficiaries are assigned on a plurality of services provided,
and if beneficiary data are shared prospectively during the benchmark
period. Another commenter supported our hybrid approach to provide
preliminary assignment information to ACOs combined with retrospective
reconciliation, which will ensure ACOs are only assigned patients they
provide care for during the performance year. Another commenter urged
us ``at a minimum * * * to move further down the continuum toward some
hybrid approach between prospective assignment and retrospective
attribution.''
A few commenters recommended a hybrid approach combined with
incentives for beneficiaries to enroll in an ACO, specifically, by
modifying the patient assignment component of the rule to allow
beneficiaries that prospectively enroll in an ACO to enjoy a portion of
the savings that the ACO realizes, perhaps through a lower Part B
premium.
A much smaller number of commenters agreed with our proposal for
retrospective assignment. One commenter stated that retrospective
assignment, though imperfect, is the only way to assign savings based
on actual performance, and will encourage unbiased treatment. However,
this same commenter requested an exception for primary care physicians
who see high-risk patients for a single encounter. The commenter
believed that omitting such patients from retrospective assignment for
purposes of the shared savings payment calculations would avoid
discouraging primary care physicians from taking on new, high-risk
beneficiaries.
Another commenter was persuaded by the argument that retrospective
assignment of beneficiaries to the ACO would create an environment
where ACOs would be encouraged to provide effective care coordination
for all beneficiaries with complex illnesses, but was nonetheless
concerned that patient engagement would be more difficult when
beneficiaries are not aware of the new delivery system. Another
commenter strongly supported retrospective assignment as a more
seamless approach, because prospective assignment would employ less
reliable data, for example, data for patients who have moved or chosen
a different provider. Another stated that early attribution may
encourage providers to focus only on attributed beneficiaries and slow
the implementation of wider scale changes.
A physician society believed the combined approach of retrospective
beneficiary assignment for purposes of determining eligibility for
shared savings balanced by the provision of beneficiary data and
aggregate beneficiary level data for the assigned population of
Medicare beneficiaries during the benchmark period is optimal, because
it would provide ACO physicians with the information needed to manage
their patient population, yet encourages high quality services to all
beneficiaries. Another commenter was satisfied that the benefits of
retrospective beneficiary assignment will likely outweigh any the
concerns about choice that might remain because of the beneficiary
notification, education and claims data-sharing opt-out provided for
under the proposed rule. ``Retrospective assignment will likely
encourage ACOs to provide the same level and type of services under
consistent care delivery models to their entire beneficiary
population.''
A patients' advocacy organization supported the agency's decision
to assign beneficiaries retrospectively, out of fear that that
prospective assignment might carry some risk that providers would
``cherry pick'' and seek to avoid certain high-risk individuals.
A physician society also supported our proposal: ``Because of [our]
concerns with risk avoidance and other means to reduce costs and
therefore create greater shared savings, we agree with the CMS decision
to provide retrospective assignment. The proposal to provide
prospective patient data to the ACO should provide the entity with the
general patient population and other
[[Page 67864]]
demographic data that could help the ACO to make necessary decisions.''
A member of Congress also strongly supported our proposal for
retrospective assignment: ``I support CMS' decision to assign Medicare
beneficiaries retrospectively. I understand that many in the provider
community would prefer prospective assignment, but fear it could create
a two-tier system where assigned beneficiaries receive a heightened
level of care and attention while the remainder of the patient
population receives a lower level of care. Our intent in creating ACOs
was to once again use Medicare to drive systematic, positive change in
the delivery system. Retrospective assignment helps accomplish this
goal by ensuring the best care for all.''
Another commenter believed that the method of assignment is less
important than ensuring that ACOs receive information sufficient to
understand and target their patient populations. Therefore, the
commenter commended us for proposing to combine retrospective
assignment with extensive data sharing about beneficiaries historically
assigned and likely to be assigned to the ACO.
A few commenters suggested allowing ACOs a choice of prospective or
retrospective assignment. One commenter would allow ACOs to elect
either prospective or retrospective attribution of patients, adding
that, if limited to one approach, prospective attribution is the only
method compatible with population health management and its
requirements.
Response: We appreciate the commenters' arguments about the
advantages of a more prospective assignment methodology for purposes of
patient care planning and other objectives. The intention of our
proposal for retrospective assignment with prospective provision of
beneficiary data was to strike an appropriate balance between the two
approaches of prospective and retrospective assignment. In this final
rule we similarly seek to strike an appropriate balance by
accommodating the advantages of the prospective approach to a greater
degree, moving, as one commenter suggested further down the continuum
toward a more prospective approach, without abandoning our proposal to
determine final assignment retrospectively.
We continue to believe that we should avoid as much as possible
outcomes in which ACOs could be held accountable for costs related to
beneficiaries who received care from ACO physicians in a prior year,
but later moved away and received no services from the ACO during the
performance year. We believe that ACOs should not be held accountable
for the costs of patients for whom they are no longer to provide
primary care due, for example, to a patient moving out of area during a
performance year. Similarly, we believe that ACOs should have the
opportunity to share in any savings realized through the application of
the ACO's health planning, care coordination, and quality programs to
patients who begin receiving primary care services from the ACO during
a performance year. We took special note of the commenters who
recommended prospective assignment with at least some retroactive
adjustments to account for situations where prospective assignment
would lead to negative or even unfair consequences for the ACO. We
believe that the recommendations of these commenters amount to hybrid
approaches that are not entirely dissimilar from our proposal, but that
place a greater emphasis on the prospective elements of the hybrid than
our proposal did. In light of the concerns raised by commenters, we
agree that our proposal for a hybrid approach identifying a preliminary
prospective population and then determining the final assignments at
the end of the performance year should be modified in ways that further
enhance its prospective aspects.
Therefore, in this final rule, we are modifying the policy that we
proposed in response to comments to adopt a preliminary prospective
assignment methodology with final retrospective reconciliation. Under
this model, we will create a list of beneficiaries likely to receive
care from the ACO based on primary care utilization during the most
recent periods for which adequate data are available, and provide a
copy of this list to the ACO. During the performance year, we will
update this list periodically on a rolling basis to allow the ACO to
adjust to likely changes in its assigned population. (We describe the
nature and timing of this updating in the discussion of data sharing in
section II.D. of this final rule.) At the end of each performance year,
we will reconcile the list to reflect beneficiaries who actually meet
the criteria for assignment to the ACO during the performance year.
Determinations of shared savings or losses for the ACO will be based on
this final, reconciled population. We believe this preliminary
prospective assignment model with retrospective reconciliation will
provide the ACO adequate information to redesign care processes while
also encouraging ACOs to standardize care for all Medicare FFS
beneficiaries instead of a subset. At the same time, we also believe
that a preliminary prospective model with retrospective reconciliation
will provide adequate incentives for each ACO to provide quality care
to its entire beneficiary population.
It is important to note that the CMS Center for Medicare and
Medicaid Innovation has announced a Pioneer ACO Model which will test
alternative savings and alignment (the equivalent of assignment under
the Shared Savings Program) () models as we proceed with implementing
the Shared Savings Program. Under the Pioneer ACO Model, an ACO may
select either prospective or retrospective alignment of beneficiaries.
Under the prospective approach CMS will identify the population of
Medicare beneficiaries for whom an ACO is accountable through analysis
of the prior 3 years of fee-for-service claims data (weighted 60
percent for the most recent year, then 30 percent for the previous
year, and 10 percent for the earliest year). The actual historical data
for these beneficiaries will make up the benchmark spending. Pioneer
ACOs that select prospective alignment will be accountable for the cost
and quality outcomes of all their prospectively aligned beneficiaries
at each end-of-period reconciliation, with certain exceptions. We will
consider beneficiaries as no longer being in the ACO's designated
patient population for purposes of performance measurement and
expenditure calculations if they: (1) Have any months of Medicare
Advantage enrollment or enrollment in only Part A or only Part B at any
point during the performance period; (2) transfer their Medicare
address to a Core Based Statistical Area (CBSA) or rural county that is
not adjacent to that of the ACO's location (where the majority of its
clinicians are located); or (3) receive more than 50 percent of their
evaluation and management allowed charges in non-adjacent CBSAs or
rural counties during the performance period. The adoption of this
approach under the Pioneer ACO Model will provide us with an
opportunity to gain experience and evaluate a more prospective hybrid
model than the approach that we are adopting in this final rule. We
will study the results of the Pioneer ACO Model very carefully, and
will consider in our next rulemaking whether it is appropriate to
revise our approach to assignment in the Shared Savings Program in the
light of those interim results.
Comment: Many commenters, including MedPAC, argued that
beneficiaries should be allowed to opt
[[Page 67865]]
out of assignment to an ACO (not just, as we proposed, of data
sharing), even if they want to continue receiving services from ACO
participants. A number of commenters went further to argue that
beneficiary choice should be the sole basis for assignment to an ACO,
that is, that beneficiary assignment to ACOs should actually be more
like a process of beneficiary enrollment in an ACO. For example, one
insurance organization recommended a ``physician-of-choice solution.''
A physician society recommended that CMS should prospectively allow
patients to choose their own Medicare ACO. Other commenters referred to
assignment based on the beneficiary's identification of their ``primary
care provider or medical home.'' A national organization of physicians
recommended that, instead of retrospective attribution, CMS should
adopt a prospective approach that allows patients to volunteer to be
part of the ACO and permits the ACOs to know up-front those
beneficiaries for whom the ACO will be responsible.
Another commenter recommended that beneficiaries should opt in to
the ACO (as the MA program is currently administered) rather than
retrospective assignment. The commenter noted our statement in the
proposed rule that the ``successful creation of this relationship is
not possible when beneficiaries are not aware of the new delivery
system available through ACOs and the possibility of being included in
the population assigned to an ACO.''
Yet another commenter argued that, since Medicare beneficiaries
must elect to participate in a MA organization, we should explain why
we are not giving Medicare eneficiaries the option or the opportunity
to elect to participate in the Shared Savings Program. The commenter
believes that, by forcing Medicare beneficiaries into a shared savings
program, the savings projected in the regulatory impact statement are
unrealistic unless ACOs reduce care for their assigned Medicare
beneficiaries.
These arguments were cast primarily in terms of giving
beneficiaries the maximum opportunity for free choice about their
participation in the Shared Savings Program. (Some of these commenters
also contended that adopting this policy would allow us to abandon the
proposal restricting primary care physicians to participation in one
ACO, which we adopted to prevent uncertainty in the assignment
process.)
Response: In the proposed rule, we emphasized that the term
``assignment'' for purposes of the Shared Savings Program in no way
implies any limits, restrictions, or diminishment of the rights of
Medicare FFS beneficiaries to exercise freedom of choice in the
physicians and other health care practitioners from whom they receive
their services. Rather, the statutory term ``assignment'' in this
context refers only to an operational process by which Medicare will
determine whether a beneficiary has chosen to receive a sufficient
level of the requisite primary care services from a specific ACO so
that the ACO may be appropriately designated as being accountable for
that beneficiary's care. We also emphasized that the continued exercise
of free choice by beneficiaries in selecting the physicians and other
health care practitioners from whom they receive their services is a
presupposition of the Shared Savings Program, in the sense that
assignment would be based on each beneficiary's exercise of free choice
in seeking primary care services.
We appreciate that those commenters advocating freedom for
beneficiaries to opt out of assignment to an ACO, as well as those
advocating that assignment actually be based on voluntary choice or
enrollment by beneficiaries, are advancing these recommendations as
means of extending the principles of beneficiary free choice that we
enunciated in the proposed rule. However, we do not believe that ACO
enrollment is an ``appropriate method to assign Medicare fee-for-
service beneficiaries to an ACO'' as required by the statute because
enrollment is a process that fits better in the context of MA, and the
Shared Savings Program is certainly not intended to be a managed care
program in a new guise. One important distinction between an ACO and
many MA organizations is that beneficiaries are not locked into
receiving services from the ACO to which they are assigned, and may
continue to seek care from any provider they choose. Furthermore, the
statute specifies that ``the methodology for assigning Medicare FFS
beneficiaries to an ACO'' must be ``based on their utilization of
primary care services provided under this title'' by physicians who are
providers/suppliers in the ACO. A prospective approach that allows
patients to volunteer to be part of the ACO would completely sever the
connection between assignment and actual utilization of primary care
services. A patient could volunteer to be part of an ACO from which he
or she had received very few services or no services at all. An attempt
could be made to mitigate this concern under a voluntary enrollment
process for assignment by requiring that a beneficiary receive a
minimum number or proportion of services from the ACO for the
enrollment to be effective. But such measures would begin to transform
a ``voluntary'' selection process into something more like the kind of
statistical attribution model that we proposed and that most commenters
endorsed (whether they preferred prospective or retrospective
statistical attribution). Similarly, we do not believe it is necessary
to provide an opportunity for a beneficiary to opt out of an ACO in
order to preserve adequate beneficiary free choice. Beneficiaries
remain free to seek services wherever they wish, and assignment results
only from a beneficiary's exercise of that free choice by seeking and
receiving services from ACO providers/suppliers. We understand the
concerns of the commenters that beneficiaries may prefer leaving
existing relationships with their provider in order to avoid being
subject to the ACO's interventions. However, for the reasons we just
stated, we do not believe that an enrollment mechanism or voluntary
beneficiary ``opt-in'' would be appropriate.
Comment: Some other commenters argued for certain restrictions on
beneficiary free choice. Some of these commenters argued that
beneficiaries who opt out of data sharing should also be excluded from
the ACO, on the grounds that it would not be fair to hold ACOs
accountable for the care of patients unwilling to share the data
necessary for planning efficient and high quality care. Another
asserted that we had proposed ``the worst of both worlds for both the
beneficiary and the providers,'' because beneficiaries can opt-out of
data-sharing but not the program, which would prevent providers from
having sufficient information to properly care for and manage the
beneficiaries. The commenter argued that the best approach would be to
allow beneficiaries the opportunity to fully withdraw from the program
without having to seek care from another provider; structuring an opt-
out option that prevents both data-sharing and attribution of that
beneficiary to an ACO while allowing them to continue seeking care from
their usual providers.
A commenter supported the patient's freedom to choose a provider
and hoped that patients always have such a right. However, the
commenter also argued that holding an ACO accountable for financial
results of a patient who expressly chooses not to participate in
critical elements of quality and care coordination is in conflict with
the very purpose of an ACO. The commenter
[[Page 67866]]
therefore recommended that the experience and data for a beneficiary
should be deleted for the entire year when the beneficiary chooses to
``opt out'' of the critical and core process of information sharing for
quality improvement and care coordination, and would not be brought
back in until the beneficiary has exercised an ``opt-in'' process or
meets the criteria for assignment to a different ACO.
Other commenters argued that some restrictions on assigned
beneficiaries seeking services outside the ACO may be necessary and
appropriate in order for the ACO's measures to provide more cost-
efficient care to be effective. One commenter suggested that
unrestricted beneficiary choice poses a tremendous impediment to
successful ACO operation, and that, while significant restrictions on
beneficiary behavior may be undesirable, providing ACOs with the
ability to more carefully direct and manage the care of high-cost
patients would be a significant improvement to the Shared Savings
Program.
Another commenter objected that ACOs may not discourage patients
from seeking care outside an ACO, yet are financially liable for
unmanageable patient behavior. The commenter recommended that ACOs
should not be held responsible for unmanageable patient behavior unless
the patients are restricted to using ACO-providers/suppliers, and that
there should be some acceptable incentives to keep beneficiaries in the
ACO, such as preferred provider rates.
Another commenter recommended adopting such restrictions along with
establishing a ``gatekeeper'' model for ACOs, under which primary care
physicians who are ACO providers/suppliers in an ACO would be in a
position to identify the Medicare beneficiaries in the ACO and
effectively coordinate care with efficient healthcare providers that
are as equally focused (and incentivized) on both quality and cost.
Without this control, the commenter believes that it would be difficult
to hold the PCP accountable for the quality and cost of services
received by the beneficiary.
Yet another commenter contended that ACOs need the ability to
require or incentivize a patient to use ACO providers otherwise it will
be nearly impossible to be held accountable for cost and quality of a
population's health care. And another commenter argued that an ``any
willing provider'' approach would prevent ACOs from developing
specialty care focused networks and limiting network participation to
providers that meet specific quality standards and other criteria that
ACOs may wish to establish, thus compromising their' ability to meet
cost and quality standards that qualify providers for shared savings.
On the other hand, some commenters urged us to confirm and/or
emphasize certain basic beneficiary rights, such as the right ``to
receive care outside the Medicare ACO at no penalty to the patient.'' A
nursing organization recommended clear and explicit language to
reassure beneficiaries about the process [of opting out] and its pros
and cons, and that there is no limit, penalty, or modification to their
services by choosing to opt out. Another commenter urged that we seek a
mechanism to measure whether patients in an ACO are restricted by
physician influence not to seek care outside the ACO and that patients
are receiving necessary care in a timely manner, expressing the concern
that primary care providers may try to manage a patient's condition and
not appropriately refer the patient to a specialist because the
potential higher cost of specialty care will potentially decrease the
ACO's chances of meeting CMS benchmarks and achieving shared savings.
Another commenter strongly supported our decision to allow
beneficiaries to seek care outside of the ACO if they desire. The
commenter noted that this policy provides important reassurance to
Medicare beneficiaries who can be wary of change and who may react
negatively if they believe they are being ``locked in'' to a new system
without their consent. Another commenter agreed that a beneficiary's
freedom to choose providers is especially critical to Medicare
beneficiaries who have multiple chronic conditions or other complex
medical conditions. Furthermore, the commenter recommended that we
should confirm that beneficiaries will also have the freedom to seek
care for particularly complex medical conditions or treatments from
experienced providers at recognized centers of excellence.
Response: We strongly believe that it would be inappropriate for
the Shared Savings Program to incorporate features such as a
beneficiary ``lock-in'' to providers within the ACO, automatic
exclusion of certain types of beneficiaries, or similar measures
advocated by some commenters. An essential element of what
distinguishes the Shared Savings Program from a managed care program is
precisely the absence of any ``lock-in'' restrictions and financial or
other penalties for beneficiaries that seek services from the
specialist physicians and other practitioners of their choice.
Beneficiaries who are assigned to ACOs under the Shared Savings Program
remain Medicare fee-for-service beneficiaries, retaining their full
freedom of choice regarding where to receive services. We therefore
take this opportunity, as requested by a number of commenters, to
confirm and emphasize that basic beneficiary rights are maintained
under the Shared Savings Program, most especially (but not exclusively)
the right to receive care from physicians and other medical
practitioners of their choice outside the ACO at no penalty to the
patient.
Comment: A commenter recommended that ACOs should have the option
of excluding from assignment certain patients, such as those patients
expected, based on the most recent historical claims data, to get a
very high percentage of their care from non-primary care physicians
(the ``specialty-managed patient'' factor), and those permanently
relocating away from the ACO's service area early in the contract
period, for example before the six-month mark each year (the ``former
patient'' factor).
Another commenter recommended a number of exclusions from
assignment to ACOs, including Medicare beneficiaries older than age 75,
Medicare beneficiaries living in a skilled nursing home or a nursing
home, Medicare beneficiaries that receive Medicare based on end-stage
renal disease, and Medicare beneficiaries who are diagnosed with AIDS,
Alzheimer's, cancer, heart disease, or a similar diagnosis.
A commenter recommended that dialysis patients should be excluded
from assignment to an ACO, on the grounds that there is a strong
likelihood that ACOs will not want to assume the responsibility for
patients on dialysis or at a high risk for initiating dialysis or
receiving a kidney transplant. The commenter believes that this may
have a negative effect on kidney patients' access to the most
appropriate care, especially in regions with just one ACO, an ACO with
the minimal number of beneficiaries, or with nominal provider
diversity. The commenter thus urged that, to ensure patient access to,
and the quality of, dialysis care and transplantation options are not
compromised as a result of the ACO program, dialysis and transplant
patients should not be included as ACO beneficiaries.
Response: We believe that adopting restrictions or exclusions on
beneficiaries with certain conditions or utilization patterns from
assignment to ACOs under the Shared Savings
[[Page 67867]]
Program would be inappropriate. The purpose of the Shared Savings
Program is to promote accountability for a patient population and
coordination of items and services under Parts A and B and to encourage
investment in infrastructure and redesigned care processes for high
quality and efficient service delivery. Because beneficiaries with
serious conditions may receive the greatest benefits from greater
accountability, enhanced coordination, and redesigned care processes,
the goals of the program would be undercut if these beneficiaries were
excluded from the program. The statute itself requires that we monitor
ACOs to prevent avoidance of ``at risk'' beneficiaries. Specifically,
section 1899(d)(3) of the Act provides that: ``[i]f the Secretary
determines that an ACO has taken steps to avoid patients at risk in
order to reduce the likelihood of increasing costs to the ACO the
Secretary may impose an appropriate sanction on the ACO, including
termination from the program.'' The statute thus clearly assumes that
beneficiaries with severe and chronic conditions that may increase
costs will and should be included in beneficiary population assigned to
an ACO. Otherwise, there would be no need to monitor whether ACOs have
taken steps to avoid assignment of such beneficiaries to the ACO.
Comment: One commenter objected that Medicare beneficiaries do not
get to pick their primary care physicians, but are assigned to them a
year after they begin participating in the ACO based on who they used
in the past. The commenter therefore asked: ``How is Medicare going to
determine how to assign the beneficiaries without overloading one
doctor more than others?''
Response: Beneficiaries are assigned to ACOs on the basis of
services they actually receive from physicians in an ACO during a
performance year. Assignment thus presupposes beneficiary choice of the
specific physician or physicians from whom they receive services.
Beneficiaries are assigned to ACOs for the purposes of holding the ACO
accountable for the quality and cost of care provided to the
beneficiary. However, beneficiaries are not assigned to a particular
physician, and remain free to seek care from any physicians they
choose. Similarly, physicians are not required to accept patients
beyond the limits on patient loads that they establish for their
practices. Therefore, the operation of the Shared Savings Program in no
way threatens to overload some doctors more than others.
Comment: One commenter recommended against exclusive attribution of
beneficiaries to only one ACO, on the grounds that it is likely that
more than one ACO will provide services to a beneficiary during a
performance year. The commenter recommended shared attribution with
savings shared in proportion to the total billed services of each ACO.
Response: Section 1899(c) of the statute refers to the assignment
of ``Medicare fee-for-service beneficiaries to an ACO.'' (Emphasis
supplied.) Therefore it is not clear the statute would permit shared
assignment and shared attribution of savings to more than one ACO. We
also note that adopting this policy would create a degree of
operational complexity for both the Medicare program and for
participating ACOs that we do not believe to be acceptable, especially
in the early stages of the program.
Final Decision: Under Sec. 425.400 of this final regulation, we
are revising our proposed policy to provide for prospective assignment
of beneficiaries to ACOs in a preliminary manner at the beginning of a
performance year based on 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 year. We are also finalizing our proposal that
beneficiary assignment to an ACO is for purposes of determining the
population of Medicare FFS 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. Beneficiaries assigned to ACOs under the
Shared Savings Program retain their full rights as Medicare fee-for-
service beneficiaries to seek and receive services from the physicians
and other medical practitioners of their choice. No exclusions or
restrictions based on health conditions or similar factors will be
applied in the assignment of Medicare FFS beneficiaries. We are also
finalizing our proposal to determine assignment to an ACO under the
Shared Savings Program based on a statistical determination of a
beneficiary's utilization of primary care services, rather than on a
process of enrollment or ``voluntary selection'' by beneficiaries. The
specific methodology (the ``step-wise'' approach) is described in Sec.
425.402. In that methodology, we are also finalizing our proposal to
assign beneficiaries to no more than one ACO.
3. Majority vs. Plurality Rule for Beneficiary Assignment
Section 1899(c) of the Act requires that Medicare FFS beneficiaries
be assigned to ``an ACO based on their utilization of primary care
services'' furnished by an ACO professional who is a physician, but it
does not prescribe the methodology for such assignment, nor criteria on
the level of primary care services utilization that should serve as the
basis for such assignment. Rather, the statute requires the Secretary
to ``determine an appropriate method to assign Medicare FFS
beneficiaries to an ACO'' on the basis of their primary care
utilization.
An obvious general approach would be to make such an assignment on
the basis of some percentage level of the primary care services a
beneficiary receives from an ACO physician. In the proposed rule, we
considered the more specific issue of whether to assign beneficiaries
to an ACO when they receive a plurality of their primary care services
from that ACO, or to adopt a stricter standard under which a
beneficiary will be assigned to an ACO only when he or she receives a
majority of their primary care services from an ACO.
Under the PGP demonstration beneficiaries were assigned to a
practice based on the plurality rule. By employing a plurality standard
for primary care services, our analysis indicates that between 78 and
88 percent of the patients seen for primary care services at the PGP
during the year were subsequently assigned to that PGP group. As
measured by allowed charges (evaluation and management CPT codes), the
PGP provided on average 95 percent of all primary care services
provided to the assigned patients.
We proposed to assign beneficiaries for purposes of the Shared
Savings Program to an ACO if they receive a plurality of their primary
care services from primary care physicians within that ACO. We believed
that the plurality rule would provide a sufficient standard for
assignment because it would ensure that beneficiaries will be assigned
to an ACO when they receive more primary care from that ACO than from
any other provider. This would result in a greater number of
beneficiaries assigned to ACOs, which could enhance the viability of
the Shared Savings Program, especially in its initial years of
operation.
Comment: Some commenters addressed the specific issue of employing
a plurality versus majority standard as the basis for beneficiary
assignment. One individual maintained
[[Page 67868]]
(without elaboration) that deciding upon assignment of patients to ACOs
on the basis of plurality rather than majority provider provision of
services enhances the likelihood of financial penalties upon ACOs. A
number of commenters recommended majority assignment in place of a
plurality standard. One of these commenters contended that a plurality
could lead to the undesirable consequence of accountability without
responsibility whenever the percentage is less than the majority. The
commenter noted that, by definition, a plurality is simply more than
any other, and the proposed rule did not recommend any minimum
percentage. Another commenter criticized our attribution proposal on
the grounds that it would produce many patients who have very loose, if
any, true connection to [an] ACO and its providers. The commenter
recommended a majority standard as one of several measures to provide a
stricter attribution standard that would only assign patients with
relatively strong relationships to an ACO. Yet another commenter would
revise and simplify the basis for assignment to be beneficiaries'
receipt of a majority of their primary care visits, stating that the
experience in local markets is that buy-in is greatest when providers
are assured their population reflects the patients for whom they
provide the most care and thus have maximum ability to affect through
quality/efficiency improvements. This, according to the commenter, also
helps to ensure the payment model will accurately reward (or penalize)
their success (or deficiencies) in caring for their assigned
population.
Some commenters expressed support for the plurality standard. One
noted that using a plurality standard takes into account the
variability in utilizing primary care physicians. Other commenters
stated that a plurality standard was at least ``workable'' or
``acceptable.'' However, some of the commenters who expressed support
for a plurality standard also endorsed adopting a minimum threshold for
assignment
Response: We are finalizing our proposal to adopt a plurality rule
as the basis for assignment. Adoption of a majority standard for
assignment would necessarily result in the assignment of fewer
beneficiaries to each ACO. Adopting a stricter majority standard would
not be conducive to assignment of enough beneficiaries to ACOs for the
Shared Savings Program to be viable or to make a contribution to
improving quality and promoting more cost-effective care for Medicare
beneficiaries. We also believe it is in the best interest of the
participating ACOs to have more beneficiaries assigned to promote
statistical stability. Moreover, we believe that use of a plurality
standard creates a greater incentive for ACOs to redesign care
processes for all FFS beneficiaries that receive care from the ACO and
promotes accountability for patients that might otherwise fall through
the cracks because they would not meet a majority standard. Finally, it
is reasonable for an entity that provides more of a beneficiary's
primary care than any other provider, to coordinate care for that
beneficiary.
Comment: Several commenters were concerned about assignment of
beneficiaries that received care outside of a reasonable geographic
distance from the ACO. For example, a number of commenters expressed
concern about the impact of ``snowbirds,'' beneficiaries who spend
parts of each year in different locations, under the plurality standard
for assignment. One noted that assigning patients to an ACO based on
the plurality of primary care services provided will result in ACOs
being responsible for patients who spend a significant portion of the
year residing outside of the ACO service area, and that there is
already great difficulty in trying to coordinate care for patients who
split their residence between two locations. A number of these
commenters cited the exclusion of ``snowbirds'' from MA plans as a
precedent.
Another commenter also advocated a list of exclusions from
assignment, including a geographic exclusion, noting that, by limiting
the distance that the beneficiary may reside from the ACO participants,
ACOs are more likely to be assigned beneficiaries who are able to seek
other types of care from the ACO.
Similarly, a health care provider recommended that we should
exclude beneficiaries who receive more than 50 percent of their
evaluation and management allowed charges in non-adjacent communities
during the performance year.
Response: With regard to the issues concerning ``snowbirds,''
beneficiaries who travel frequently, and similar situations, we believe
that such situations pose a much smaller problem in the Shared Savings
Program than they do in other programs, such as the MA program. This is
because the assignment methodology under the Shared Savings Program is
essentially self-correcting for the effects of seasonal migrations and
extensive travel, since it directly reflects where a beneficiary
receives the plurality of his or her primary care services. A
beneficiary who travels or resides in more than one location will not
be assigned to an ACO unless he or she receives the plurality of
primary care from that ACO.
Furthermore, one reason for the exclusion of ``snowbirds'' from MA
plans is that beneficiaries who make seasonal migrations cannot adhere
to the network arrangements that are an intrinsic feature of managed
care. The ACO model does not include the use of networks or any
restrictions on where beneficiaries can receive care. It is true that
``snowbirds'' may be assigned to an ACO on the basis of receiving a
plurality of primary care in one location, and that ACO will still be
responsible for costs related to care in the alternate location.
However, any beneficiary assigned to an ACO remains free to receive
substantial amounts of care outside the ACO, even if they remain year-
round within the geographical area of the ACO, and for reasons we have
already discussed, we do not believe that it is appropriate to adopt
restrictions and exclusions that hinder beneficiary freedom to choose
where to receive care. We believe that this principle applies equally
to the issue of seasonal migration (``snowbirds'') and other issues of
geography (for example, distance from an ACO) that commenters raised.
Therefore, we do not believe that it is appropriate to adopt
restrictions or exclusions on assignment to account for seasonal
migration or any other geographical factor in the Shared Savings
Program
Comment: A CAH requested a very different assignment methodology,
specifically, that all the beneficiaries in their service area be
assigned to their rural ACO. The commenter explained that, if we were
not to allow this model, rural patients would be unable to be properly
assigned to an ACO, and the CAH would have to join other rural
providers to meet the 5,000 beneficiary requirement.
Response: We believe that this suggestion is incompatible with the
statute, which requires that assignment be based on the utilization of
primary care services from a physician who is a provider/supplier in an
ACO, not the location of beneficiaries within the area served by an
ACO.
Comment: A number of commenters recommended establishing a minimum
threshold of primary care services for assignment to prevent providers
from being evaluated on beneficiaries for whom they provide limited
services and thus have limited opportunities to influence care or
coordination. Other commenters supported a two-visit threshold as the
minimum for
[[Page 67869]]
beneficiary assignment. Several major medical institutions recommended
that we establish a threshold of at least three visits which would
provide more assurance of continuity with the ACO and more patients who
have continuing needs. A medical association urged that there must be a
floor to the plurality of primary care charges used for that
assignment, recommending a floor of 20 percent--meaning that unless the
ACO is responsible for at least 20 percent of a patient's primary care
charges, that patient would not be assigned to any ACO. Another
commenter recommended 25 percent. Yet another commenter advocated a
minimum percentage between thirty and forty. And still another
recommended 50 percent of primary care visits.
MedPAC discussed the possibility of establishing a 10 percent
threshold (citing the Pioneer ACO demonstration threshold of 10 percent
or less of E&M charges) in the course of endorsing the step-wise method
of assigning beneficiaries: ``we would prefer the step-wise option
which assigns beneficiaries first to primary care physicians if
possible and then to certain specialty physicians if the share of
evaluation and management visits (or charges) to primary care
physicians falls below a threshold value. (The Pioneer ACO
demonstration sets the threshold as 10 percent or less of E&M
charges.)''
Response: In this final rule, we have decided not to adopt a
threshold for assignment for reasons similar to those which motivated
our decision to maintain a plurality standard for assignment. Adoption
of a threshold, like adoption of a majority standard for assignment,
would necessarily result in the assignment of fewer beneficiaries to
ACOs generally and to each ACO in particular. We believe it is in the
general interest of the Shared Savings Program, and in the best
interest of each ACO, to have more beneficiaries assigned to promote
statistical stability. Moreover, we believe that use of a plurality
standard without a threshold creates a greater incentive for ACOs to
redesign care processes for all FFS beneficiaries that receive care
from the ACO, and thus promotes accountability for patients that may
fall through the cracks because they fail to meet a minimum threshold.
Finally, in the proposed rule we considered the issue of how to
determine when a beneficiary has received a plurality of primary care
services from an ACO. We noted the plurality could be determined either
on the basis of a simple service count or on the basis of the
accumulated allowed charges for the services delivered. The method of
using a plurality of allowed charges for primary care services would
provide a greater weight to more complex primary care services in the
assignment methodology, while a simple service count method would weigh
all primary care encounters equally in determining assignment. We have
previous experience with the method of using a plurality of allowed
charges in the PGP demonstration. One advantage of this method is that
it would have less need for tie-breaker rules, since it is unlikely
that allowed charges by two different entities would be equal. On the
other hand, this method does not necessarily assign the beneficiary to
the entity that saw the patient most frequently, but rather to the
entity that provided the highest complexity and intensity of primary
care services.
We proposed to implement the method of using a plurality of allowed
charges for primary care services to assign beneficiaries to ACOs.
Allowed charges are a reasonable proxy for the resource use of the
underlying primary care services, so the method of using a plurality of
allowed charges assigns beneficiaries to ACOs according to the
intensity of their primary care interactions, not merely the frequency
of such services.
Comment: One commenter expressed concern that the method for
determining from which primary care provider a patient received the
``plurality of care'' is problematic because it is measured by the
``sum of allowed charges.'' The commenter argued that this will tend to
reward providers who may be paid more for the same service and
providers who tend to provide higher priced procedures, and that while
this does give the provider who generated the most costs the
responsibility for containing costs, it may skew things if, for
example, a patient gets one high cost procedure from one provider and
the majority of their primary care somewhere else. The single procedure
provider would generally be less able to improve care coordination and
manage costs with respect to that patient than the ``regular''
provider.
Another commenter suggested that we modify the methodology for
beneficiary assignment from plurality of allowed charges to number of
encounters by a provider. ``If one of the goals of the Shared Savings
Program is to achieve a healthier population, the greater the number of
encounters, regardless of the allowed charges or the physician's
specialty, provides increased opportunities to educate and impact the
patient and influence his/her behavior.'' Another commenter also
advocated using a visit-based standard to assessing majority, instead
of the proposed allowed-charges approach. This commenter emphasized
that the charges standard would skew patient attribution based on the
illness severity of the patients. Another commenter cited the frequency
of upcoding as a basis for using visit counts rather than charges.
Another commenter objected that we seem to believe that charges are
reasonable proxy for the resource use of the underlying primary care
service. The commenter argued that the potential downside of using
charges is that it may entrench the overutilization or up-coding that
we otherwise wish to avoid. The commenter thus suggested that ``a more
balanced approach'' could be the use of the plurality of visits
combined with an adjustment factor to reflect intensity.
A nursing association recommended, in conjunction with its proposal
to count the services of NPs in the assignment process, an alternative
to employing allowed charges as the basis for assignment. The commenter
noted that, if non physicians such as NPs and PAs were to be included
in the assignment process, they would be at a disadvantage if allowed
charges are the basis for assignment. They explained: ``The problem
here lies in the mandatory discount applied to approved charges from
NPs and CNSs. Their approved charges for primary care services are set
at 85 percent of the Medicare Physician Fee Schedule amount. This
discounting of APRN primary care services can tip the balance as to
whether the beneficiary is assigned to an ACO where he or she may have
received primary care services from the ACO's primary care physicians
but in lesser amounts than provided by the advanced practice registered
nurse. Our preferred remedy in this case would be to follow the
recommendations of the Chair of the IOM Study on the Future of Nursing
and pay according to the value of the service rather than the specialty
of the provider. Failing that, ACO assignment should be based on the
plurality of the work RVUs associated with primary care services.''
Response: We considered most of the alternatives to the use of
allowed charges in developing our proposal. We agree that the method of
using a plurality of allowed charges would provide a greater weight to
more complex primary care services in the assignment methodology, while
a simple service method count would weigh all primary care encounters
equally in determining assignment. However, we do not believe that a
method of using allowed charges is
[[Page 67870]]
inappropriate. Although this method does not necessarily assign the
beneficiary to the entity that saw the patient most frequently, the
beneficiary will be assigned to the entity that provided the highest
complexity and intensity of primary care services. This method also
results in the assignment of the responsibility for containing costs to
the provider who generates the most costs. Our previous experience with
the PGP demonstration demonstrated an advantage of this method is that
it does not require tie-breaker rules, since it is unlikely that
allowed charges by two different entities would be equal. Assignment of
beneficiaries on the basis of plurality in a simple service method
count would require tie-breaker rules for those rare occasions when two
or more entities delivered an equal number of services to a
beneficiary.
We considered the nursing association's recommendation that we use
RVUs rather than charges. Use of RVUs in place of allowed charges would
retain many of the benefits of employing charges (for example, reduced
need for a tie-breaker) while correcting for the effects of some
factors in allowed charges that arguably should not affect assignment
(for example, the application of GPCI values to the physician fee
schedule payments). However, it is unclear whether it would be possible
and how to include FQHC/RHC services in the assignment process if we
were to base assignment on RVUs for specific HCPCS codes rather than
allowed charges since, as discussed previously, we have not required
that RHCs include HCPCS codes on their claims, and FQHCs have been
required to report HCPCS codes only since January 1, 2012. Moreover,
the use of allowed charges has resulted in satisfactory assignment
results under the PGP demonstration. Therefore, we will retain this
proven method of using allowed charges. We note that for purposes of
the Shared Savings Program, allowed charges for FQHC/RHC services will
be based on the interim payments, since any subsequent adjustments
following settlement of their cost reports would not be available in
time for assignment purposes. We will continue to consider the
alternative of using RVUs as we gain experience under the Shared
Savings Program.
Comment: Several commenters expressed concern about potential
unintended consequences of the plurality rule, specifically
consequences related to care coordination and manipulation of Medicare
beneficiary attribution, particularly for beneficiaries who require SNF
or NF care during the attribution time period. These commenters noted
that similar concerns were raised in the Medicare Advanced Primary Care
Practice Demonstration. As a result, they recommend that CMS monitor
the plurality rule to ensure that it does not adversely impact patient
care coordination or encourage ACO gaming of Medicare beneficiary
attribution in the SNF or NF setting.
Response: We appreciate the commenters' recommendation, and we will
certainly monitor the impact of the plurality rule to ensure that it
does not adversely impact patient care coordination or encourage ACO
gaming in any way. We discuss our monitoring plans in detail in section
II.H. of this final rule.
Comment: One commenter had a technical comment about the plurality
formula in the regulations text: ``Section 425.6(b) of the regulations
provides the technical details of the assignment methodology in five
steps. We have the following comments on the technical description:
Step (3) calculates a single number--the total allowed charge for
primary care services--for each beneficiary. The rule should clarify
whether the intention for the plurality test is to calculate total
allowed charges for each non-ACO provider or in aggregate for all non-
ACO providers. Step (5) includes a plurality test but only references
Step (4), which does not include non-ACO providers. Based on the rule,
it appears that non-ACO providers are intended to be considered in the
plurality test. Step (5), therefore, also should reference the total
allowed charges for non-ACO providers in the plurality test.''
Another commenter noted that we proposed to assign beneficiaries to
an ACO if they receive a plurality of their primary care services from
primary care physicians within an ACO. In this formula, primary care
services provided by specialists would be included in the total primary
care services for the beneficiary, but would not be included in the
count of the primary care services the beneficiary receives from an
ACO. The commenter recommended that we should compare the primary care
services beneficiaries receive from an ACO's primary care physicians
only to the total primary care services beneficiaries receive from
primary care providers, thereby excluding primary care services
provided by specialists from the denominator in the plurality
calculation.
Response: We agree with the first commenter that the regulations
text needs to be revised to reflect the intention for the plurality
test to calculate total allowed charges for each non-ACO provider for
purposes of determining where the beneficiary received the plurality of
his or her primary care services. In addition, we believe that our
decision to include specialists in the assignment methodology by way of
a step-wise process addresses the commenters' questions regarding
whether primary care services furnished by specialists should be
included in the computation of the plurality of allowed charges for
primary care services.
Final Decision: In Sec. 425.402, we are finalizing our proposal to
adopt a plurality of primary care services, defined in terms of allowed
charges, as the basis for assignment. However, we are modifying the way
in which we will calculate that plurality in order to apply it in the
two-step assignment process, as described previously.
F. Quality and Other Reporting Requirements
1. Introduction
In this section of the final rule, we discuss: Measures to assess
the quality of care furnished by an ACO; requirements for data
submission by ACOs; quality performance standards; the incorporation of
reporting requirements under section 1848 of the Act for the Physician
Quality Reporting System; and aligning ACO quality measures with other
laws and regulations.
2. Measures To Assess the Quality of Care Furnished by an ACO
a. General
Section 1899(b)(3)(A) of the Act requires the Secretary to
determine appropriate measures to assess the quality of care furnished
by the ACO, such as measures of clinical processes and outcomes;
patient, and, wherever practicable, caregiver experience of care; and
utilization (such as rates of hospital admission for ambulatory
sensitive conditions). Section 1899(b)(3)(B) of the Act requires ACOs
to submit data in a form and manner specified by the Secretary on
measures that the Secretary determines necessary for the ACO to report
in order to evaluate the quality of care furnished by the ACO. In the
proposed rule, we indicated that we believe that the Secretary's
authority to determine the form and manner of data submission allows
for establishing requirements for submission of data on measures the
Secretary determines to be appropriate for evaluating the quality of
care furnished by the ACO, without regard to whether the Secretary has
established a specific quality performance standard with respect to
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those measures that must be met in order to be eligible for shared
savings.
We proposed that an ACO be considered to have met the quality
performance standard if it has reported quality measures and met the
applicable performance criteria in accordance with the requirements
detailed in rulemaking for each of the 3 performance years. We further
proposed to define the quality performance standard at the reporting
level for the first year of the Shared Savings Program and to define it
based on measure scores in subsequent program years. We proposed the
use of 65 measures to establish quality performance standards that ACOs
must meet in order to be eligible for shared savings for the first
performance period (76 FR 19571). We stated that quality measures for
the remaining 2 years of the 3-year agreement would be proposed in
future rulemaking.
Comment: While some commenters supported the 65 measures proposed
without modification, the majority recommended that we adopt fewer,
validated measures aligned with the three-part aim and currently in use
in order to encourage participation, reduce reporting burden, and
achieve more focused and meaningful improvements, particularly in the
first agreement period. Commenters suggested paring down the number of
quality measures in a number of ways, such as by using a more
simplified framework and limiting measures to: A specific number; those
that can be reported via a specific methodology such as claims; those
currently reported through another program; only some of the proposed
domains; outcomes measures; those related to the most prevalent and
costly health conditions; or eliminating the measures that involve
beneficiary compliance. Another commenter recommended having a
``performance set'' of measures that includes outcome-oriented, claims-
based measures focused on utilization to determine eligibility for
payment, and a ``reporting set of measures'' used for monitoring
purposes only. A few commenters supported the number of measures
proposed but were concerned about reporting burden. Another commenter
noted that the proposed measure set may not be feasible initially but
should be in the future, as it is in other sectors.
Response: We considered the commenters' recommendations carefully
when determining the 33 final, required quality measures, which will be
scored as 23 measures as discussed in section II.F.4. of this final
rule. We are sensitive to the concerns raised by commenters regarding
the administrative burden of the proposed measures, and we have
modified our proposal by reducing the number of required measures by
removing measures perceived as redundant, operationally complex, or
burdensome and retaining those that would still demand a high standard
of ACO quality, focus on priority areas and are areas of high
prevalence and high cost in the Medicare population. We have also
sought to finalize proposed measures or variations of proposed measures
that align with the measures used in other quality programs and
initiatives. We have also made certain adjustments to our proposed
measures to align with updates in the measures, such as the retirement
of certain measures. Further detail on the reasoning behind finalizing
or removing specific measures is discussed in section II.F.2.c of this
final rule.
Comment: Several commenters expressed concern about unintended
negative consequences related to the quality measures and patients'
role in improving quality of care outcomes. A number of commenters were
concerned that ACOs might skimp or delay in providing specialty care,
particularly high cost services or those not available within the ACO.
Several commenters suggested a wider choice of measures for major
illnesses in order to avoid underutilization. Another commenter was
concerned that providers would treat patients based on the measures
rather than on patients' needs. Several commenters were concerned that
measures would track how many services are provided rather than how
well care is provided.
One commenter suggested CMS consider patients' responsibility, and
another commenter noted the proposed measures make providers
accountable for patient decisions. One commenter suggested CMS add
measures or program requirements that encourage ACOs to promote patient
accountability for health and wellness. A few commenters suggested the
proposed measures were not those that would have the greatest impact on
quality or address the urgent need to evaluate the efficient use of
healthcare resources. One commenter recommended that measures focus on
misuse and overuse as much as underuse and suggested targeting the
areas for misuse identified by the National Priorities Partnership.
Response: In addition to measuring quality for performance
purposes, we also intend to monitor the quality of care furnished by
ACOs in an effort to identify patterns of avoiding at-risk
beneficiaries and misuse, underuse, and overuse of services over time.
We will use data that we can calculate internally without requiring
additional ACO reporting, such as claims and administrative data, to
conduct this monitoring. Further information about program monitoring
is addressed in section II.H of this final rule.
b. Considerations in Selecting Measures
We view value-based purchasing as an important step towards
revamping how care and services are paid for, moving increasingly
toward rewarding better value, outcomes, and innovations instead of
volume. The Shared Savings Program is a critical element of our
Medicare value-based purchasing initiative, in which we have sought to
meet certain common goals, as described in the proposed rule (76 FR
19569).
Comment: Numerous commenters endorsed focusing measures around the
three-part aim of better care, better health, and lower costs; some
suggested that the proposed measures could go further in this regard.
One commenter stated that the quality measures sufficiently address the
care and improving health aims but do not address the reducing costs
aim. Another commenter stated the proposed measures will add cost to
providers and will not produce savings. Commenters also supported using
tested, evidence-based and endorsed measures, and a number of
commenters suggested that measures should: Be meaningful, improve
patient outcomes, rely on clinically enriched administrative measures
already in use and be consistent with measures used in other public
programs, such as the PQRS, Electronic Health Record (EHR) Incentive
Program, Medicare Advantage (MA), Hospital Value-Based Purchasing
(HVBP), the Inpatient Prospective Payment System (IPPS), and others.
Commenters also suggested a number of different measurement sets. One
commenter was concerned that quality of care for individuals and
populations are not genuine top priorities of the Shared Savings
Program, since the proposed rule included only quality measures that
cover the same patient populations, processes, and outcomes that are
already addressed by existing measures used in other programs. A few
commenters proposed only using PQRS measures initially. Many commenters
suggested using only NQF-endorsed measures, while others asked that CMS
not limit itself to NQF-measures.
Response: We agree that the quality measures should be tested,
evidence-based, target conditions of high cost and high prevalence in
the Medicare population, reflect priorities of the National Quality
Strategy, address the
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continuum of care to reflect the accountability that ACOs accept for
their patient populations, and align with existing quality programs and
value-based purchasing initiatives. At this time, we have concluded
that it is most appropriate to focus on quality measures that directly
assess the overall quality of care furnished to beneficiaries. We are
adopting a measurement set that includes patient experience, outcomes,
and evidence-based care processes. That said, we do not agree that
specific measures addressing high cost services or utilization are
necessary to incentivize ACOs to address these issues. We believe that
the goal of lower cost growth will be achieved through improved
coordination and quality and that the potential for shared savings will
offer a sufficient incentive for ACOs to address utilization issues in
a way that is most appropriate to their organization, patient
population, and local healthcare environment. However, we may consider
such measures in the future. Accordingly, the measures we are
finalizing include a subset of the proposed measures that address the
populations, processes, and outcomes that were the focus in the
proposed rule.
In the proposed rule, we stated that our principal goal in
selecting quality measures for ACOs was to identify measures of success
in the delivery of high-quality health care at the individual and
population levels. We considered a broad array of process and outcome
measures and accounted for a variety of factors, prioritizing certain
measures according to principles described in the proposed rule. (76 FR
19569) We believe endorsed measures have been tested, validated, and
clinically accepted and have therefore selected the final measures with
a preference for NQF-endorsed measures. However, the Act does not limit
the Shared Savings Program to endorsed measures. As a result we have
also exercised our discretion to include certain measures that we
believe to be high impact but that are not currently endorsed.
c. Quality Measures for Use in Establishing Quality Performance
Standards That ACOs Must Meet for Shared Savings
Based upon the principles described previously, we proposed 65
measures (76 FR 19571) for use in the calculation of the ACO Quality
Performance Standard. We proposed that ACOs would submit data on these
measures using the process described in the proposed rule and meet
defined quality performance thresholds. We proposed that ACOs would be
required to report quality measures and meet applicable performance
criteria, as defined in rulemaking, for all years within the agreement
period to be considered as having met the quality performance standard.
Specifically, for the first year of the program, we proposed for the
quality performance standard to be at the level of full and accurate
measures reporting; for subsequent years, we proposed the quality
performance standard would be based on a measures scale with a minimum
attainment level. We proposed that ACOs that do not meet the quality
performance thresholds for all measures would not be eligible for
shared savings, regardless of how much per capita costs were reduced,
which is discussed further in section II.F.4.b.2. of this final rule.
Comment: One commenter requested clarification on whether care
provided outside the ACO would count toward the ACO's quality metrics.
One commenter recommended we require measures reporting for all
patients seen by the ACO, not just those assigned in order to simplify
the reporting process and spur improvement across the ACO's entire
patient population.
Response: Since ACOs will be accountable for all care received by
their assigned beneficiary population, quality measures will reflect
the care assigned beneficiaries receive from ACO providers and non-ACO
providers. We will utilize claims data submitted by the ACO providers/
suppliers as well as from providers outside the ACO in determining
measure numerators and denominators.
Comment: A few commenters asked CMS to clarify whether the
reporting performance standard would be applicable to ACOs only during
the first year of the Medicare Shared Savings Program (that is, 2012)
or for the first year of the ACO's agreement period and how this would
affect a mid-year start date, if CMS decides to incorporate one. One of
these commenters supported defining the quality performance standard at
the reporting level for the first year of an ACO agreement period,
regardless of whether this timeframe coincides with the calendar year.
Response: In this final rule, we have finalized first year start
dates for ACO participants in April and July of 2012, but not for
January 2012, as discussed in section II.C.1. of this final rule. We
have also outlined a performance standard for each 12-month, calendar
year quality measure reporting period. We indicated that ACOs
requesting an interim payment calculation as described in section
II.G.2.k of this final rule must completely and accurately report the
ACO GPRO measures for 2012. We indicated that the final performance
year 1 reconciliation for the first agreement period would be based on
completely and accurately reporting all ACO quality measures--ACO GPRO,
CAHPS and claims- and administrative-based measures--for CY 2013.
Recognizing that ACOs' first performance year will be 18 to 21 months
and carry from 2012 into 2013 if they start in the Shared Savings
Program in April or July 2012, ACOs will need to comply with annual
measures specifications updates detailed in subregulatory guidance.
While we anticipate a relatively static set of quality measures for the
first agreement period, ACOs will also be required to comply with any
measures updates made in future rulemaking as clinical guidelines
change and as other programs update their measure requirements. For
instance, the EHR Incentive Program will release clinical quality
measure requirements for Stage 2 Meaningful Use, and we believe it is
advantageous and more efficient for the provider community if we can
align measures across programs. It may also be necessary to add or
remove measures from the Shared Savings Program as CMS gains experience
with ACOs and develops a better understanding of the types of measures
that are most important to assess the quality of care furnished by this
new type of entity. Quality measures requirements for each performance
year are discussed in Tables 1 and 2 as well as in section II.F.4 of
this final rule.
ACOs that enter into an agreement period beginning in 2013 or
subsequent years will be subject to the same rules unless they are
revised in future rulemaking cycles. That is, absent some change to our
policies, the quality performance standard for an ACO's first
performance year will be set at the level of complete and accurate
measures reporting. We expect that the measures we are finalizing will
be maintained in the early years of the program as both ACOs and CMS
develop infrastructure and gain experience with the program. We believe
having one quality performance standard and set of measures for all
ACOs will make for better longitudinal comparisons and be operationally
more feasible and less burdensome.
In the proposed quality measures table (76 FR 19571), we
categorized each of the measures into the goals of better care for
individuals and better health for populations and included: The domain
each of the proposed measures addresses, the measure title, a brief
description of the data the measure
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captures, applicable PQRS or EHR Incentive Program information, the
measure steward or, if applicable, NQF measure number, the proposed
method of data submission for each measure, and information on whether
the quality performance standard for each measure is defined at the
reporting or performance level for each year of the agreement period.
We noted that while many of the proposed measures have NQF endorsement
or are currently used in other CMS quality programs, the specifications
for some of the proposed measures would need to be refined in order to
be applicable to an ACO population. However, we proposed to align the
quality measures specifications for the Shared Savings Program with the
measures specifications used in our existing quality programs to the
extent possible and appropriate for purposes of the Shared Savings
Program. We also stated that we planned to make the specifications for
the proposed measures available on our Web site prior to the start of
the Shared Savings Program. We also acknowledged that we would expect
to refine and expand the ACO quality measures in the future and expand
measures reporting mechanisms to include those that are directly EHR-
based. Specifically, we expect to expand the measures to include other
highly prevalent conditions and areas of interest, such as frailty,
mental health, substance abuse, including alcohol screening, as well as
measures of caregiver experience. Finally, we also sought comment on a
process for retiring or adjusting the weights of domains, modules, or
measures over time.
We received the following comments about the proposed measures in
general.
Comment: Many commenters expressed concern that few proposed
measures were focused on outcomes as opposed to processes. One
commenter who supported outcome measures wrote that a 3-year agreement
period was too short to allow accurate outcomes assessment across
diagnoses and expressed concern that the expectation that outcomes
could be altered in this time frame might encourage gamesmanship and
manipulation of data by ACOs.
Response: In selecting the final set of measures, we have sought to
include both process and outcome measures, including patient experience
of care. Process measures are typically easier to calculate based on
administrative data, such as claims, and would require less reporting
effort by ACOs, while outcomes measures would provide a more complete
picture of quality of care improvement but would require more ACO
reporting effort, such as GPRO measures that tend to rely on a
combination of both claims and clinical quality data. Since ACOs are
charged with improving and coordinating care and delivering high
quality care but also need time to form and ramp up, we believe it is
important to start with a combination of both process and outcomes
measures, but may move to more outcomes-based measures and fewer
process measures over time. We have modified our proposed domain
structure in this final rule by combining the care coordination and
patient safety domains to better align with other CMS value-based
purchasing initiatives and the National Quality Strategy and to
emphasize the importance of ambulatory patient safety and care
coordination. In addition, we are moving certain proposed claims-based
measures, such as inpatient safety measures and ambulatory care
sensitive condition (ACSC) admissions measures, to our monitoring
program to prevent ACOs from engaging in gamesmanship and manipulation
of at-risk patients.
Comment: Many commenters suggested adopting a risk-adjustment
strategy for measures that would account for beneficiary
characteristics such as: geographic location, body mass index,
socioeconomic status, education, severity or type of illness, race,
ethnicity, gender, preferred language, disability status, or health
literacy. One commenter recommended risk-adjusting outcomes measures in
addition to process and patient experience measures. One of the
commenters also noted that our proposed measure set provided no
incentive for more accurate coding and failed to recognize that an
aging population's health status is expected to deteriorate over time,
not remain stable. One commenter was concerned about factors outside of
an ACO may affect an ACO's quality measure performance, such as the
patient's right to decide whether he or she will follow recommendations
of health care professionals. One commenter requested clarification on
how CMS will apply risk-adjustments when calculating ACO performance on
specific quality measures.
Response: Risk adjustment is included for a number of the proposed
measures, such as the ACSC measures, but is generally limited to age
and gender. In addition, some measures include specific exclusions for
patients, such as those in hospice, who may not benefit from an action
targeted by the measure. Risk adjustment would also be used in the
Risk-Standardized, All Condition Readmission measure, the details of
which would be forthcoming in subregulatory guidance. We believe that
our linkage of payment to accurate reporting requirements provides a
strong incentive for complete and accurate reporting, since the quality
performance standard must be met in order for an ACO to be considered
eligible for shared savings. As discussed in section II.H.2. of this
final rule, we may audit the quality measures data ACOs enter into the
GPRO web interface by requiring the ACO to share beneficiary medical
record information with CMS. As discussed in II.B. of this final rule,
ACOs will also have to agree, as a condition of receiving any shared
savings and participating in the program, that the quality data they
submit to CMS is accurate, complete, and truthful. We believe that
including a process to audit quality measures data and a certification
requirement provides ACOs with an incentive to more accurately report
quality measure data. In addition, we agree that the personal
preferences of beneficiaries play an important role in their health
behaviors. However, the lack of patient adherence may also represent a
legitimate dimension of care, as it could be indicative of poor
communication between ACO providers/suppliers and their patients.
Beneficiary incentives are discussed further in section II.B. of this
final rule.
We also received a number of comments on the specific measures
proposed. We received the following comments on proposed measures 1-7:
Patient/Caregiver Experience.
Comment: A number of commenters supported a prominent role for
patient experience and health status in the measure set. One commenter
applauded the inclusion of a measure on shared decision making while
another advocated for additional shared decision making measures. One
commenter was supportive of including measures of caregiver as well as
patient experience. One commenter noted the importance of patient
experience of care but cautioned that such measures are subjective, and
do not always accurately measure the quality of care furnished and that
ACO marketing materials could influence beneficiary responses.
Response: While we recognize the concern about patient subjectivity
to surveys, we believe patients' perception of their care experience
reflects important aspects of the quality of the care they receive,
such as communication and patient engagement in decision-making, that
are not adequately captured by other measures. As such, patient surveys
are important complements to the other process of care and outcomes
measures. For the
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same reason, we intend to expand the quality measures over time to
include more caregiver experience measures. In addition, we intend to
retain some level of ACO marketing oversight, as discussed in section
II.H.2 of this final rule, and will refine our processes over time as
appropriate.
Comment: Many commenters supported using Consumer Assessment of
Healthcare Providers and Systems (CG-CAHPS) surveys to measure patient
experience but varied in their recommendation of which version to use.
One commenter stated that CG-CAHPS and Hospital CAHPS (HCAHPS) do not
include the desired shared decision making modules that are included in
the draft Patient Centered Medical Home CAHPS (PCMH-CAHPS) and the
Surgical CAHPS. Others supported the use of CAHPS but recommended
adding additional measures to the domain. A few commenters suggested
adding more care coordination and specialty care constructs to the
patient/caregiver experience domain. One commenter suggested adding the
new CAHPS cultural competence modules. One commenter stated that CAHPS
did not adequately capture the team care experience of an ACO and
suggested adding specific supplemental questions to CG-CAHPS.
Some commenters suggested other modifications to the proposed
approach. One commenter suggested allowing ACOs to incorporate CAHPS
constructs into existing surveys. Another commenter wrote that CMS
should not allow ACOs to use existing experience tools because this
approach would not produce comparable data and suggested that CMS
require all ACOs to use the same, standardized tool, with the same
sampling methodologies. Another commenter suggested a hybrid approach
with some standardized measures but also with some flexibility for ACOs
to replace survey items of no or limited relevance to their practice
with other questions. One commenter recognized the importance of
measures related to patient experience of care but recommended that
they not be incorporated into the performance standard for the first
agreement period. One commenter did not believe patient satisfaction
should be used to assess ACO performance.
A few commenters cautioned CMS that there is limited experience
with the CG-CAHPS tool, making it unfeasible for setting benchmarks
initially and raising possible issues of its reliability and validity
for ACOs. A couple of commenters suggested that survey information not
be used to assess ACO performance until validated. One commenter
recommended that until more proven measures become available, survey
measures should include a ``control group'' of non-ACO FFS
beneficiaries in the ACO's service area and be used for program
monitoring and public information only. One commenter expressed doubt
about whether the timeframe for implementing the survey and using the
results to improve care would be feasible. One commenter stated that
CG-CAHPS was not particularly actionable as many items included would
not be under the control of ACOs and suggested visit-specific questions
be used, such as those in the AMA Patient Experience Survey. A few
commenters stated that CAHPS does not address communication,
environmental factors, resource utilization, patient role in care, care
coordination, or transition quality and suggested additional questions
related to those areas. A few commenters found CAHPS both
administratively burdensome and costly. One recommended CMS adopt a
sampling approach to mitigate these factors, while another commenter
recommended the survey be collected at CMS' expense. One commenter was
concerned about duplicative CAHPS reporting through this program, PQRS
and HCAHPS. Several commenters suggested methods other than CAHPS, or
patient surveys in general, for collecting patient experience data. One
commenter recommended CMS permit the use of other validated
instruments, such as the American Board of Internal Medicine's
condition specific patient surveys. Another commenter expressed concern
that allowing ACOs to choose a survey instrument other than CG-CAHPS
would limit the validity and utility of such data. One commenter
recommended that the survey be tailored to the setting where care was
received such as an inpatient rehabilitation unit or mental health.
Response: We believe the CG-CAHPS is the most appropriate version
of CAHPS for ACOs, given the Shared Savings Program's primary care
focus and the ambulatory care focus of the CG-CAHPS. We note, however,
that our decision to require use of this survey instrument as part of
the quality performance measures does not preclude an ACO from
continuing to use other tools it may already have in place. We do not
think HCAHPS is appropriate as a Shared Savings Program tool at this
time, since not all ACOs will include a hospital. We recognize the
PCMH-CAHPS currently in development may offer modules applicable to
ACOs, so we may consider these modules, when available, in future
rulemaking. While the CG-CAHPS is among the more recently developed
CAHPS surveys, the modules have undergone field testing by a number of
public and private organizations and are endorsed. There are already a
number of users contributing experience with the CG-CAHPS, including
regional collaboratives, member boards of the American Board of Medical
Specialties, and a growing number of individual health plans and
medical groups. In addition, national benchmark data are now available
for the CAHPS Clinician & Group Survey through the National CAHPS
Benchmarking Database. We also believe there is sufficient time to test
the CG-CAHPS for ACO use.
In response to comments recommending that we add a care
coordination and specialty care construct, we intend to add an Access
to Specialists module as we think it is responsive to comments, will
emphasize the importance of specialty care for patients served by the
ACO, and complements our program focus on care coordination and our
monitoring activities to ensure ACOs are not engaged in practices to
avoid at risk patients. It also will align with the two-step
methodology for assigning beneficiaries to ACOs, discussed in section
II.E, of this final rule, which considers primary care services
furnished by providers other than primary care physicians and will
ensure that the CAHPS survey meaningfully assesses patient experience
with ACO providers other than primary care physicians. This would
mitigate the risk of issuing a survey to beneficiaries that does not
necessarily reflect their care experience, which could be perceived as
confusing and/or unduly burdensome.
Thus, we are finalizing the CAHPS modules listed in Table 1 for
quality performance purposes as we believe they offer the best
alternative for ACO patient experience of care measurement at this
point in time. We are not finalizing the Helpful, Courteous, Respectful
Office Staff module proposed for quality performance measurement and
reporting or scoring purposes but note that this module is still a core
part of the CAHPS survey to be collected and we will collect the data
and feedback to ACOs for informational purposes only. We also believe
there is evidence that CAHPS assesses important aspects of provider-
patient interaction that can be influenced by an ACO's level of
organizational support, training and incentive structure. These items
may be combined with existing data in devising appropriate quality
improvement
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interventions as demonstrated by case studies and a guide available on
the CAHPS Web site. We recognize that not all relevant areas of the
patient experience are covered and will consider additional items in
future rulemaking. We are sensitive to the data collection issues
related to the patient experience survey and we have taken the
commenters' implementation strategy suggestions under consideration. We
will also consider the comments regarding adding additional CAHPS
questions in the future. As described in section II.F.3. of this final
rule CMS will fund and administer the survey for the first two calendar
years of the Shared Savings Program, 2012 and 2013.
Comment: A number of commenters asked for clarification or made
other specific comments regarding use of the CAHPS surveys for ACOs.
One of these commenters recommended CMS: Use the six-point response
scale, clarify if only the primary care CG-CAHPS should be used, and
clarify how ACOs might add additional measures not included in the
final measure set. One commenter expressed concern that various CAHPS
tools do not recognize care provided by registered nurses and certified
registered nurse anesthetists. One commenter stated that CAHPS data
could include visits outside the ACO reporting period.
Response: We will consider comments regarding which CAHPS response
scale is most appropriate for the Shared Savings Program and concerns
that CAHPS data could include visits outside the reporting period and
will release detailed instructions subregulatorily, outside of
rulemaking. In response to the request that we clarify whether only the
primary care version of the CG-CAHPS should be used for those modules
from the CG-CAHPS, we note that the core CAHPS items proposed are
identical for the CG-CAHPS primary care and specialty versions. The
shared decision-making module, a supplemental module for both adult
primary care and adult specialty care versions, is also identical in
both versions. However, the health promotion and education module is a
supplemental module from the adult primary care version only. With
respect to the comment recommending that the included CAHPS modules
reflect care furnished by registered nurses and certified registered
nurse anesthetists, we recommend the commenter contact the measure
steward directly with this suggestion.
Comment: Several commenters had varying recommendations about how
the CAHPS data would be collected, including use of a web-based survey
or cloud application and use of both mail and telephone as opposed to
one or the other. A few commenters were concerned that mail and phone
surveys would be unlikely to reach a large number of low-income
beneficiaries with low English proficiency or with disabilities and
urged us to allow on-site patient surveys. One commenter suggested
providing detailed survey guidelines regarding the fielding of the
patient/caregiver experience survey. One commenter noted that survey
results are affected by survey mode and methodology; this commenter
suggested CMS require ACOs to follow clear guidelines for survey
administration in order to make data more comparable. A few commenters
urged CMS to encourage patient surveys to be done by or under the
supervision of the Regional Health Information Collaboratives. One
commenter suggested oversampling to allow ACOs to internally report
individual provider level feedback and to ensure that patients with
chronic conditions, who would have the most ACO contact, are
sufficiently represented. The commenter also suggested not restricting
surveys to Medicare beneficiaries only, similar to HCAHPS. Finally, one
commenter suggested a phased approach to implementing the survey.
Response: Because of these and other comments described in this
final rule, we have decided to pay for the first two years of the
survey in 2012 and 2013. We agree that survey mode and methodology can
affect survey results and believe that, at this juncture, standardized
administration and comparable results will be best achieved through the
use of trained and certified vendors as is done with other CAHPS
surveys administered to the Medicare population. We, too, are concerned
about reaching low-income beneficiaries, as well as beneficiaries with
limited English proficiency, chronic disease, or disabilities and will
take these populations (and other relevant considerations) into account
as we develop the sampling methodology for the CAHPS surveys. We will
review carefully the results of the ACO patient experience of care
survey in 2012 and 2013 to adjust and refine the sampling and/or survey
methodology as we move forward.
We received the following comments regarding proposed measure 7:
Health Status/Functional Status.
Comment: One commenter noted that this measure was appropriate for
a survey item and recommended it be added to the CAHPS instrument. A
few commenters thought patient survey tools should account for primary
care services furnished by providers other than primary care
physicians. A few commenters stated NQF 6, MA-CAHPS, was noted
in the table, but NQF 6 is from the HP-CAHPS. Either way, the
commenters expressed concern that while health status and functional
status have been used for risk adjustment, these constructs are not
currently used for accountability purposes in any pay for performance
initiatives and may have limited value in determining high and low-
performing physician group practices, particularly in small geographic
areas, where patients have more limited choice in selecting providers.
Many commenters advocated for stronger measures of functional status,
including measures outside of CAHPS surveys, to help ensure providers
with a higher proportion of patients for whom a cure is not available
are not punished. A few commenters advocated adding functional status
as a sixth domain. One commenter strongly supported measures of changes
in functional status from admission and discharge but stated that the
proposed measure is not measured from the patient or caregiver
perspective and did not believe it is sufficiently objective. One
commenter recommended development of ways to measure pre- and post-care
health status of patients treated by ACOs.
Response: To clarify our original proposal, we intended to propose
NQF 6. Health Status is intended to be self-reported in order
to adequately represent the patient or caregiver perspective. Patient-
reported outcomes, although subjective, provide valuable information
not captured by other means, and many are well established and widely
used with demonstrated reliability and validity. That said, we will
consider suggestions for alternatives in the future.
We are also finalizing the health status survey as pay for
reporting for all 3 years of the agreement period. While we agree with
commenters that the information is important for improving the overall
health and functioning of a patient population, we also recognize that
it is not currently used for accountability purposes in any pay for
performance. Therefore we will keep the measure as pay for reporting
for the entire agreement period in order for ACOs to gain experience
with the measure and to provide important information to them on
improving the outcomes of the population they serve.
We received the following comments on proposed measures 8. to 23.
Care Coordination.
[[Page 67876]]
Comment: Several commenters wrote in general support of the Care
Coordination measures. One commenter supported the emphasis on care
coordination but did not want this focus to be at the expense of
specialty care. One commenter thought these measures were unclear and
would be difficult to measure. One commenter suggested evaluating the
incidence of ACSC admissions in each ACO. If the frequency of ACSC
admissions in many ACOs is likely to be insufficient for statistical
stability of admission rates, such instability should be considered
before tying performance results to shared savings. One commenter
believed CMS should reduce the number of measures until new and better
care measures for this domain are developed and require reporting only
(not performance) on all measures for the first 3-year agreement.
However, another commenter recommended CMS add new quality measures to
this category that define the responsibilities of both the sending and
receiving provider and measure accountability and performance of these
providers during patient care transitions. One commenter believed the
proposed care coordination measures were inadequate to ensure that
patient care is truly coordinated among providers and settings.
Regarding proposed measures 8-10. Risk-Standardized, All Condition
Readmission; 30 Day Post-Discharge Physician Visit; and Medication
Reconciliation, one commenter believed these measures were all based
primarily on hospital performance and should be dropped. One commenter
appeared to support electronic capture of the 30 Day Post-Discharge
Physician Visit and Medication Reconciliation, but cautioned that only
would be possible for readmissions and discharge visits that occurred
among entities connected to that particular electronic medical record.
Response: We agree that care coordination is an important part of
patient care and that sample size is an important consideration in
measure selection. We also believe that accountability for patients,
including knowledge of services rendered outside of an ACO, is
important for achieving the three-part aim goals previously described.
As a result, we note that all Shared Savings Program quality measures
are intended to measure performance in relation to a defined set of
assigned beneficiaries and not the performance of an individual entity,
such as a hospital. Given the population focus of ACOs and refinements
to the list of ACSC conditions, coupled with the phase in of these
measures for performance, we believe that ACO assigned populations
should be sufficient to reliably measure performance. We may consider
including the additional measures suggested by commenters in the
future.
Comment: Proposed Measure 8. Risk-Standardized, All Condition
Readmission. A few commenters supported inclusion of measure 8 as
proposed, but a few were not supportive. Some noted that this measure
was not NQF-endorsed and that CMS had not provided specifications for
this measure, making it impossible to evaluate the risk adjustment
methodology or the measure exclusions, such as planned readmissions and
transfers. A few commenters noted that there is already a readmission
payment policy, and as a result, hospitals would potentially be
penalized multiple times for the same readmission. Many commenters
expressed support for a readmission measure but several of these
commenters urged CMS to specify the measure to include only unplanned
readmissions for heart attack, heart failure, and pneumonia. However,
one commenter stated that CMS should not adopt the three CMS disease-
specific all-cause readmission measures for heart attack, heart
failure, and pneumonia currently reported to CMS because they leave out
85-90 percent of readmissions. One commenter stated that the proposed
readmission measure lacked clinical credibility and could undermine
quality improvement efforts. This commenter stated that the Affordable
Care Act requires that readmission measures ``have exclusions for
readmissions that are unrelated to the prior discharge'' and argued
that the proposed measure failed to do this. This commenter also argued
that certain readmissions related to the prior discharge are planned
and unavoidable, such as planned chemotherapy. One commenter questioned
how this measure would be used in an ACO context. Another commenter
believed that review of patient medications within 24 hours of
discharge/transition or communication with the patient within 72 hours
of discharge/transition were better measures of care coordination. One
commenter suggested the measure be changed to include readmission or
admission to observation status within 30 days of discharge from an
acute care hospital.
Response: Readmissions is an area in which we believe an ACO's
coordination of care and accountability can have a significant impact
in improving patient care and are finalizing this measure as proposed.
While we recognize concerns that the measure has not been endorsed,
this is one area in which we wish to exercise our discretion to include
appropriate quality measures even if they have not been endorsed. We do
not believe including this measure would be duplicative of any current
readmission payment policy, since ACOs are a new concept and the Shared
Savings Program is a new care model, and since this measure is not
currently utilized in any other CMS quality reporting program. During
the development of the proposed measures, we considered including the
three disease-specific readmissions measures suggested by several
commenters, but did not propose these measures for the reason another
commenter noted: These types of readmissions represent only a small
percentage of all readmissions. We recognize that certain readmissions
are planned, unavoidable, and even advantageous to the patient, and
will consider this prior to releasing specifications for this measure.
That said, we also note that this measure has been under development
and that finalization of this measure is contingent upon the
availability of measures specifications before the establishment of the
Shared Savings Program on January 1, 2012. We are also finalizing the
measure as a pay for reporting measure for the first two years of the
program to allow more time for ACOs to gain experience with the measure
and to redesign care processes to improve outcomes and reduce avoidable
readmissions.
Comment: Proposed measure 9. 30-Day Post Discharge Provider Visit.
One commenter suggested this measure could be captured through claims
data, rather than through the GPRO web interface. A few commenters
believed this measure should not only pertain to ACO providers. One
commenter believed the 30-day period was too long and that a 5-7 day
follow-up was necessary to avoid readmissions.
Response: We have decided not to include the measure at this time
in response to comments regarding duplicity and reporting burden, as
the medication reconciliation measure we are finalizing includes both
the act of post-discharge medication reconciliation and a post-
discharge provider visit. However, we would like to clarify the
original proposal to collect this measure through the GPRO web
interface rather than via claims data. In our proposed measures set
development process, we concluded that although claims data would
capture many post discharge visits, the GPRO web interface
[[Page 67877]]
would allow visits not discernable from claims, such as those that may
be included in a bundled hospital payment, to be included in this
measure. Although we are not finalizing the measure at this time, we
will consider the comments received and revisit the appropriateness of
adding this measure at a future time during future rulemaking.
Comment: Proposed measure 10. Medication Reconciliation. Several
commenters commended including medication reconciliation in the measure
set. One commenter stated that the 60-day time frame post-
hospitalization appears to be a typographical error as NQF Measure
554 calls for a 30 day timeframe. One commenter recommended
variations of the proposed measure, because the proposed measure is a
self-reported, unidirectional measure. Another commenter proposed a
self-reported adherence assessment measure should be included as well
as measures that identify other barriers to medication adherence. This
commenter also believed medication behavior assessment should not be
limited to post-discharge but would also be indicated for all patients
on chronic maintenance therapy, particularly those with diabetes,
hypertension, coronary artery disease, or heart failure. A few
commenters recommended that discharges from inpatient rehabilitation
hospitals and units, long term care hospitals, skilled nursing
facilities, and any of the multiple post-acute care outpatient settings
be included in the final rule. One commenter stated this measure should
include verification that medication reconciliation was conducted and
documented prior to hospital discharge. A few commenters recommended a
more limited time frame to avoid complications and readmissions; one
mentioned a 3-7 day range. A number of commenters recommended deferring
the introduction of this measure until EHRs are fully implemented and
this measure can be captured electronically. One commenter recommended
clarification that the medication reconciliation should be documented
in a medical record rather than be a medication claim.
Response: The commenter that pointed out the error in the proposed
rule is correct. NQF 554 is a 30 day post discharge medication
reconciliation measure rather than a 60 day measure as we indicated in
the measure description (76 FR 19572). The correct NQF number for the
60 day measure that we proposed is NQF 97. Accordingly, in
this final rule, we are adopting NQF 97, the 60 day measure,
in an effort to align with PQRS. Since this measure would be collected
through the GPRO web interface, which will have ability to both accept
manual data uploads and interface with an EHR as described in section
II.F.4.b. of this final rule, we do not think this measure needs to be
deferred until there is greater EHR implementation in the provider
community. We recommend commenters direct comments regarding
alternative time frames, care settings and other deviations from the
endorsed specification to the measure steward. We will consider the
other suggested medication-related measures and propose them through
future rule making if appropriate.
Comment: Proposed measure 11. Care Transitions. One commenter
generally endorsed measures related to transition plans of care, while
others specifically endorsed this measure. One commenter recommended
that this measure be eliminated as it is already captured via CAHPS,
while another cautioned against adoption of any measure that requires
chart abstraction. Another commenter expressed concern that this is not
an objective measure and lacks evidence it improves outcomes. A few
commenters requested that CMS clarify whether this is a survey measure
or reported through GPRO. One commenter suggested CMS consider other
care coordination measures that assess whether: the patient received a
reconciled medication list upon discharge, the patient received a
transition record with specified information, and the transition record
was transmitted to the receiving provider in a timely manner.
Response: We are not finalizing this measure at this time in an
effort to be responsive to comments about reporting burden. We
recognize this measure is typically collected within 48 hours to six
weeks after discharge via phone or mailed survey. In exploring options
for operationalizing this measure in an ACO context, we recognize that
it would be difficult to require this measure for an ACO that does not
have a hospital, as it could require substantive infrastructure,
education, and development to have an ACO disseminate the survey
questions to patients timely post-discharge and report the results to
CMS. Nevertheless, we continue to believe that assessing care
coordination, and in particular care transitions, is an important
aspect of evaluating the overall quality of the care furnished by ACOs.
One way we will do this is by including an access to specialists module
in the CAHPS survey as previously described. We also intend to continue
exploring ways to best capture ACO care coordination metrics as
suggested, including the proposed measure, and will consider adding new
care coordination measures for future years.
Comment: Proposed measures 12-18. Ambulatory Care Sensitive
Conditions Admissions. Several commenters expressed concern about the
use of various AHRQ Prevention Quality Indicators (PQIs) for the
Ambulatory Care Sensitive Conditions (ACSC) Admissions measures as
these are designed as screening tools rather than quality measures and
are not adequately risk-adjusted. A few of these commenters thought the
PQIs might be useful for monitoring but not for inclusion in
performance scores, since they could inadvertently drive
underutilization. One commenter suggested evaluating the incidence of
ACSC admissions in each ACO and if the size of many ACOs' enrollment is
insufficient to assure that these measures are statistically stable,
such instability should be considered before tying performance results
to shared savings. One commenter suggested developing a methodology to
address how measures for ACOs with small eligible populations (for
example N<30) can be reliably and fairly scored. Two commenters
recommended we consider consolidating measures with small sample sizes
into one measure at least for scoring purposes. One commenter believed
beneficiary compliance to be outside the provider's control and
recommended that CMS monitor these measures rather than include them in
the performance score.
One commenter supported the intent of ACSC: Congestive Heart
Failure (proposed measure 15) but stated there are technical issues
with the measure in that it may not accurately capture patients with
CHF. This commenter urged CMS to remove monitor implementation of this
measure to ensure its reliability. We did not receive any comments on
ACSC: Dehydration (proposed measure 16). One commenter wrote in support
of ACSC: Bacterial Pneumonia (proposed measure 17). Another commenter
stated that ACSC: Bacterial Pneumonia assumes that administrative
claims can identify preventable cases of pneumonia, fails to recognize
that the pneumonia vaccine has limited effectiveness, and does not
adjust for regional differences in patient and environmental
characteristics associated with risk for pneumonia. One commenter wrote
in support of ACSC: Urinary Infections (proposed measure 18).
[[Page 67878]]
Response: We note that the AHRQ PQIs for Ambulatory Care Sensitive
Condition admissions are well-established as indirect measures of
access to and performance of timely and effective primary care
services. That is, timely and effective care for managing patients'
chronic conditions should result in fewer hospital admissions for these
admissions. These were among the measures recommended by major provider
groups in Listening Sessions conducted by CMS to inform the rule-making
proposals. We recognize the commenters' risk adjustment concerns and
believe that the adjustment for age and sex included in these measures
establishes a fair baseline for comparing ACO performance to national
benchmarks, so that both very high and very low rates can be
investigated. The ACSC admissions represent common conditions among
Medicare FFS beneficiaries, but we recognize the concern of small
numbers of admission events. We have accounted for this concern in our
selection of final ACO quality measures to include those PQIs that we
believe are most important as indicators of ACO care coordination and
remove those that we believe are still important but may have sample
size issues or are less central to ACO goals. We are not finalizing the
following ACSC measures for quality performance purposes but may still
consider calculating them from claims for monitoring and informational
purposes: diabetes, short-term complications (proposed measure 12);
uncontrolled diabetes (proposed measure 13); dehydration (proposed
measure 16); bacterial pneumonia (proposed measure 17); and urinary
infections (proposed measure 18). We are finalizing the ACSC measures
for COPD (proposed measure 14) and heart failure (proposed measure 15).
Once we have actual ACO performance data on the measures, we will
review again to determine if sample size is truly an issue in the ACO
context and will address in the future if needed. We suggest that
commenters contact the measures steward directly regarding any
technical issues identified with these measures. Finally, we do not
believe it would be appropriate to combine measures with small sample
sizes into one measure, as one commenter suggested. Such combination
would require further testing and coordination with the measures
steward. Additionally, we are unclear how an ACO could take action
based on a consolidated ACSC measure score that does not distinguish
between types of ACSC events.
Comment: Proposed measures 19-23. Care Coordination/Information
Systems. One commenter wrote in support of all 5 of these measures.
Another recommended CMS require ACOs to implement the use of electronic
medical records as soon as practicable. Many commenters wrote in
support of a single measure of EHR program participation, such as
proposed measure 19. Percent of all Physicians Meeting Stage 1
Meaningful Use Requirements or proposed measure 20. Percent of PCPs
Meeting Stage 1 Meaningful Use Requirements. A number of commenters
recommended removing these measures for a variety of reasons. A few
commenters recommended CMS remove these measures or collect them only
for monitoring purposes because they are structural measures and not
necessarily accurate indicators of quality performance. Another
commenter echoed this recommendation and added that the incentive
should not be based upon the tools or processes used by an ACO but
rather the outcomes achieved by the ACO. A few commenters stated that
adoption of health information technology is already the subject of
penalties and incentives under the EHR Incentive Program and including
these measures for the Shared Savings Program is redundant. A few
commenters believed it unfair to penalize ACO providers for not meeting
meaningful use in advance of the penalty phase of the EHR Incentive
Program. One of these commenters noted that these measures are not core
measures for the EHR Incentive Program and meeting the proposed
requirements would be feasible only for ACOs that already have
experience with a robust EHR. One commenter believed certain EHR
Incentive Program measures were susceptible to inaccurate reporting,
such as whether medication reconciliation is performed.
A few commenters recommended proposed measures 19 (Percent of All
Physicians Meeting Stage 1 Meaningful Use Requirements) and 20 (Percent
of PCPs Meeting Stage 1 Meaningful Use Requirements) be dropped or that
CMS should exempt specialists. One commenter thought Stage 1 Meaningful
Use measures made it difficult for specialists to achieve meaningful
use, while another objected to requiring specialists to report on
primary care-based measures. One commenter asked CMS to consider how
specialists, who are permitted to contract with multiple ACOS, would be
able to communicate electronically across various ACOs, who may be
using different EHRs that are not interoperable. One commenter
requested that the ACOs' EHR-related measures not be limited to the
categories of providers designated as EPs under Stage 1 of Meaningful
Use.
A few commenters requested clarification of the definition of
clinical decision-support in proposed measure 21 (Percent of PCPs Using
Clinical Decision Support), and one commenter urged CMS to include
cardiovascular imaging decision support tools in the measure. Proposed
measure 22 (Percent of PCPs who are Successful Electronic Prescribers
Under the eRx Incentive Program) and proposed measure 23 (Patient
Registry Use) each received one comment of support.
Response: We considered these comments in finalizing our measures
set and have decided to finalize only proposed measure 20 and expand it
to include any PCP who successfully qualifies for an EHR Incentive
Program incentive rather than only including those deemed meaningful
users. One reason for retaining this measure is that we believe it is
important to encourage EHR adoption as a means for ACOs to better
achieve the goals of the three-part aim, recognizing that some
organizations may currently be achieving better quality outcomes using
EHRs, even if they are not yet considered ``meaningful users,'' than
organizations that have not yet adopted such technology. To this end,
we recognize that first-year Medicaid EHR Incentive Program
participants can earn an EHR incentive for adopting, implementing, or
upgrading an EHR, and do not need to be ``meaningful users'' in order
to earn an incentive, and would like to include such EHR participants
in this measure. A second reason for retaining this measure but not
proposed measure 19, percent of all physicians meeting Stage 1 HITECH
Meaningful Use Requirements, is that we recognize some ACOs may be
comprised of PCPs only. An ACO's score on proposed measures 19 and 20
would be the same if the ACO is only comprised of PCPs. As a result,
the use of both measures could be considered redundant. The third
reason for finalizing proposed measure 20 with modification is that it
is a structural measure of EHR program participation that is not
measured in any other program, and therefore is not duplicative of any
existing measures. In addition, CMS can calculate the measure based on
data already reported to the EHR Incentive Program, such that no
additional reporting would be required by ACOs other than what EPs have
already reported. Overall, we believe relaxing this measure definition
is more inclusive and promotes
[[Page 67879]]
participation, while still signaling the importance of healthcare
information technology (HIT) for ACOs.
Regarding the decision not to finalize the other proposed Care
Coordination/Information Systems measures (that is proposed measures
21-23), we have removed these measures based on commenters'
recommendations and in an effort to pare down the proposed measures set
to those measures that will have the most impact and are most aligned
with ACO goals. Our intent is to align the Shared Savings Program
measures with the EHR Incentive Program measures, however since we are
not incorporating the EHR Incentive Program or eRx Incentive Program
incentives under the Shared Savings Program, as discussed in section
II.F.5. of this final rule, we have decided not to finalize EHR and eRx
structural measures that may be considered redundant. For instance, we
recognize that some ACOs may be comprised predominantly of primary care
physicians, which would make proposed measure 19 largely redundant of
proposed measure 20.
In response to the comment on proposed measure 21. Percent of PCPs
Using Clinical Decision Support, to clarify, the measure proposed was
an EHR Incentive Program core measure for clinical decision support. We
have removed this measure from the final set, since it is included in
the meaningful use requirements and could be considered redundant. Some
of the EPs who successfully qualify for an EHR incentive payment are
meaningful users of HITECH, and clinical decision support is one of the
requirements to be considered a meaningful user. Similarly, we did not
finalize proposed measure 22 (Percent of PCPs who are Successful
Electronic Prescribers Under the eRx Incentive Program), since EPs
cannot earn both an eRx Incentive Program incentive and a Medicare EHR
Incentive Program incentive. As a result, any measures that reflect
successful incentive qualification for the eRx and Medicare EHR
incentives would conflict with one another. In addition, we believe
there is some redundancy between proposed measures 21 and 22 with
proposed measure 20. Percent of PCPs Meeting Stage 1 Meaningful Use
Requirements, since clinical decision support and electronic
prescribing are part of the meaningful use criteria included in
proposed measure 20., which we are finalizing with minor modifications
as previously described.
We are not finalizing the Patient Registry Use measure (proposed
measure 23), since it is not a required, ``core'' measure in the EHR
Incentive Program's meaningful use criteria. We have concerns that, by
requiring this measure, we will inadvertently provide an incentive for
ACOs to make an optional, EHR Incentive Program ``menu set'' measure a
``core'' measure for their ACO providers/suppliers who are EPs. We also
recognize that patient registry use is fundamental to measuring,
improving and reporting quality measures so we expect that most, if not
all, ACOs will have some form of patient registry use already in place
to support quality measurement and improvement activities. As a result,
we believe this measure is unlikely to provide an incentive for more
widespread adoption of EHRs or registries or improved ACO performance.
Comment: Proposed measures 24. Health Care Acquired Conditions
Composite and 25. CLABSI Bundle. One commenter endorsed measures
related to hospital-acquired conditions and patient safety, but many
commenters stated that hospital-based measures should be removed or
were not applicable to ACOs that do not include hospitals as ACO
participants. One commenter stated that the information exchange
required would generally not be in place for ACOs without hospitals,
and another thought these measures were duplicative of IPPS reporting.
Others stated that hospitals were already being held accountable
through the hospital value-based purchasing program and that, in many
markets, an ACO simply wouldn't have the ability to impact the various
hospitals where an ACO's members might receive treatment. Commenters
proposed various alternatives: That ACOs without hospitals be exempted
from reporting on these measures; that hospital measures be made
voluntary; that these be dropped completely; or that we use process
measures that are already widely used in the hospital value-based
purchasing program until true population-based outcomes measures are
available. Several commenters expressed concern about including the HAC
composite but supported inclusion of the CLABSI bundle until better ACO
patient safety measures are developed. One commenter thought it
duplicative to have two different measures of central line infections
and preferred the CLABSI bundle as a more reliable and valid measure.
Regarding the proposed method of data submission, one commenter noted
the difficulties of using claims data to accurately detect healthcare
acquired conditions and supported the CDC National Healthcare Safety
Network (NHSN) surveillance data as a more reliable source. One
commenter recommended CMS apply the recently released regulations
specifying that state Medicaid programs may use more comprehensive
approaches to payment adjustment to ACOs. One commenter stated some
hospital acquired conditions can be reduced but not eliminated and
programs that expect elimination may cause providers to avoid caring
for high-risk patients and recommended identification of evidence-based
exceptions, development of alternative systems to encourage providers
to adopt processes to reduce HACs, and systems to measure process steps
taken.
Proposed measure 24. Health Care Acquired Conditions Composite. A
few of commenters wrote in support of this measure; one recommended CMS
only score the measure on an ``all or nothing'' basis to eliminate
rewards for preventable medical errors. One commenter argued that
measurement alone would motivate improvement as long as scores are
transparent and visible. Another commenter recommended this composite
only be used for monitoring and not for performance scores.
Many commenters expressed concerns about including the HAC
composite, most commonly on the grounds that it is untested or because
it is a hospital-based measure. A few commenters stated that the
proposed composite HAC measures lack clarity and do not provide useful
or timely information to improve performance. These commenters were
concerned about the measure being a compilation of nine CMS HACs
combined with an AHRQ Patient Safety Indicator which is itself a
composite of eight measures, some of which are only slightly different
from other proposed components (for example pressure ulcers and
decubitus ulcers are both included). These commenters were concerned
about how risk adjustment would be handled in this composite, since
sicker patients are at higher risk for HACs. These commenters were also
concerned that the data could be submitted from either administrative/
claims data or NHSN and that the resultant measure including both
sources has not been validated. These commenters recommended that CMS
use the HAC measures individually as separate measures and not a
composite as currently defined in the Hospital Inpatient Quality
Reporting Program; use CLABSI from NHSN with data submitted as a
separate patient safety measure; and delete AHRQ PSI 90 since
it overlaps with several HAC measures and imposes redundant,
duplicative effort. Another commenter
[[Page 67880]]
with similar concerns recommended inclusion of the first five HAC
measures along with additional NQF measures such as, patient death or
serious injury associated with medication errors, or failure to follow
up on or communicate clinical information as soon as practicable.
Commenters were also concerned that: the complexity and lack of
validation for the composite would discourage organizations or groups
from participation; risk adjustment is needed since sicker patients
have a greater chance for these events; and many of the HACs are low-
incidence complications that have not been tested for rate-based
comparisons. One commenter opposed the inclusion of accidental puncture
or laceration and iatrogenic pneumothorax, arguing that including
measures for rare complications is ineffective and may result in
unintended consequences. This commenter stated that it is difficult to
identify statistically significant differences rather than random
variation in the data and raised concern that measuring such rare
events could drive increased use of less safe procedures such as
femoral catheterization. A few commenters recommended this measure be
used for monitoring and not be used as part of the performance score.
One commenter stated that there are ambiguous coding guidelines
regarding inadvertent laceration or puncture not considered to be
accidental (for example serosal tears) and recommended CMS field test
patient safety measures prior to adopting them for the Shared Savings
Program. Another commenter noted that the proposed ACO HAC Composite
includes CLABSIs rather than vascular catheter-associated infections,
consistent with reporting requirements in the Hospital Inpatient
Quality Reporting program. However, this commenter urged CMS to further
align measurement requirements and use CLABSIs across programs in order
to reduce duplicative reporting burden and to support the use of what
the commenter believed to be superior quality data.
A few commenters noted that proposed measure 25. Health Care
Acquired Conditions: CLABSI Bundle is the CDC National Healthcare
Safety Network (NHSN) process measure of central line insertion
practices and questioned how it would be possible to measure this based
on claims data. The commenters stated that the measure is very labor
intensive, and is not in widespread use even in NHSN, which means there
are minimal baseline data. The commenters recommended that this measure
not be included given the lack of baseline data, the labor intensity of
the required chart abstraction, and the number of proposed ACO quality
measures. Another commenter preferred this measure over the proposed
HAC Composite.
Response: Medical errors are a major source of morbidity and
mortality in the United States, and patient safety initiatives that
reduce the number of these events are a critical focus for CMS and the
Department. However, we recognize that not all ACOs will have
participating hospitals, but, for those ACOs that do have hospitals, we
do not believe this approach is duplicative of hospital value-based
purchasing program efforts, which calculate such measures at a hospital
patient population level and not at an ACO assigned beneficiary
population level. We also recognize that some HACs may be reduced but
not eliminated, as one commenter noted. Reporting remains an important
issue for effectively tracking health care acquired conditions.
Measuring ACO performance on HACs would potentially serve as an
incentive to improve reporting. We agree many of the hospital acquired
conditions are rare events and proposed the composite in an effort to
produce a larger, more meaningful sample size, since ACOs will have
smaller populations and even fewer events than would a hospital.
However, we recognize there are challenges with combining claims and
surveillance-based measures that have different calculation
methodologies into one measure. There are also challenges with using
hospital-reported measures based on aggregate, all payer data, as is
the case with measures reported to the NHSN, particularly for ACOs that
do not include hospitals. Upon further consideration of our proposal,
we agree with the suggestion that, if these measures were to be
finalized, we should break out the components and score the measures
individually. We recognize there are operational complexities combining
endorsed measures that reflect different population bases and have
different timeframes, data sources and risk adjustment methodologies.
In addition, we realize that combining these measures may result in a
larger number of incidents in the measure numerator, due to the larger
sample size, but may not result in more meaningful information for an
ACO. That is, in combining the HACs into one measure, the ACO cannot
discern which HACs are of concern and which are not, whereas measuring
the HACs individually would provide such information.
That said, we have decided not to finalize these measures at this
time. However, we may consider claims-based HAC measures that can be
calculated at an ACO assigned beneficiary population level for quality
monitoring purposes, regardless of whether an ACO includes a hospital.
That is, we would determine from claims whether any ACO-assigned
beneficiaries who had been hospitalized (regardless of whether the
hospital is an ACO provider/supplier) experienced a HAC. We believe the
approach of considering claims-based HAC measures that can be
calculated at a patient level emphasizes the importance of monitoring
HACs among an ACO's assigned beneficiary population but eliminates
reporting burden and operational complexity, particularly for those
ACOs that do not include a hospital. We would not calculate the CLABSI
Bundle, even for monitoring purposes, at this time as this measure can
only be calculated from NHSN surveillance data, as one commenter
clarified. Since NHSN data are hospital-reported, all-payer data, we
are unclear at this time how to translate such data to a Medicare FFS
ACO population, particularly when ACOs do not include a hospital.
However, we will continue exploring how to leverage NHSN data in the
Shared Savings Program.
Comment: Proposed measures 26-34. Preventive Health. A few
commenters wrote in general support of preventive care measures while
one commenter recommended that all preventive health measures should be
dropped until they can be studied further. One commenter suggested CMS
work with CDC to add additional prevention measures as the program
matures.
Response: We believe preventive health is critical to reducing
chronic, costly conditions, and that primary care is critical to the
ACO model of care. As a result, we believe it is important to retain
preventive health quality measures in the Shared Savings Program.
However, we will monitor these measures and work with the measures
community in an effort to ensure we are using the most appropriate,
high impact measures.
Comment: Proposed measures 26 and 27. Influenza Immunization and
Pneumococcal Vaccination. Several commenters wrote in support of one or
both of these measures particularly given the burden of death, disease
and high cost care resulting from pneumococcal disease and influenza
among the elderly. One commenter stated that these measures are not
geared towards population health and should be removed. One commenter
recommended that providers not be penalized for vaccine shortages.
Another commenter recommended
[[Page 67881]]
deferring introduction of these measures until EHRs are in widespread
use because vaccine administration would be difficult to document if
the vaccine was received outside of the ACO. Another commenter noted
the burden of using EHR data to populate GPRO and suggested CMS instead
consider the survey-based measure from NCQA HEDIS, which could be added
to the CG-CAHPS. One commenter suggested updating the pneumococcal
vaccination measure to include the new ACIP recommendations for
pneumococcal vaccine for patients age 5-64 that have a high-risk
condition.
Response: We believe vaccinations are important to population
health, particularly in the Medicare population, and are finalizing the
proposed measures with minor modification as discussed later in this
final rule. The Advisory Committee on Immunization Practices of the
Centers for Disease Control and Prevention states effectiveness
estimates for vaccines range from 50 percent to 80 percent for
prevention of pneumonia among immunocompetent older adults and adults
with various underlying illnesses.\2\ The CDC has also shown that
elderly citizens vaccinated against influenza have reductions in the
rates of hospitalization and death from influenza, as compared with the
rates in unvaccinated elderly persons. These measures were not intended
to penalize providers in cases of vaccine shortages. Commenters should
contact the measures stewards regarding such concerns.
---------------------------------------------------------------------------
\2\ Centers for Disease Control and Prevention. Influenza and
Pneumococcal Vaccination Levels Among Adults Aged greater than or
equal to 65 Years--United States. MMWR 1998 Oct 2; 47(38); 797-802.
---------------------------------------------------------------------------
The CAHPS questions relevant to health care services are intended
to assess the patient's experience with care furnished in the ACO
rather than whether the ACO providers are actively tracking
immunization status. Since ACOs are charged with better coordinating
and improving care, we believe these immunization measures should be
ACO-reported not patient-reported. Our ACO GRPO reporting process uses
patients' claims data to the extent that they are available when
calculating the measure, thus reducing the burden on providers for
reporting on their population while allowing the ACO to update the
numerator with information from its clinical or administrative systems,
such as patient-reported information.
Additionally, in response to other comments requesting that we
align measures with those used in PQRS and the EHR Incentive Program,
as discussed in section II.F.5. of this final rule, we have finalized
the pneumococcal vaccination measure to reflect NQF 43 instead
of 44. Both measures have the same denominator population--
patients over the age of 65--and reflect the same outcome, whether
pneumococcal vaccination was obtained in the previous 10 years;
however, we believe NQF 43 offers an advantage to ACOs over
NQF 44 in that a provider collects NQF 43 through
discussion with the patient, whereas NQF 44 requires medical
chart abstraction. Because of the level of effort required to obtain a
10 year chart abstraction (for purposes of NQF 44), the
decision was made to use NQF 43, which can be collected at the
point of care during a current patient visit and reported
electronically through the GPRO web interface. We believe the use of
this measure would help address the general comments regarding
reporting burden and would align with quality measures used in other
programs, such as PQRS.
Comment: Proposed measure 28. Mammography Screening. Several
commenters noted that this measure was not aligned with professional
guidelines that do not support routine mammograms for women 40-49 and
recommended shared decision making between woman and provider. Some of
these commenters also noted that guidelines recommend screening for
women until age 74, not 69 as proposed. One commenter favored inclusion
of women 40-49 but stated that the upper age limit should be at 5 years
of life expectancy. One commenter stated that this measure should be
eliminated because it has potential for the unintended consequence of
interfering with a woman's right to refuse mammography until age 50, by
measuring the quality of an ACO's care based on whether she received
biennial exams starting at 40. One commenter thought the measure should
begin at age 40, since this age is included in health plan coverage and
as a measure of provider counseling given to the woman. Another
commenter recommended that this measure be excluded because the
denominator population (women, 40-69 years of age) is comprised
primarily of patients who are not Medicare beneficiaries.
Response: We are finalizing the measure as proposed. The proposed
measure follows guidelines established by NCQA and endorsed by NQF. We
recognize that the age 40-49 category applies to a small percentage of
Medicare beneficiaries, however early detection allows women to obtain
timely treatment and potentially lead a longer, healthier, life. We
believe early preventive health is important for deterring many of the
chronic conditions and illnesses more prevalent later in life that are
more specific to the Medicare population. Additionally, this age range
aligns with preventive health measures with similar age ranges used in
other CMS quality programs. We also appreciate the recommendation to
extend the age range to 74, however the current measure specification
is for years 40-69. We expect that the specifications for the endorsed
measures may be updated to reflect the change in clinical guidelines,
at which time we would also adopt such specifications.
Comment: Proposed measure 29. Colorectal Cancer Screening. We did
not receive any comments on this proposed measure.
Response: We will finalize this measure as we believe colorectal
cancer screening is an important component of preventive health in the
Medicare FFS population.
Comment: Proposed measure 30. Cholesterol management for Patients
with Cardiovascular Conditions. One commenter wrote in support of this
measure.
Response: We note that the correct title of the measure
corresponding with the NQF number proposed (NQF 75) is:
Ischemic Vascular Disease: Complete Lipid Profile and LDL Control <100.
We have finalized this measure to reflect the correct title and also
added an Ischemic Vascular Disease subcategory in the At Risk
Population domain. This measure also aligns with other cardiovascular
disease prevention initiatives that are priorities for CMS, CDC, and
HHS, such as the Million Hearts initiative.
Comment: Proposed measure 31. Adult Weight Screening and Follow-up.
One commenter expressed concern that this was a process measure that
does not measure actual weight management.
Response: We believe the processes of weight and BMI screening and
follow-up are important steps for preventing and reducing obesity and
complications related to other chronic conditions in which weight plays
a factor. BMI measurement can also be considered an intermediate
outcome, since BMI can be used to monitor patients' progress with
respect to weight reduction as well as weight gain that can exacerbate
chronic conditions. Therefore, we are finalizing this measure.
Comment: Proposed measure 32. Blood Pressure Measurement. One
commenter stated that a measure of the percentage of patients with
uncontrolled blood pressure did not represent a best practice of care.
A few commenters
[[Page 67882]]
questioned the meaningfulness of this measure; one urged CMS to go
beyond structure and process measures to measures that solidly address
clinical appropriateness and overuse. One commenter suggested deleting
this blood pressure process measure, because we also proposed a blood
measure level measure.
Response: Blood pressure measurement for patients with diagnosed
hypertension is a best practice according to clinical guidelines;
however the measure community recognizes the high rate of compliance
and the need for even greater quality improvement. We agree with the
suggestion to remove this measure, since the AMA-PCPI is retiring this
measure (NQF 13), and because it is similar to proposed
measure 58. Hypertension: Blood Pressure Control (NQF 18).
However, we believe blood pressure measurement is an important
preventive health measure and therefore have included ``Proportion of
adults 18 years and older who have had their BP measured within the
preceding 2 years,'' in the final measures set, consistent with the
measure that has been proposed for the PQRS for 2012. The measure we
are finalizing also aligns with the Million Hearts Initiative and blood
pressure measurement standards of care recommended by the USPSTF and
the Joint National Committee on Prevention, Detection, Evaluation, and
Treatment of High Blood Pressure. We believe this measure is more
appropriate for the Preventive Health domain of the Shared Savings
Program than the measure proposed as it is a quality measure intended
for patients without diagnosed hypertension whereas the proposed
measure was intended for BP management for patients with diagnosed
hypertension. Similar to the proposed measure, the measure we are
finalizing targets a Medicare FFS population age 18 and older, requires
two face-to-face provider encounters for assigned patients, and would
be reported via the GPRO web interface.
Comment: Proposed measure 33. Tobacco Use Assessment and Tobacco
Cessation Intervention. Several commenters wrote in support of the
tobacco use measure. One commenter proposed use of NQF Measure
27 as a stronger measure of cessation efforts. One commenter
questioned the fairness of holding ACOs responsible for patients who
might choose to continue using tobacco. One commenter expressed concern
that this measure could be gamed and suggested excluding or modifying
the measure. One commenter recommended replacing this measure with PQRS
measure 226.
Response: Tobacco use is harmful to patient health, but among
diabetics, it is particularly dangerous as it increases the risk of
complications, and we are therefore including this measure in the final
set. To substantially lower the risk for cardiovascular and stroke
events, it is critical that the specified tobacco use assessment and
cessation goals are achieved. This quality measure aims to encourage
even greater engagement by physicians and their patients in achieving
tobacco free status. We recognize the potential for gaming and will
monitor this measure closely, for instance, through the GPRO audit and
validation process described in section II.F.4.b. of this final rule.
We will consider suggestions for other measures in the future. We also
note that at the time of our proposed rule the PQRS measure number was
``TBD'' and has since been numbered 226; thus, the measure we proposed
and are including in the final measure set for the Shared Savings
Program is the same measure used by PQRS.
Comment: Proposed measure 34. Depression Screening. A few
commenters wrote in support of the depression screening measure. One
commenter stated that this measure would require significant changes in
primary care workflow, even though it has not been linked with improved
chronic disease outcomes in clinical trials. One commenter recommended
modifying the measure to incorporate elements of NQF 17 that
specify screening, monitoring, and reassessment with the Patient Health
Questionnaire. One commenter recommended CMS replace this measure with
other measures or expand it to include other mental health assessment
tools. Another commenter stated that while several useful tools are
available in the public domain, many lack standardization of scoring
and data collection modalities, or lack sufficient normative data and
condition-specific benchmarks useful for interpreting health scores and
reducing interpretation bias. In addition, the commenter stated, many
publically available health measures lack culturally validated
translations for non-English speaking patients.
Response: We disagree with the comment that depression screening
has not been linked to improved chronic disease outcomes in clinical
trials. In a systematic review of the evidence, the USPSTF concluded
that depression screening significantly improves patient outcomes.
(http://www.ncbi.nlm.nih.gov/books/NBK36406/) Another study found that
the presence of depression is associated with reduced compliance with
treatment.\3\ Because patients in whom depression goes unrecognized
cannot be appropriately treated, systematic screening has been
advocated as a means of improving detection, treatment, and outcomes of
depression. As a result, we are finalizing this measure in order to
encourage ACOs to adopt system changes that ensure timely
identification and adequate treatment and follow-up if needed. Since
the NQF 17 measure suggested is Hypertension Plan of Care we
believe the commenter was actually referring to NQF 712,
Depression Utilization of the PHQ-9 Tool.
---------------------------------------------------------------------------
\3\ DiMatteo MR, Lepper HS, Croghan TW. Depression is a risk
factor for noncompliance with medical treatment: meta-analysis of
the effects of anxiety and depression on patient adherence. Arch
Intern Med. 2000 Jul 24;160(14):2101-7.
---------------------------------------------------------------------------
Comment: Proposed measure 35. Diabetes Composite (all or nothing
scoring) and 52. Coronary Artery Disease (CAD) Composite (all or
nothing scoring). A few commenters wrote in support of these measures.
A few commenters stated opposition to scoring these measures in an
``all-or-nothing'' manner. Other commenters cautioned against use of
both the composite measures and counting the components of the
composite as individual measures because of resultant ``double
counting.'' A few commenters recommended using only the individual
measures to allow ACOs to target processes for improvement but others
recommended retaining only the composite.
A few commenters recommended CMS replace the diabetes composite
measure proposed with NQF measure 0729 and use the
specifications for measure 0729 for proposed measures 36-39
and 41. One commenter recommended CMS include microalbumin screening in
the diabetes composite measure as well as an individual measure. One
commenter questioned the fairness of holding ACOs responsible for
patients who might choose to continue using tobacco, under the diabetes
composite. One commenter recommended replacing either the diabetes or
CAD composites with the Optimal Vascular Care Composite (NQF
0076).
Response: To clarify, the diabetes composite measure proposed is
the Optimal Diabetes Care composite, NQF 0729, as one
commenter suggested. At the time of the proposed rule, this measure was
pending NQF endorsement. As a result, we proposed similar NQF numbers
for the components of this composite to provide the public the
opportunity to review and comment on similar and/or
[[Page 67883]]
related component measures. Since the time of proposed rulemaking, the
measure has been endorsed and numbered 0729. We also note this
composite is currently NQF-endorsed with 5 components, of which
microalbumin screening is not included, so we advise the commenter that
supported inclusion of this measure to contact the measure steward
directly about the addition of other components. Although we appreciate
that there are concerns about all-or-none scoring, there are also
advantages. For instance, AMA-PCPI states that the ``all-or-none method
is the most patient-centric approach and provides the most
opportunities for improvement, especially if the individual components
are reported out separately.'' (http://www.ama-assn.org/resources/doc/cqi/composite-measures-framework.pdf)
We also understand concerns about the redundancy of scoring both
the composites and individual measures and are finalizing the proposed
diabetes and CAD composites, with modification to the CAD composite as
described later in this final rule, and are not finalizing the
individual proposed measures that were also within the proposed
composites, consistent with the AMA-PCPI statement cited previously.
However, we will report back to ACOs their results on individual
measures within the composites in addition to their overall composite
measure score. We believe the diabetes and CAD composites raise the bar
for diabetes and CAD care, consistent with Shared Savings Program goal
of improving quality of care, by providing an incentive for ACOs to
ensure that a number of important care processes are performed for
diabetic and CAD patients, and that appropriate outcomes are achieved.
In contrast, the individual measures would award points if only some of
the processes are performed and some outcomes are achieved. We
recognize the concern about holding ACOs accountable for patient
choices such as continued tobacco use. However, since tobacco use
causes greater complications among diabetics, we believe the tobacco
use component of this composite measure will incentivize greater
provider involvement in smoking cessation counseling.
Comment: Proposed measures 35 and 39. Diabetes Mellitus: Aspirin
Use. One commenter wrote in support of this measure. One commenter
stated that these measures are not evidence based as aspirin should be
given to patients with diabetes only after consideration of their 10-
year risk of a significant coronary event in accordance with current
USPSTF and American Diabetes Association guidelines. One commenter
considered this measure of limited value and noted that it only applies
to those with diabetes and ischemic vascular disease but is not
included as a measure for those with just coronary artery disease.
Response: To clarify, we proposed the Minnesota Community
Measurement ``Optimal Diabetes Care'' composite for its up-to-date
research, extensive testing, and relevance to the Medicare FFS
beneficiary population, as discussed previously. The composite measure
received NQF endorsement in March 2011, too late for this information
to be included in the Shared Savings Program proposed rule. Regarding
the aspirin use component of proposed composite measure 35, which we
also proposed as individual measure 39, the recommendation for aspirin
use for diabetics with known cardiovascular disease is based on
American Diabetes Association guidelines for daily aspirin use.\4\
Evidence no longer supports daily aspirin for all diabetics age 40 and
older, and, as a result, the aspirin component of the composite measure
only includes diabetic patients with known cardiovascular disease.
---------------------------------------------------------------------------
\4\ American Diabetes Association. Standards of Medical Care in
Diabetes--2011. Available at http://care.diabetesjournals.org/content/34/Supplement_1/S11.full.
---------------------------------------------------------------------------
We are finalizing diabetes aspirin use as part of the diabetes
composite (proposed measure 35) but are not finalizing it as an
individual measure at this time. Instead of the individual aspirin use
measure, we are finalizing Ischemic Vascular Disease: Use of Aspirin or
Another Antithrombotic (NQF 68), which we believe is a broader
measure that is more aligned with Departmental efforts to improve
cardiovascular care and with other agency programs, such as PQRS. Both
proposed measure 39 and NQF 68 measure aspirin or
antithrombotic use in beneficiaries diagnosed with ischemic vascular
disease (IVD), use a common set of ICD-9 codes to define the condition,
and are calculated for Medicare FFS beneficiaries age 18 and older.
However, we believe the IVD measure is more appropriate as an
individual measure, since it is intended for the entire IVD population,
rather than only those with IVD and diabetes, which the diabetes
composite measure already captures.
The IVD measure also includes use of other antiplatelet
medications, which we believe reduces the need for a separate CAD: Oral
Antiplatelet Therapy Prescribed for Patients with CAD measure, as
discussed in more detail later in this final rule in connection with
proposed measure 53. Thus, we believe the IVD measure reduces the
burden of quality measure reporting for ACOs, since it is one GPRO
measure that captures the data that would otherwise have been required
be reported via 2 separate measures. It also aligns with PQRS efforts
for 2012, the Million Hearts initiative, and the other IVD measures we
are finalizing in this rule.
Comment: Proposed measures 36 and 40. Diabetes Mellitus: Hemoglobin
A1c Control and Hemoglobin A1c Poor Control. A few commenters
recommended that, in order to pare down measures, CMS retain only one
of these measures as there is some overlap. One commenter recommended
CMS use age limits for these measures.
Response: We note that these measures do address somewhat different
aspects of diabetes control. HbA1c Control targets good control in
patients, with an aim of monitoring to keep levels in range, while
HbA1c Poor Control targets patients whose diabetes is poorly-controlled
and may require additional intervention. Accordingly, we believe it is
appropriate to retain both measures. Although we are not finalizing
proposed measure 36 in this final rule, HbA1c Control is part of the
all or nothing diabetes composite measure under proposed measure 35. We
suggest that the commenter concerned about age limits contact the
measure steward directly.
Comment: Proposed measure 38. Diabetes Mellitus: Tobacco Non Use. A
few commenters believed this measure was unnecessary as it was
duplicative of proposed measure 33. Tobacco Use Assessment and Tobacco
Cessation Intervention or suggested that the measure be broadened to
all tobacco users, regardless of diagnoses. One commenter expressed
concern that this measure could be gamed and suggested excluding or
modifying the measure.
Response: Tobacco use is harmful to patient health, but among
diabetics, it is particularly dangerous as it increases the risk of
complications. To substantially lower the risk for cardiovascular and
stroke events among patients with diabetes, it is critical that the
specified outcome goals are achieved. This quality measure aims to
encourage even greater engagement by physicians and their diabetic
patients in achieving tobacco free status. Although we are not
finalizing this individual measure, it is part of the diabetes
composite under proposed measure 35 that we are finalizing in this
rule. At the time the proposed rule was published,
[[Page 67884]]
some aspects of the measure had not yet received NQF endorsement. Since
the measure has now been endorsed as part of the Optimal Diabetes Care
composite (NQF 0729), we can clarify that this has now been
changed to a different NQF measure, ``Tobacco Non-Use.'' This measure
is specifically endorsed for use in diabetics, whereas the measure
proposed (NQF 28) is a general preventive health measure we
would have calculated for a diabetic population. We recognize concerns
for gaming and intend to use the GPRO audit and validation process
described in section II.F.4.b. of this final rule, to monitor such
activities.
Comment: Proposed measure 40. Diabetes Mellitus: Hemoglobin A1c
Poor Control. One commenter questioned inclusion of this measure
stating it was not evidence-based, citing research suggesting that
interventions to maintain glycemic control in the frail elderly may
adversely affect outcomes. One commenter recommended CMS remove this
measure as it is not aligned with patient goals.
Response: We are finalizing this measure as we believe glycemic
control is an important quality issue. The American Geriatrics Society
guidelines currently state that avoiding poor glycemic control is
important even for frail older adults; therefore, we believe this
measure is consistent with the standard of care and aligned with
patient goals.\5\
---------------------------------------------------------------------------
\5\ Guidelines for Improving the Care of the Older Person with
Diabetes Mellitus. California Healthcare Foundation/American
Geriatrics Society Panel on Improving Care for Elders with Diabetes.
American Geriatrics Society. May 2003--Vol. 51, No. 5 Supplement,
JAGS.
---------------------------------------------------------------------------
Comment: Proposed measure 41. Diabetes Mellitus: High Blood
Pressure Control in Diabetes Mellitus. One commenter stated that this
measure is not geared towards population health and should be removed.
Response: We included this measure as a population health measure
because diabetes is prevalent in the Medicare population and has high
rates of morbidity and mortality. Most people with diabetes have other
risk factors, such as high blood pressure, that increase the risk for
heart disease and stroke. However, we are not finalizing this as an
individual measure, because it is part of the diabetes composite,
proposed measure 35. that we are finalizing.
Comment: Proposed measures 42.-44. At Risk Population--Diabetes.
One commenter supported including proposed measure 42. Diabetes
Mellitus: Urine Screening for Microalbumin or Medical Attention for
Nephropathy in Diabetic Patients. Another commenter believed this
measure could be removed as it only measured process. One commenter
stated that, regarding proposed measure 43. Diabetes Mellitus: Dilated
Eye Exam in Diabetic Patients, there are alternatives to dilated eye
exams and recommended providers not be penalized for using those
alternatives. We did not receive any comments on proposed measure 44.
Diabetes Mellitus: Foot Exam.
Response: We are not finalizing these measures at this time. While
we agree that nephropathy screening, eye exams, and foot exams are
important for diabetics, in order to reduce the burden of the quality
reporting at the start of the Shared Savings Program, we have sought to
include only the most high impact diabetes intermediate outcome
measures and are not finalizing these measures at this time. If the
commenter that recommended eye exam alternatives is referring to fundus
photographs as the alternative, the 2011 American Diabetes Association
(ADA) Standards of Medical Care in Diabetes still recommend dilated eye
exams and state that while retinal photography may serve as a screening
tool for retinopathy, it is not a substitute for a comprehensive eye
exam.
Comment: Proposed measures 45-51. At Risk Population--Heart
Failure. One commenter supported proposed measures 45. Heart Failure:
Left Ventricular Function (LVF) Assessment and 46. Heart Failure: Left
Ventricular Function (LVF) Testing. A few of commenters stated that LVF
assessment reflects a minimal standard of care and urged CMS to go
beyond structure and process measures to measures that solidly address
clinical appropriateness and overuse. Another commenter questioned how
meaningful these measures are as they may already have high performance
levels and, therefore, have little room for additional quality
improvement. Another commenter wrote in support of proposed measure 49.
Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic
Dysfunction (LVSD).
One commenter was concerned that proposed measure 47. Heart
Failure: Weight Measurement was duplicative to proposed measure 31
(Adult Weight Screening and Follow-up). One commenter stated that the
measure developer had retired this measure. Another commenter stated
the measure was of limited value because it fails to differentiate
between providers.
One commenter stated proposed measure 48. Heart Failure: Patient
Education was of limited value because it fails to differentiate
between providers. Another commenter wrote in support of proposed
measure 50. Heart Failure: Angiotensin-Converting Enzyme (ACE)
Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left
Ventricular Systolic Dysfunction, while another commenter questioned
the value of this measure as it already has high performance levels in
some regions.
One commenter wrote in support of proposed measure 51. Heart
Failure: Warfarin Therapy for Patients with Atrial Fibrillation.
Another commenter noted that this measure is outdated and should be
modified to include thrombin inhibitor therapy, and one commenter
recommended removing this measure entirely.
Response: While we agree that LVF testing has improved, 2011 AMA-
PCPI guidelines cite LVF assessment, Patient Education, and ACEI/ARB
Therapy for LVSD as opportunities for improvement. (http://www.ama-assn.org/ama1/pub/upload/mm/pcpi/hfset-12-5.pdf) However, in response
to comments about reducing the number of quality measures and in an
effort to finalize higher impact measures, we are not finalizing LVF
assessment (proposed measure 45), LVF testing (proposed measure 46),
Patient Education (proposed measure 48), or ACEI/ARB Therapy for LVSD
(proposed measure 50). We are also not finalizing the Heart Failure:
Weight Measurement measure (proposed measure 47), as it is retired, as
one commenter noted. We are also not finalizing the Warfarin Therapy
measure (proposed measure 51) but intend to further research the
implications of such a measure of warfarin therapy as opposed to one of
thrombin inhibitor therapy and revisit this in the future.
Of the measures proposed for heart failure, we believe there is
greatest opportunity for quality improvement in the Beta-Blocker
Therapy for LVSD (proposed measure 49) and ACSC: Congestive Heart
Failure (proposed measure 15), aimed at reducing avoidable admissions,
and are finalizing both measures.
Comment: Proposed measure 52. Coronary Artery Disease (CAD)
Composite: All or Nothing Scoring. Comments discussed previously with
proposed measure 35.
Response: We have finalized this measure with modification to
include only the following components: Drug Therapy for Lowering LDL-
Cholesterol and Angiotensin-Converting Enzyme (ACE) Inhibitor or
Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and
Diabetes and/or Left Ventricular Systolic Dysfunction
[[Page 67885]]
(LVSD). Since CAD is a common chronic condition and is an underlying
condition for individuals with other chronic conditions, we are
narrowing our composite measure to focus on CAD measures that better
align with final measures in other chronic disease areas. In addition,
while we will score this measure as a composite measure, we will
provide feedback on the individual components so ACOs can identify
areas of lower performance and design strategies to improve
performance.
Comment: Proposed measure 53. Coronary Artery Disease (CAD): Oral
Antiplatelet Therapy Prescribed for Patients with CAD. One commenter
wrote in support of this measure.
Response: We are not finalizing this measure at this time, as we
believe the aspirin use component of the diabetes composite (proposed
measure 35) and the IVD: Use of Aspirin or Another Antithrombotic
measure (discussed under proposed measure 39) align and complement the
CAD measures given the overlap in the chronic disease population.
Therefore, we are finalizing the diabetes composite and the IVD: Use of
Aspirin or Another Antithrombotic measures in lieu of proposed measures
39 and 53.
Comment: Proposed measure 54. Coronary Artery Disease (CAD): Drug
Therapy for Lowering LDL-Cholesterol. One commenter wrote in support of
this measure. One commenter suggested dropping this measure and
retaining proposed measure 56 (Coronary Artery Disease: LDL Level <100
mg/dl) in order to pare down measures and retain those with the most
impact on health outcomes. Another commenter questioned whether there
is demonstrated variability on this measure and whether it was of
value.
Response: We note that AMA-PCPI identified this measure as an
opportunity for improvement and as a result have retained the measure
in the final measure set under the CAD composite (proposed measure 52)
but not as an individual measure, since we believe CAD is an area in
which we can raise the bar for quality improvement through all or
nothing scoring.
Comment: Proposed measure 55. Coronary Artery Disease (CAD): Beta-
Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI).
One commenter wrote in support of this measure. Another commenter
cautioned CMS to use the most recent version of this measure, which was
updated to include patients with left ventricular systolic dysfunction.
One commenter expressed concern about the sample size for most ACOs,
whether there is demonstrated variability in the measure, and
exclusions for patients who have contraindications to beta blockers.
Response: We have taken the measure update into consideration and
decided not to finalize the measure at this time as we believe the IVD
measure we are finalizing (discussed under proposed measure 39) is a
broader measure that encompasses this aspect of CAD care and allows us
to reduce reporting burden to ACOs by requiring fewer measures to be
reported.
Comment: Proposed measure 57. Coronary Artery Disease (CAD):
Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor
Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left
Ventricular Dysfunction (LVSD). One commenter questioned whether there
is demonstrated variability in this measure and whether allowances
would be made for patients with contraindications to ACEs/ARBs.
Response: We believe this measure has room for improvement and have
decided to finalize this measure under proposed measure 52, the CAD
composite measure, rather than as an individual measure, as we believe
CAD is an area in which we can raise the bar for quality improvement
through all or nothing scoring. We will take contraindications into
account prior to releasing measures specifications.
Comment: Proposed measure 58. Hypertension: Blood Pressure Control.
One commenter stated that this measure is dependent on medical record
data making it particularly difficult for ACOs to collect and report
and recommended it not be included, at least initially. One commenter
stated that this measure is not geared towards population health and
should be removed. One commenter believed beneficiary compliance to be
outside the provider's control and recommended that CMS monitor this
measure rather than include it in the performance score.
Response: Many of these measures are based on medical record data
and will be collected through the GPRO web interface, which will allow
data collection from electronic medical records, patient registries and
other administrative systems, as well as from paper records.
Hypertension is one of the most common chronic illnesses in the
Medicare population and a major cause of morbidity and mortality and a
contributing risk factor for other highly prevalent conditions such as
diabetes and heart disease. Although some factors influencing outcome
measures are outside the provider's control, many others, such as
tailoring blood pressure medications and nutrition education, can be
influenced by services received through the ACO. Therefore, we are
finalizing this measure in the final set.
Comment: Proposed measure 59. Hypertension: Plan of Care. Several
commenters recommended removing this measure. Their reasons included:
Concerns that the measure is not geared towards population health; it
is inefficient; labor intensive; and not scalable. Another commenter
believed this measure could be removed as long as Hypertension: Blood
Pressure Control was retained.
Response: We believe this measure is important, but may have some
overlap with the Adult Weight Screening and Follow-up measure (proposed
measure 31), which also includes a plan of care component. Thus, we are
not finalizing this measure in an effort to be sensitive to general
measures comments about the number of required measures and redundancy.
We are, however, retaining the Hypertension: Blood Pressure Control
measure, consistent with one commenter's suggestion.
Comment: Proposed measure 60. Chronic Obstructive Pulmonary Disease
(COPD): Spirometry Evaluation. One commenter wrote in support of
retaining this measure. One commenter recommended CMS use age limits
for this measure.
Response: We are not finalizing the measure at this time, in an
effort to respond to general comments about the number of required
measures and reporting burden. If the commenter that recommended the
use of age limits for this measure is suggesting changes to the
endorsed specification, we recommend communicating with the measure
steward directly. We note, however, that we are finalizing the ACSC:
COPD measure (proposed measure 14) as previously discussed.
Comment: Proposed measure 61. Chronic Obstructive Pulmonary Disease
(COPD): Smoking Cessation Counseling Received. One commenter wrote in
support of retaining this measure. One commenter expressed concern that
this measure could be gamed and suggested excluding or modifying the
measure.
Response: Tobacco use is harmful to patient health, but among
patients with COPD, it is particularly harmful as it can cause
progression of the illness. We acknowledge the potential for gaming,
which is why we proposed a GPRO audit and validation process. However,
we have decided not to finalize this measure at this time, as we
believe smoking cessation counseling is important for all patients.
Accordingly, we are instead finalizing the Tobacco Use Assessment and
Tobacco Cessation Intervention measure (proposed measure 33), which
includes
[[Page 67886]]
individuals with COPD. We believe this decision is also responsive to
general comments about the number of required measures, redundancy in
the measures, and reporting burden.
Comment: Proposed measure 62. Chronic Obstructive Pulmonary Disease
(COPD): Bronchodilator Therapy based on FEV1. Two commenters wrote in
support of this measure.
Response: We are not finalizing this measure at this time, but we
are finalizing the ACSC: COPD measure (proposed measure 14), which aims
to reduce avoidable admissions and is outcome focused.
Comment: Proposed measure 63. Falls: Screening for Fall Risk.
Several commenters supported this measure. One commenter stated that
this is a survey-based measure and should not be submitted via GPRO but
could be added to CG CAHPS. This commenter also noted that the proposed
measure does not match the current measure description in the 2011 NCQA
HEDIS Specifications Volume II.
Response: We believe it is important for an ACO to conduct a fall
risk screening or have one noted in a patient's medical record and to
report this measure. The CG CAHPS is a patient-reported survey, which
we do not think is appropriate for this measure, given the required
involvement of a provider educated about requirements for a meaningful
assessment. We are finalizing this measure and have adjusted the
measure description in Table 1 to reflect the NQF description. We agree
that the proposed measure does not match the 2011 HEDIS measure
description, but HEDIS includes a different measure (NQF 35)
than the one proposed for ACO (NQF 101). We are also moving
this measure to the Care Coordination/Patient Safety domain as we
believe it is more accurately characterized as a patient safety
measure.
Comment: Proposed measure 64. Osteoporosis Management in Women who
had a Fracture. Two commenters wrote in support of this measure. One
commenter commended CMS for inclusion of this measure but recommended
that it be expanded to include men who have had a fracture based on
recent literature. One commenter believed that CMS should align ACO and
PQRS measures by replacing this measure with the four NQF-endorsed
osteoporosis measures in PQRS.
Response: At this time, we have decided not to finalize this
measure in order to allow ACOs to focus their efforts to redesign their
care processes to incorporate fall risk assessments and to use those
results in meaningful conversations with their patients about fall
risks and ways to reduce them. As ACOs gain more experience in
integrating the fall risk screening measure more broadly into their
day-to-day practices, we will revisit the frail elderly measures in
future rulemaking to build upon these achievements and to address
additional issues for the frail elderly.
Comment: Proposed measure 65. Monthly INR for Beneficiaries on
Warfarin. One commenter wrote in support of this measure. One commenter
suggested CMS use ACOVE guidelines for INR. One commenter suggested CMS
modify its proposal to measure the quality of warfarin therapy by
measuring patients on stabilized warfarin therapy within the critical
INR range. Several commenters recommended removing of this measure and
believed it was out of date.
Response: We have decided not to finalize the measure at this time.
We intend to investigate the appropriateness of warfarin therapy
further, including developments regarding of alternative therapies and
gaps in monthly INR monitoring, and will consider this measure and/or
other related measures that may be appropriate in future rulemaking
cycles.
Comment: While a majority of commenters suggested paring down the
measure set, we received a number of suggestions for additional
measures and measure categories that were not included in our proposed
measures set, such as measures of: emergency room visits, comprehensive
medication management, patient safety, additional potentially
preventable complications, care transitions, more robust mental health
measures, substance use, underuse of health care services,
perioperative care, cancer survivorship care, hematology care, kidney
disease, COPD, asthma and other allergic diseases, patient engagement,
recovery and wellness. Several commenters recommended including risk-
adjusted mortality measures for the entire ACO population, not limited
to those who have been hospitalized. A few commenters advocated for
more emphasis on continued quality improvement rather than quality
assurance.
Response: Given that many ACOs will be newly forming organizations,
we concluded that ACO quality measures should focus on discrete
processes and short-term measurable outcomes derived from
administrative claims and limited medical record review facilitated by
a CMS-provided web interface to lessen the burden of reporting. For
both the proposed rule and this final rule, we selected a set of
quality measures based on the criteria discussed in section II.F.2.b.
of this final rule. Because of the focus on Medicare FFS beneficiaries,
our measure selection emphasized prevention and management of chronic
diseases that have high impact on these beneficiaries such as heart
disease, diabetes mellitus and chronic obstructive pulmonary disease.
Comment: A number of commenters were concerned that the program
measure quality across the spectrum of care settings including not just
outpatient clinics and short-term acute hospital care but also
federally qualified health centers, rural environments, convenient care
clinics, home health, telehealth, remote patient monitoring, SNFs or
long-term care, behavioral health, rehabilitation care, anesthesia
care, hospice and palliative care, and case management. A number of
these commenters suggested adding specific measures. One commenter
advocated for a separate domain of palliative care.
Response: We selected final measures with a predominantly
ambulatory care focus, consistent with the primary care focus of, and
beneficiary assignment methodology used for, the Shared Savings
Program. It is important to note, however, that ACOs may use
information from additional care settings types of providers in
reporting quality information via the GPRO web interface and that
patients' total Medicare Part A and B claims history will be used in
determining GPRO measure denominators and calculating claims-based
measures. We encourage ACOs to work with providers across the care
spectrum to better coordinate care and improve the quality of care for
their mutual patient population.
Comment: A number of commenters suggested that new measures are
needed for ACOs and that CMS should partner with others, such as
Regional Health Improvement Collaboratives and AHRQ, to identify gaps
and develop new measures. One commenter supported development of new
patient-centered functional outcome measures that are site-neutral,
focused on the coordination of services, and based on individual needs
and preferences for care. Another stated that new measures specific to
the ACO patient experience should be developed in the future but not
prior to the launch of the ACO program. One commenter recommended
development of measures of appropriate use of new technologies. One
commenter expressed concern that current measures reflect limitations
of the current payment system, while ACO metrics should
[[Page 67887]]
include population-based outcomes measures such as emergency room use,
potentially preventable admission rates, in-hospital mortality rates,
and possibly patient safety measures. One commenter supported measures
of how ACO professionals use their performance on quality measures to
improve care as well as the quality measures themselves. One commenter
proposed that emergency medicine measures should be developed, while
another urged CMS to work with NQF to develop more robust measures of
medication management.
Response: We appreciate the commenters' interest in measures that
address additional areas of specialty care, inpatient and post acute
care while working to move our measurement strategy to more outcome-
oriented measures and will consider these in the future.
Comment: A number of commenters recommended CMS include measures
that are more inclusive of specialty care, pediatric care, and non-
physician professionals, such as nurse practitioners and registered
nurses. Many of these commenters noted that the proposed measures were
heavily focused on primary care. One commenter believed the emphasis on
primary care measures would result in much less data on which to judge
ACO quality for specialty care, which could either inappropriately
reward or punish specialist providers. Other commenters expressed
concern that specialty care and care for those with disabilities might
be negatively affected by the lack of specialty measures or incentives
to skimp on necessary care. One commenter added that most proposed
measures have no direct relationship to cost management that could be
achieved during the ACO agreement period, particularly since specialty
care is a driver of cost differences. Without specific quality measures
related to specialty care, the commenter argues, specialists in ACOs
will face pressure to reduce the costs of specialty care, which may
translate into inferior care for beneficiaries by limiting access to
specialty care and ignoring quality. Several commenters recommended
measures that reflect the interprofessional nature of an ACO and the
mix of clinicians providing primary care.
Response: We believe that the final set of measures is
appropriately focused and measures care furnished by a variety of
providers including specialists, nurses, and nurse practitioners. We
also believe the issue of including specialty providers who furnish
primary care services is addressed in the two-step beneficiary
assignment methodology discussed in section II.E of this final rule. We
also agree that monitoring is necessary to ensure providers do not
skimp on care or avoid at-risk beneficiaries. Our final policies
regarding monitoring of ACOs are discussed in section II.H. of this
final rule. Finally, we do not think including pediatric measures is
appropriate at this time, since the Shared Savings Program is designed
for the Medicare FFS population, which includes very few children and
would not allow for reliable and valid pediatric measures.
We also received suggestions for a process to retire and add
measures over time.
Comment: A few commenters recommended CMS take steps to assure that
the most recent version of a specification, per the measure developer,
is being used and that measures keep pace with current evidence. One
commenter suggested that we conduct an annual review of the quality
measures as well as new scientific evidence published in peer-reviewed
medical literature and comparative effectiveness research of the
Patient-Centered Outcomes Research Institute (PCORI) and remove any
measures that are no longer supported by the evidence. Another
commenter suggested that CMS should plan to update evaluation tools and
methods as advances allow. One commenter requested that CMS assure that
quality measures keep pace with new technologies and advances in
medical care. Another commenter recommended CMS specify its criteria
for selecting future measures and suggested beginning with: correlation
with outcomes; NQF endorsement; measure impact (that is, high-volume,
high-cost); sufficient sample size; existence of complete and clear
specifications; compound or composite measures; and degree of
opportunity for improvement, as indicated by high variability across
organizations. One commenter stated that measures should be meaningful
to consumers.
A few commenters suggested that measures not be modified or added
during the first agreement period or, at minimum, that we institute a
system similar to the final value-based purchasing system where
measures must be reported for a year without specification changes
before they are eligible to be added to the performance standard. These
commenters stated that keeping measures constant would allow ACOs to
compare results from year to year. One of these commenters thought, at
a minimum, any new measures added during an agreement period should be
reasonable in number and limited to those that have been publicly
reported for one year, in line with the HVBP model. One commenter
requested CMS clarify how ACOs will be notified of changes to quality
reporting in subsequent years and how new quality measures would be
vetted. Another commenter recommended measures be added through an
approval process open to all interdisciplinary health providers through
their professional organizations while another commenter recommended
that CMS use a formal notice and comment process to retire or add
measures so that all stakeholders have the opportunity for input. One
commenter suggested CMS add new measures during the agreement period
for reporting only and not include those in the shared savings
calculation. This commenter also recommended that more than 90 days
lead time should be given before new measures are added. A few
commenters recommended publishing final measure specifications at least
90 days in advance for 2012 and at least 180 days notice be given for
subsequent years, while another commenter recommended that CMS publish
sample approach, sample size and data collection rules for any survey
tools at least 12 months in advance. Another commenter recommended
measures be published at least 18 months in advance. One commenter
suggested that measures which are substantially modified be reported
for a year prior to being incorporated into the performance standard.
One commenter suggested measures be added only if they meet an ACO's
patient population needs and removed if they are found to be
unreliable, unactionable, or do not meet the needs of the population
served.
Response: As discussed previously, detailed measure specifications,
including the measure title, for the Shared Savings Program quality
measures may have been updated or modified during the NQF endorsement
process or for other reasons prior to 2012. Specifications for all
Shared Savings Program quality measures must be obtained from the
specifications document for Shared Savings Program quality measures. As
measures stewards frequently make their measures updates for a given
year during the 4th quarter of the preceding year or the 1st quarter of
the applicable year, we expect to release specifications during the 4th
quarter of 2011 or the 1st quarter of 2012 for most of the measures. We
expect to release specifications for the CAHPS survey later in 2012. We
will also add and retire measures as
[[Page 67888]]
appropriate through the rulemaking process. We are working with the
measures community to ensure that our specifications are the most up-
to-date for the 2012 Shared Savings Program performance period. We have
to balance timing the release of specifications so they are as up-to-
date as possible, while also giving ACOs sufficient time to review
specifications.
Comment: One commenter requested that CMS clarify exclusion options
for situations when following an evidence-based guideline would be
inappropriate for a given ACO patient. A few commenters noted many of
the proposed measures are inappropriate for terminally ill patients and
recommended excluding such patients from quality measure calculations
without consequence to the ACO.
Response: Measure owners identify appropriate exclusion criteria as
part of their measure specifications. Additionally, measures collected
via the GPRO web interface allow providers to exclude patients per the
measure specifications and for other defined reasons related to the
reporting methodology as appropriate. The ACO measures specifications
and reporting methodology will be provided in subregulatory guidance.
However, in the proposed rule, we included information, such as the NQF
number, for each measure so that the public could view measures
specifications information on the NQF Web site and as currently used in
other CMS programs, such as PQRS and the EHR Incentive Programs. Our
audit and validation process and monitoring activities will also look
at exclusions to determine if ACOs are excluding large numbers of
patients from quality reporting as a way to avoid reporting or to game
the methodology.
Comment: Many commenters suggested that CMS outline quality
reporting requirements over the entire ACO agreement period since
Medicare ACOs are required to commit to participating for at least 3
years. One commenter was disappointed that we only aligned with PQRS
measures for the first year of the agreement period. One commenter
recommended a 2 year reporting-only period for any future new measures
that are not currently being collected. One commenter suggested that if
measures for the agreement period are not specified up front, an ACO
should be able to withdraw from its agreement if the second and third
year measure reporting requirements are too burdensome and resource
intensive. One commenter urged CMS to specify the reporting period, due
date of submission, and the population that is being measured for each
of the quality measures in the final rule. One commenter recommended
that ACOs not be required to develop clinical guidelines and instead we
should encourage them to use those developed by medical specialty
societies. There was widespread support among commenters for a ramp-up
approach to measurement and linking the degree of measure reporting--or
in later years, measure performance--to the degree of shared savings.
Many commenters believed phasing in measures or having a tiered
approach, rather than requiring ACOs meet all thresholds would
encourage wider participation, allow ACOs time to develop the necessary
infrastructure and capacity, and reduce startup costs. Several
commenters proposed a tiered approach to the performance standard. A
few commenters stated that this approach would not only encourage
participation but would help avoid some of the learning curve issues
that occur in new programs. Several commenters pointed to the approach
taken by the PGP Demonstration, in which an initial set of measures was
phased in over time, and suggested the Shared Savings Program take a
similar approach.
While a number of commenters endorsed the first year quality
performance standard at the reporting level, a number of commenters
recommended extending it for 2 years, and a few endorsed a pay-for-
reporting standard for the entire first agreement period. Another
commenter requested that, if measures which are not in current use are
included in the final rule, these be kept at the reporting standard for
the entire agreement period. One commenter thought the proposed
Ambulatory Care Sensitive Conditions and Risk Standardized All
Condition Readmission measures proposed should be pay for reporting
measures only during the entire agreement period, due to the associated
cost and risk, similar to the way in which new measures have been
treated under the PGP demonstration. One commenter urged CMS not to use
the reporting standard and to establish at least a minimum performance
threshold from the outset of the program.
Response: We have outlined in Tables 1 and 2 the quality measure
requirements for the ACO agreement period. We do not intend to develop
specific clinical guidelines for ACOs. Rather, we intend to adopt
existing clinical guidelines as appropriate for ACOs in our measure
specifications. Withdrawal from the Shared Savings Program is discussed
in section II.H.5. of this final rule. A subset of these measures will
be phased in for performance scoring starting in performance year 2 of
the agreement period, as illustrated in Table 1 and summarized in Table
2. We believe this approach emphasizes all domains and measures as
important, provides a longer phase in of measures to pay for
performance than in our original proposal, and aligns closely with the
phase in used in the PGP Transition Demonstration.
We expect to require ACOs to report all measures listed in Table 11
during each ``reporting period,'' as defined in Sec. 425.20, of its
agreement. This means that while an ACO's first ``performance year,''
as defined in Sec. 425.20, for shared savings purposes would be 18 or
21 months, quality data will be collected on a calendar year reporting
period basis, beginning with the reporting period starting January 1,
2012 through December 31, 2012 for ACOs electing an interim payment.
Thus, the first performance year of the ACO agreement period begins
April 1, 2012 or July 1, 2012 and ends December 31, 2013, while quality
performance for this first performance year will be based on complete
and accurate reporting of measures January 1, 2013 through December 31,
2013. Quality data submitted via the GPRO web interface for the 2012
reporting period would also be used for purposes of the PQRS incentive
under the Shared Savings Program, as discussed in II.F.5. of this final
rule and for the interim payment calculation, as discussed in II.G.2.k.
of this final rule. Furthermore, for all ACOs starting in 2012, we will
conduct a CAHPS survey with assigned ACO beneficiaries and will measure
claims- and administrative-based quality measures. Complete and
accurate reporting on all quality measures in Table 1 for both the
calendar year 2013 will be used to determine shared savings eligibility
for an ACO's first performance year. The pay for performance phase-in
of measures and second performance year for shared savings purposes
would begin January 1, 2014. Table 2 summarizes the number pay for
reporting and pay for performance measures for each performance year.
[[Page 67889]]
Table 1--Measures for Use in Establishing Quality Performance Standards That ACOs Must Meet for Shared Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pay for performance phase in R =
NQF measure / Method of data Reporting P = Performance
Domain Measure title measure steward submission -----------------------------------------
Year 1 Year 2 Year 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
AIM: Better Care for Individuals
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Patient/Caregiver CAHPS: Getting Timely NQF 5, AHRQ.. Survey................ R P P
Experience. Care, Appointments,
and Information.
2. Patient/Caregiver CAHPS: How Well Your NQF 5 AHRQ... Survey................ R P P
Experience. Doctors Communicate.
3. Patient/Caregiver CAHPS: Patients' NQF 5 AHRQ... Survey................ R P P
Experience. Rating of Doctor.
4. Patient/Caregiver CAHPS: Access to NQF 5 AHRQ... Survey................ R P P
Experience. Specialists.
5. Patient/Caregiver CAHPS: Health NQF 5 AHRQ... Survey................ R P P
Experience. Promotion and
Education.
6. Patient/Caregiver CAHPS: Shared Decision NQF 5 AHRQ... Survey................ R P P
Experience. Making.
7. Patient/Caregiver CAHPS: Health Status/ NQF 6 AHRQ... Survey................ R R R
Experience. Functional Status.
8. Care Coordination/ Risk-Standardized, All NQF TBD CMS.. Claims................ R R P
Patient Safety. Condition
Readmission*.
9. Care Coordination/ Ambulatory Sensitive NQF 275 AHRQ. Claims................ R P P
Patient Safety. Conditions
Admissions: Chronic
Obstructive Pulmonary
Disease (AHRQ
Prevention Quality
Indicator (PQI)
5).
10. Care Coordination/ Ambulatory Sensitive NQF 277 AHRQ. Claims................ R P P
Patient Safety. Conditions
Admissions:
Congestive Heart
Failure (AHRQ
Prevention Quality
Indicator (PQI)
8).
11. Care Coordination/ Percent of PCPs who CMS................... EHR Incentive Program R P P
Patient Safety. Successfully Qualify Reporting.
for an EHR Incentive
Program Payment.
12. Care Coordination/ Medication NQF 97 AMA- GPRO Web Interface.... R P P
Patient Safety. Reconciliation: PCPI/NCQA.
Reconciliation After
Discharge from an
Inpatient Facility.
13. Care Coordination/ Falls: Screening for NQF 101 NCQA. GPRO Web Interface.... R P P
Patient Safety. Fall Risk.
--------------------------------------------------------------------------------------------------------------------------------------------------------
AIM: Better Health for Populations
--------------------------------------------------------------------------------------------------------------------------------------------------------
14. Preventive Health..... Influenza Immunization NQF 41 AMA- GPRO Web Interface.... R P P
PCPI.
15. Preventive Health..... Pneumococcal NQF 43 NCQA.. GPRO Web Interface.... R P P
Vaccination.
16. Preventive Health..... Adult Weight Screening NQF 421 CMS.. GPRO Web Interface.... R P P
and Follow-up.
17. Preventive Health..... Tobacco Use Assessment NQF 28 AMA- GPRO Web Interface.... R P P
and Tobacco Cessation PCPI.
Intervention.
18. Preventive Health..... Depression Screening.. NQF 418 CMS.. GPRO Web Interface.... R P P
19. Preventive Health..... Colorectal Cancer NQF 34 NCQA.. GPRO Web Interface.... R R P
Screening.
20. Preventive Health..... Mammography Screening. NQF 31 NCQA.. GPRO Web Interface.... R R P
21. Preventive Health..... Proportion of Adults CMS................... GPRO Web Interface.... R R P
18+ who had their
Blood Pressure
Measured within the
preceding 2 years.
22. At Risk Population-- Diabetes Composite NQF 0729 MN GPRO Web Interface.... R P P
Diabetes. (All or Nothing Community Measurement.
Scoring): Hemoglobin
A1c Control (< 8
percent).
[[Page 67890]]
23. At Risk Population-- Diabetes Composite NQF 0729 MN GPRO Web Interface.... R P P
Diabetes. (All or Nothing Community Measurement.
Scoring): Low Density
Lipoprotein (< 100).
24. At Risk Population-- Diabetes Composite NQF 0729 MN GPRO Web Interface.... R P P
Diabetes. (All or Nothing Community Measurement.
Scoring): Blood
Pressure < 140/90.
25. At Risk Population-- Diabetes Composite NQF 0729 MN GPRO Web Interface.... R P P
Diabetes. (All or Nothing Community Measurement.
Scoring): Tobacco Non
Use.
26. At Risk Population-- Diabetes Composite NQF 0729 MN GPRO Web Interface.... R P P
Diabetes. (All or Nothing Community Measurement.
Scoring): Aspirin Use.
27. At Risk Population-- Diabetes Mellitus: NQF 59 NCQA.. GPRO Web Interface.... R P P
Diabetes. Hemoglobin A1c Poor
Control (> 9 percent).
28. At Risk Population-- Hypertension (HTN): NQF 18 NCQA.. GPRO Web Interface.... R P P
Hypertension. Blood Pressure
Control.
29. At Risk Population-- Ischemic Vascular NQF 75 NCQA.. GPRO Web Interface.... R P P
Ischemic Vascular Disease (IVD):
Disease. Complete Lipid
Profile and LDL
Control < 100 mg/dl.
30. At Risk Population-- Ischemic Vascular NQF 68 NCQA.. GPRO Web Interface.... R P P
Ischemic Vascular Disease (IVD): Use of
Disease. Aspirin or Another
Antithrombotic.
31. At Risk Population-- Heart Failure: Beta- NQF 83 AMA- GPRO Web Interface.... R R P
Heart Failure. Blocker Therapy for PCPI.
Left Ventricular
Systolic Dysfunction
(LVSD).
32. At Risk Population-- Coronary Artery NQF 74 CMS GPRO Web Interface.... R R P
Coronary Artery Disease (CAD) (composite)/AMA-PCPI
Disease. Composite: All or (individual
Nothing Scoring: Drug component).
Therapy for Lowering
LDL-Cholesterol.
33. At Risk Population-- Coronary Artery NQF 66 CMS GPRO Web Interface.... R R P
Coronary Artery Disease (CAD) (composite)/AMA-PCPI
Disease. Composite: All or (individual
Nothing Scoring: component).
Angiotensin-
Converting Enzyme
(ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB) Therapy
for Patients with CAD
and Diabetes and/or
Left Ventricular
Systolic Dysfunction
(LVSD).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* We note that this measure has been under development and that finalization of this measure is contingent upon the availability of measures
specifications before the establishment of the Shared Savings Program on January 1, 2012.
Table 2--ACO Agreement Period Pay for Performance Phase-In Summary
----------------------------------------------------------------------------------------------------------------
Performance Performance Performance
year 1 year 2 year 3
----------------------------------------------------------------------------------------------------------------
Pay for Performance............................................. 0 25 32
Pay for Reporting............................................... 33 8 1
-----------------------------------------------
Total....................................................... 33 33 33
----------------------------------------------------------------------------------------------------------------
[[Page 67891]]
Final Decision: In summary, in response to comments, we have
modified this final rule by reducing the measure set to 33 measures
total, or 23 scored measures when accounting for the patient experience
survey modules scored as 1 measure and the all or nothing diabetes and
CAD measures scored as 1 measure each. We believe judiciously removing
certain redundant, operationally complex, or burdensome measures would
still provide a high standard of quality for participating ACOs while
providing greater alignment with other CMS and HHS quality improvement
initiatives. This measure set will be the starting point for ACO
measurement, as we plan to modify measures in future reporting cycles
to reflect changes in practice and quality of care improvement and
continue aligning with other quality programs.
For the patient/caregiver experience measures, we believe requiring
a standardized, patient experience of care survey that is based on
CAHPS will better allow comparisons of ACOs over time and benchmarking
for future years of the program. Additionally, it will help ensure the
patient survey is measuring patient experience for the ACO as a whole
rather than for one specific practice, since there is currently no
survey instrument in existence, that we are aware of, that measures
patient experience of care in an ACO specifically. We will also fund
the administration of an annual CAHPS patient experience of care survey
for ACOs participating in the Shared Savings Program in 2012 and 2013.
Starting in 2014, ACOs participating in the Shared Savings Program must
select a survey vendor (from a list of CMS-certified vendors) and will
pay that vendor to administer the survey and report results using
standardized procedures developed by CMS. We will develop and refine
these standardized procedures over the next 18 to 24 months.
We will consider the individual CAHPS modules together as one
measure for scoring purposes, consistent with Hospital Value-Based
Purchasing and the PGP Transition Demonstration, except for Health
Status/Functional Status. We have also added an access to specialists
module to align with our final step-wise assignment methodology that
incorporates specialists. This module will also promote care
coordination and allow monitoring for avoidance of at-risk patients and
underutilization of care by adding a patient perspective on access to
specialty care. We will score the two finalized coronary artery disease
measures as one composite and the recently endorsed Optimal Diabetes
Care Composite, which has 5 components, will also be scored as one
composite.
ACOs will be required to completely and accurately report on all 33
measures for all reporting periods in each performance year of their
agreement period, and we will phase in pay for performance in
performance years 2 and 3, as previously described above. Of the 33
measures we are finalizing, 7 are collected via patient survey, 3 are
calculated via claims, 1 is calculated from EHR Incentive Program data,
and 22 are collected via the GPRO web interface.
While we are removing the hospital patient safety measures from the
final measures set, we plan to use the claims-based hospital measures
as part of our ACO monitoring efforts. We also intend to consider any
other claims-based measures proposed but not finalized in our program
monitoring efforts. Please note that detailed measure specifications,
including the measure title, for the 2012 Shared Savings Program
quality measures may have been updated or modified during the NQF
endorsement process or for other reasons prior to 2012. Specifications
for all 2012 Shared Savings Program quality measures must be obtained
from the specifications document for 2012 Shared Savings Program
quality measures, which we expect to make available on the CMS Web
during the 4th quarter of 2011 or 1st quarter of 2012, with the
exception of the CAHPS measures, for which separate documentation will
be available during 2012. We also note that the risk standardized, all
condition readmission measure (final measure 2) has been under
development and that finalization of this measure is contingent upon
the availability of measures specifications before the establishment of
the Shared Savings Program on January 1, 2012.
Finally, we have modified this final rule to define the quality
performance standard at the reporting level in the first year and based
on performance in subsequent years. Rather than transition all measures
from pay for reporting to pay for performance in the second performance
year of the ACO agreement period as proposed, we will transition only a
portion of the measures to pay for performance in the second
performance year, and then all but one of the measures to pay for
performance in the third performance year, as outlined in Table 2.
3. Requirements for Quality Measures Data Submission by ACOs
a. General
Under section 1899(b)(3)(B) of the Act, ACOs are required to submit
data in a form and manner specified by the Secretary on measures the
Secretary determines necessary for the ACO to report in order to
evaluate the quality of care furnished by the ACO. In the proposed
rule, we stated that most of the proposed measures were consistent with
those reported for PQRS, others would rely on survey instruments, eRx,
and HITECH program data, and some might rely on Hospital Compare or the
Centers for Disease Control and Prevention National Healthcare Safety
Network data (76 FR 19592). We recognized that there are a number of
limitations associated with claims-based reporting, since the claims
processing system was designed for billing purposes and not for the
submission of quality data. For this reason, we stated we would make
available a CMS-specified data collection tool for certain measures,
which is now referred to as a ``web interface.'' We proposed that
during the year following the first performance period, each ACO would
be required to report via the GPRO web interface the applicable
proposed quality measures with respect to services furnished during the
performance period. We proposed that we would derive the claims-based
measures from claims submitted for services furnished during the first
performance period, which therefore would not require any additional
reporting on the part of ACO professionals. We also proposed that for
survey-based measures data would also reflect care received during the
first performance period. We also noted that we would use rulemaking to
update the quality measure requirements and mechanisms for future
performance periods.
We welcomed comments on the proposed data submission requirements.
We also sought comment on whether alternative data submission methods
should be required or considered, such as limiting the measures to
claims-based and survey-based reporting only.
We received the following comments about data submission
requirements in general.
Comment: Several commenters requested more complete specifications
about data submission requirements in the final rule. A few commenters
stated that multiple formats of reporting are expensive and confusing
and suggested a single reporting format. One commenter supported the
multiple
[[Page 67892]]
approaches to capture quality data. A few commenters recommended that
CMS require ACOs to measure quality for all patients, not just Medicare
beneficiaries. One commenter recommended CMS require ACOs to give ACO
providers/suppliers access to claims data arguing that such
transparency is needed to ensure that all ACO providers/suppliers
understand how their performance rates are being calculated. A few
commenters expressed concern about whether CMS has the resources to
handle the incoming data. One commenter did not believe ACOs should be
held accountable for CMS problems with implementation.
Response: We were as specific as practicable in the proposed rule
regarding the data submission requirements. More detailed instructions
regarding data submission will be provided through subregulatory
guidance. We agree with the commenters' concern about a standard format
for reporting purposes to ensure consistent reporting over years and by
multiple ACOs. We believe the GPRO web interface provides this
mechanism for ACOs to report data at the individual beneficiary level.
It was developed with provider input and is currently used in multiple
physician pay for performance demonstrations and in the PQRS group
practice reporting option. The tool is pre-populated with Medicare
claims data for a sample of assigned beneficiaries for each ACO to
minimize reporting burden and to ensure complete and accurate
reporting. While CMS encourages ACOs to measure quality for all their
patients, it is beyond the scope of this regulation to require that
they do so for patients other than Medicare beneficiaries. We also
embrace the concept of data transparency and availability. While we
cannot foresee all possible future implementation issues, we will
strive to mitigate any unforeseen issues swiftly and fairly.
We received the following comments about survey-based quality data.
Comment: A few commenters stated that the survey data
specifications were not sufficiently detailed. One commenter requested
clarification on CAHPS timeframe of the last 12 months and asked
whether visits outside of the reporting period may be included. A few
commenters requested CMS clarify who would administer the survey,
required timing, and sample size, while another questioned whether
implementation of this measure was feasible for the first year given
that this would be a new activity for most ACOs.
Response: As discussed in section II.F.2. of this final rule, we
agree with the concerns that have been raised regarding the initial
burden of survey administration and have decided to pay for the
administration of the CAHPS survey for 2012 and 2013. We are developing
the necessary specifications and infrastructure to prepare vendors to
administer the survey. Starting in 2014, ACOs will be required to
select and pay for a CMS-approved vendor to administer the survey.
Comment: One commenter requested that the final rule clearly
articulate the reporting period, due date of submission, and the
population that is being measured for each of the quality measures. One
commenter wrote in support of the 12-month performance period as it
allows for more valid and reliable measurement than would be possible
under a shorter time period. A few commenters stated that 100 percent
reporting may not be achievable in year one.
Response: To clarify, all quality measures will have a 12-month,
calendar year reporting period, regardless of ACO start date. Quality
measures specifications and processes related to all quality measures
will be made available in subregulatory guidance along with the
specific dates for reporting and submission. Because of the measures
and the methodology we are finalizing in this rule, our experience with
GPRO measures and reporting methods to date, along with our plans to
administer the CAHPS survey for the first 2 years of the program, we
believe ACOs can achieve complete and accurate reporting in all years
of the agreement period as we phase in pay for performance. CMS survey
vendors will have responsibility for measuring the patient experience
measures, and CMS will be able to calculate the claims-based measures
and EHR Incentive Program measure without requiring any additional ACO
reporting. ACOs will be directly responsible for reporting measures
collected through the GPRO web interface. Starting in 2014, ACOs will
also be responsible for selecting and paying for a CMS-certified vendor
to administer the CAHPS survey.
Comment: Numerous commenters suggested a core and menu set approach
to quality measurement, which would require all ACOs to report on a
core measure set but allow flexibility to choose among measures in a
menu set, similar to that used for the EHR incentive program. Different
suggestions as to how to select core measures were received. One
commenter suggested a performance score during the first year for a
limited set of 11 core measures available through claims data in order
to immediately focus on quality performance. Another commenter
suggested separating the measures as core, interim clinical process,
and advanced sets, with ``core'' referring to administrative claims and
patient survey measures and ``advanced'' referring to more advanced,
outcomes measures. Advanced measures would be those requiring clinical
data such as the proposed preventive health screening measures. One
commenter suggested requiring a core set of measures but offering
higher shared savings for successful implementation of additional
voluntary measures. One commenter suggested reducing the number of
measures in each domain to three; another advocated reducing the number
within patient/caregiver experience, care coordination, patient safety
and preventive health domains to an initial core similar to EHR
Incentive Program and emphasized that measures for specific clinical
areas should eventually include measures in several domains in as well
as for at-risk populations and the frail elderly. This commenter also
suggested CMS begin to identify measures for each clinical area within
those domains.
Response: We agree with the basic suggestions of a more limited
measure set with some type of phased in approach. Table 2 illustrates
the desire to have a phased in approach and a smaller, core set of
measures that aligns with quality improvement priorities and value-
based purchasing, in response to comments received. We do not agree
that arbitrarily requiring all domains to have the same number of
measures would be beneficial. Rather, we have reduced the number of
initial measures, independent of domain, based on feasibility, impact,
program goals, and specific comments. At this time, we believe it is
important all ACOs report on the same measures in order to emphasize
quality improvement across a variety of important areas. We believe
that a menu approach would provide incentives for ACOs to select areas
in which they are already performing well, rather than those areas in
which there is room for improvement.
We received the following comments about claims-based quality
measure data.
Comment: Several commenters stated measures should be derived from
claims data when possible for ease of reporting and to give ACOs real-
time feedback of results. One commenter stated that using existing data
for most measures would also be advantageous in that ACOs could be more
focused on quality improvement from the outset rather than having to
spend resources simply
[[Page 67893]]
to track and report quality measures. One of these commenters
recommended that measures with HEDIS claims specifications should be
collected in that manner. Several commenters recommended beginning with
a measure set based on claims data and expanding to registry or EHR-
based measures over time. Another commenter indicated that Medicare
claims data would yield a limited set of measures and that CMS should
instead focus on requiring ACOs to demonstrate core capabilities
critical to improving quality and reducing costs. This commenter
suggested different levels of scoring similar to NCQA's proposed
criteria. One commenter suggested CMS consider, in the future, ABIM's
Comprehensive Care Practice Improvement Module, which is designed to
assess generalist practice.
Response: We have included measures collected from a variety of
sources, including claims, in the final measures set. We recognize that
using claims offers a benefit in easing reporting burden but claims do
not necessarily reflect the improvement outcomes that ACOs will seek to
affect. We also recognize that the availability of measures from
electronic health records may change significantly in the future, which
we will consider accordingly. We are unable to add new measures in this
final rule that were not proposed or that are not closely related to
proposed measures. Accordingly, we are finalizing a combination of both
claims-based measures and other measures collected from clinical
quality data, patient experience surveys, and EHR Incentive Program
data.
b. GPRO Web Interface
In 2010, 36 large group practices and integrated delivery systems
used GPRO to report 26 quality measures for an assigned patient
population under the PQRS. As we indicated in the proposed rule, the
GPRO web interface affords a key advantage in that it is a mechanism
through which beneficiary laboratory results and other measures
requiring clinical information can be reported to us. The web interface
would allow ACOs to submit clinical information from EHRs, registries,
and administrative data sources required for measurement reporting. We
believe the web interface would reduce the administrative burden on
health care providers participating in ACOs by allowing them to tap
into their existing Information Technology (IT) tools that support data
collection and health care provider feedback, including at the point of
care. Accordingly, we proposed that the existing GPRO web interface
would be built out, refined, and upgraded to support clinical data
collection and measurement reporting and feedback to ACOs participating
in the Shared Savings Program.
For quality measures collected via the GPRO web interface, we
proposed to determine a sample for each domain or measure set within
the domain using a sampling methodology modeled after the methodology
currently used in the 2011 PQRS GPRO I, as described in section
II.F.3.b of the proposed rule. Assigned beneficiaries, for purposes of
the GPRO web interface, would be limited to those Medicare FFS
beneficiaries assigned to the ACO.
We indicated in the proposed rule that we would provide each ACO
with access to the GPRO web interface that would include a sample of
its assigned beneficiary population and the GPRO quality measures
listed in Table 1 of the proposed rule (76 FR 19592). We stated we
would pre-populate the web interface with the beneficiaries'
demographic and utilization information based on their Medicare claims
data. The ACO would be required to populate the remaining data fields
necessary for capturing quality measure information on each of the
beneficiaries as applicable.
Using the same sampling method used in the 2011 PQRS GPRO I, we
would require that the random sample for measures reported via ACO GPRO
must consist of at least 411 assigned beneficiaries per measure set/
domain. If the pool of eligible, GPRO assigned beneficiaries is less
than 411 for any measure set/domain, then we proposed to require the
ACO to report on 100 percent, or all, of the assigned beneficiaries.
For each measure set/domain within the GPRO web interface, the ACO
would report information on the assigned beneficiaries in the order in
which they appear consecutively in the ACO's sample.
We stated that some GPRO measures would not rely on beneficiary
data but rather on ACO attestation. We proposed to validate GPRO
attestation for such measures through CMS data from the EHR Incentive
Program and Electronic Prescribing (eRx) Incentive Program. For the
other measures reported via the GPRO web interface, we proposed to
retain the right to validate the data entered by ACOs via a data
validation process based on the one used in phase I of the PGP
demonstration. In the GPRO audit process, we would abstract a random
sample of 30 beneficiaries previously abstracted for each of the
quality measure domains/measure sets. The audit process would include
up to three phases, depending on the results of the first two phases.
Although each sample would include 30 beneficiaries per domain, only
the first eight beneficiaries' medical records would be audited for
mismatches during the first phase of the audit. A mismatch represents a
discrepancy between the numerator inclusions or denominator exclusions
in the data submitted by the ACO and our determination of their
appropriateness based on supporting medical records information
submitted by the ACO. If there are no mismatches, the remaining 22 of
the 30 beneficiaries' records would not be audited. If there are
mismatches, the second phase of the audit would occur, and the other 22
beneficiaries' records would be audited. A third phase would only be
undertaken if mismatches are found in more than 10 percent of the
medical records in phase two. If a specific error is identified and the
audit process goes to Phase 3, which involves corrective action, we
proposed to first provide education to the ACO on the correct
specification process and provide the opportunity to correct and
resubmit the measure(s) in question. If, at the conclusion of the third
audit process the mismatch rate is more than 10 percent, we proposed
that the ACO would not be given credit for meeting the quality target
for any measures for which this mismatch rate still exists. We noted
that the failure to report quality measure data accurately, completely
and timely (or to timely correct such data) might subject the ACO to
termination or other sanctions.
We invited comment on the proposed GPRO quality data submission
requirements and on the administrative burden associated with
reporting.
Comment: A few commenters supported the use of GPRO although one of
the commenters stated that this type of reporting requires considerable
time, effort and knowledge to do well and suggested automating measures
as much as possible. One commenter encouraged CMS to rapidly develop
the GPRO interface for ACOs and requested guidance for data submission
in the meantime. One commenter suggested that CMS work with EHR
vendors, DIRECT HISPs and HIEs to support efficient interfaces between
EHRs, HIE, and the web interface and that the Quality Data Model
developed by NQF should be supported to standardize data collection.
This commenter also suggested that GPRO should be evaluated for
expanded use. However, a few commenters expressed concern about whether
GPRO is capable of being expanded for ACO use or its applicability for
ACO populations as it has been used primarily for large group practices
to date. A few commenters recommended further testing before
[[Page 67894]]
using it as proposed. Several commenters did not believe enough
information was available about GPRO and baseline metrics from GPRO.
One commenter stated that GPRO reported measure specifications are not
available for review and interpretation. One commenter requested
provider assistance if GPRO reporting is required. Another commenter
requested clarification about whether the intent was for GPRO to cover
all measures, and whether practices within an ACO would continue to
report separately under GPRO for purposes of a PQRS incentive payment.
Another commenter recommended that GPRO be populated soon with the
prior two years of likely ACO assigned members, including an analysis
of claims only results.
Response: We have attempted to weigh the burdens of various
reporting mechanisms against the benefits. The original GPRO tool
evolved from the PAT tool used for the PGP Demonstration, which was
developed with significant physician involvement. Over 600 physicians
in a range of practice sizes used it as part of the Medicare Care
Management Performance Demonstration, the PQRS had 35 groups using the
GPRO tool in 2010 and 61 have signed up for 2011. Additionally, the
tool has migrated to a web interface, which will offer the additional
capability of data upload from an EHR. As a result, we believe this
reporting mechanism is capable and well-tested and represents the best
current option for quality reporting. We do not think it would be
appropriate or effective to populate the web interface with the prior 2
years of beneficiaries likely to be assigned to an ACO, as one
commenter suggested, since this is not the population for which the
ACOs will be responsible for being accountable for quality or financial
performance. Rather, the ACO will be required to report on the
beneficiaries actually assigned to the ACO in 2012. As a result, the
web interface will be populated based on a sample of the 2012 assigned
beneficiaries. Additionally, the calendar year reporting period for the
ACO GPRO quality measures aligns with the PQRS GPRO reporting period
for purposes of qualifying ACO TINs for a 2012 PQRS incentive payment,
which is discussed in section II.F.5. of this final rule.
We are finalizing our proposal to build upon GPRO experience for
ACO use. We have specified in Table 1 which final measures must be
reported through the GPRO web interface.
Comment: Several commenters discouraged CMS from using the GPRO web
interface because it does not provide a long-term solution to data
collection and may hinder development of robust EHR solutions. One
commenter encouraged CMS to establish its intent to collect electronic
measures in subsequent years of the Shared Savings Program. A number of
commenters noted GPRO is a labor intensive reporting method requiring
chart abstraction, prone to error, and not derived from the normal
workflow of providing patient care and encouraged the use of measures
that could be captured by EHRs. One commenter expressed concern about
the limited amount of time proposed for data entry in GPRO. Several
commenters suggested alternate approaches to reporting. One commenter
suggested a parallel reporting pathway via EHR for practices that have
invested in health IT. One commenter suggested another standardized
option to the GPRO web interface. One commenter recognized that medical
record data would result in increased accuracy and recommended CMS
prioritize measures for electronic exchange of clinical data between
ACOs and CMS in the future rather than introduce the burden associated
with the use of the GPRO web interface. Another commenter suggested
content analysis of unstructured data available from encounters to more
objectively measure some dimensions of quality without increasing
reporting burden. This commenter also suggested that content analysis
methodology be tested prior to building out the GPRO web interface.
Response: We agree that it is important to foster innovation and
support the development and uptake of electronic medical records. For
this reason, we are including a measure related to EHR Incentive
Program participation in our final measure set. However, we must rely
on other means of collecting quality data for the Shared Savings
Program until there is much more widespread use of electronic medical
records and available means for group reporting based on ACO
beneficiary level data. We note that the original GPRO tool evolved
from the PAT tool used for the PGP Demonstration, which was developed
with significant physician involvement, and over 600 physicians in a
range of practice sizes used it as part of the Medicare Care Management
Performance Demonstration. PQRS had 35 groups using the GPRO tool in
2010 and currently have 61 signed up for 2011. As a result, we believe
this reporting mechanism is sound and well-tested, and we intend to
build upon this experience for ACO use. Additionally, the tool has
migrated to a web interface, which will offer the additional capability
of data upload from an EHR. We do not believe content analysis of
unstructured data, as one commenter suggested, would be an efficient or
operationally feasible way of collecting and analyzing ACO quality data
as it would be difficult and time-consuming to make quality performance
standard determinations from non-uniform data. Additionally, the GPRO
web interface represents a first step in EHR-based reporting, which we
believe is more efficient and cost-effective, since it will allow ACOs
to upload data directly from their EHR systems. Meanwhile, those ACOs
that would prefer to manually submit data through the GPRO web
interface could do so, in a uniform way.
Comment: A few commenters expressed concern about the proposed GPRO
data validation process and discussed the difficulty of obtaining
medical records across an entire ACO and reconciling those records with
quality performance data reported by the ACO. One of these commenters
further stated that the data validation process should be tested prior
to implementation.
Response: We agree that data validation may be a challenge but do
not believe that use of the GPRO web interface significantly adds
complexity. Rather, we believe the data validation process implicitly
incentivizes ACOs to keep organized and up-to-date medical records and
is necessary to protect against the gaming concerns other commenters
have noted.
c. Certified EHR Technology
In July 2010, HHS published final rules for the EHR Incentive
Programs. The final regulations included certain clinical quality
measures on which EPs and eligible hospitals must report as part of
demonstrating they are meaningful EHR users. In the proposed rule, we
included information on which of the proposed quality measures for the
Shared Savings Program are currently included in the EHR Incentive
Programs and stated our intent to continue to further align the
measures between the two programs. As we intend to further align both
the Shared Savings Program and EHR incentive program through subsequent
rulemaking, we stated that we anticipated that certified EHR technology
(including EHR modules certified to calculate and submit clinical
quality measures) would be an additional measure reporting mechanism
used by ACOs under the Shared Savings Program in future program years.
Comment: Several commenters supported the use of EHR-derived
[[Page 67895]]
measures whenever possible, particularly as the use of EHRs becomes
more widespread. One commenter was concerned that EHRs do not currently
generate all the data necessary for the proposed performance measures.
Others supported the move toward EHR-based measures over time. One
commenter was concerned that the proposed measures require providers to
have already adopted an EHR. Several commenters suggested special
consideration for EHR adoption be given to smaller practices. Several
commenters supported movement toward using Health Information Exchange
(HIE) as a means of measures reporting. Another commenter expressed
concern that the proposed regulations require a level of functional
health information exchange that is not yet available, such as a
patient online portal to meet the patient-centeredness objective and
the need to electronically exchange information with entities outside
of the ACO. This commenter suggested that allowing ACOs to determine
their own technology needs would result in greater participation and
more widespread adoption of best practices. One commenter stated that
differences in technology access among providers would inhibit
information sharing and care coordination and stated that, if
beneficiaries see non-ACO providers, care coordination may be
diminished. This commenter requested a separate policy to address care
coordination and exchange of information.
Many commenters also recommended that CMS allow data submission
through clinical registries and encourage their use as a proven tool to
improve quality and control costs and as a way of having real-time
actionable data. One commenter also recommended that CMS allow data to
be submitted via registry or additional means that have been
established by regional collaborative.
Response: While we hope to have more robust capabilities for EHR-
derived measures and reporting in the future, at this point we are
finalizing one quality measure that rewards and encourages greater EHR
use, which is the percent of primary care providers who successfully
qualify for an EHR Incentive Program payment. We are also double
weighting this measure for scoring purposes as well as for determining
poor performing to reflect the importance of HIT for ACOs to redesign
care, provide practitioners actionable information at the point of
care, and to align incentives and encourage broader EHR adoption. As
providers gain more experience with EHR technology, we will reconsider
using certified EHR technology as an additional reporting mechanism
used by ACOs under the Shared Savings Program.
Final Decision: After considering the comments and for the reasons
discussed previously, we are finalizing our proposal to use survey
based measures, claims and administrative data based measures, and the
GPRO web interface as a means of ACO quality data reporting for certain
measures, as listed in Table 1. For the ACO GPRO measures, we are
finalizing our proposal to use the same sampling method used in the
2011 PQRS GPRO I, as described previously. We are also finalizing our
proposal to retain the right to validate the data ACOs enter into the
GPRO web interface via a data validation process based on the one used
in phase I of the PGP demonstration, as described previously.
4. Quality Performance Standards
a. General
A calculation of the quality performance standard will indicate
whether an ACO has met the quality performance goals that would deem it
eligible for shared savings. As discussed previously in section II.F.2.
of this final rule, we are finalizing the 33 measures in Table 1 to
establish the quality performance standards that ACOs must meet in
order to be eligible for shared savings.
In the proposed rule, we considered two alternative options for
establishing quality performance standards for the measures: Rewards
for better performance, and a minimum quality threshold for shared
savings. We proposed the performance score approach and sought comment
on the threshold approach. The performance score approach would reward
ACOs for better quality with larger percentages of shared savings. The
threshold approach would ensure that ACOs exceed minimum standards for
the quality of care, but allows full shared savings if ACOs meet the
minimum level of performance.
b. Performance Scoring
Under the proposed rule, quality performance standards would be
used to arrive at a total performance score for an ACO. We proposed to
organize the measures by domain, and to score the performance on each
measure. We proposed to roll up the scores for the measures in each
domain into domain scores and to provide ACOs with performance feedback
at both the individual measure and domain level. We proposed that the
percentage of points earned for each domain would be aggregated using a
weighting method to arrive at a single percentage that would be applied
to determine the final sharing rate used to determine any shared
savings or losses. We proposed that the aggregated domain scores would
determine the ACO's eligibility for sharing up to 50 percent of the
total savings generated by the ACO under the one-sided model or 60
percent of the total savings generated by the ACO under the two-sided
risk model. We also discussed our proposal to set the quality
performance standard in the first year of the Shared Savings Program at
the complete and accurate reporting level and set the standard at a
performance level in subsequent years.
(1) Measure Domains and Measures Included in the Domains
The proposed quality performance standard measures in Table 1 were
subdivided into 5 domains, including: (1) Patient/Caregiver Experience;
(2) Care Coordination; (3) Patient Safety; (4) Preventive Health; and
(5) At-Risk Population/Frail Elderly. We proposed that the At-Risk
Population/Frail Elderly domain would include a frail elderly category
as well as the following chronic diseases: Diabetes mellitus; heart
failure; coronary artery disease; hypertension and chronic obstructive
pulmonary disorder.
(2) Methodology for Calculating a Performance Score for Each Measure
Within a Domain
We proposed that an ACO would receive a performance score on each
proposed measure. For the first year of the Shared Savings Program,
these scores would be for informational purposes, since we proposed to
set the quality performance standard at the reporting level. For
subsequent years of the program, we proposed setting benchmarks for
each measure using national Medicare FFS claims data, MA quality
performance rates, or, where appropriate, the corresponding national
percent performance rates that an ACO will be required to demonstrate.
For each measure, we proposed to set a performance benchmark and a
minimum attainment level as defined in Table 3 of the proposed rule (76
FR 19595). We proposed that the benchmarks would be established using
the most currently available data source and most recent available year
of benchmark data prior to the start of the Shared Savings Program
annual agreement periods. We would determine Medicare FFS rates by
pulling a data sample and modeling the measures. For
[[Page 67896]]
MA rates, we would check the distribution from the most recent
available annual MA quality performance data for all MA plans and set
the benchmark accordingly. Furthermore, since MA quality performance
rates utilize both claims and clinical data, we proposed to use those
rates when they are available.
We proposed that benchmark levels for each of the measures included
in the quality performance standard would be made available to ACOs,
prior to the start of the Shared Savings Program and each annual
performance period thereafter, so ACOs would be aware of the benchmarks
they must achieve to receive the maximum quality score. In the proposed
rule, we stated that in future program years, we anticipate
incorporating actual ACO performance to update the national benchmarks.
We also proposed that if an ACO fails to meet quality performance
standard during a performance year (that is, fails to meet, the minimum
attainment level for one or more domain(s)), we would give the ACO a
warning, provide an opportunity to resubmit, and reevaluate the ACO's
performance the following year. If the ACO continues to significantly
under-perform, the agreement may be terminated. We further proposed
that ACOs that exhibit a pattern of inaccurate or incomplete reporting
or fail to make timely corrections following notice to resubmit may be
terminated from the program. We noted that since meeting the quality
standard is a condition for sharing in savings, the ACO would be
disqualified from sharing in savings in each year in which it
underperforms.
We proposed that performance below the minimum attainment level
would earn zero points for that measure under both the one-sided and
two-sided risk models. We also proposed that performance equal to or
greater than the minimum attainment level but less than the performance
benchmark would receive points on a sliding scale based on the level of
performance, for those measures in which the points scale applies. We
also proposed setting the initial minimum attainment level for both the
one-sided and two-sided shared savings models at a 30 percent or the
30th percentile of national Medicare FFS or the MA rate, depending on
what performance data are available.
We proposed ``all or nothing'' scoring for the diabetes and CAD
composite measures. We proposed that measures designated as all or
nothing measures would receive the maximum available points if all
criteria are met and zero points if at least one of the criteria are
not met. We defined ``all or nothing'' scoring to mean all of the care
process steps and expected outcomes for a particular beneficiary with
the target condition must be achieved to score positively. This means
all sub measures within the diabetes and CAD composites would need to
be reported in order to earn any credit for these measures. We stated
we recognized that all or nothing scoring implies that all
beneficiaries can and should receive the indicated care process, which
may not necessarily be appropriate for all beneficiaries. As a result,
we also proposed scoring the diabetes and CAD sub measures
individually. We also proposed a HAC composite measure for which we did
not propose all or nothing scoring, since the HACs are rare events.
We also stated our intent to post performance rates for the final
measures set, including the applicable benchmarks, on the CMS Web site
prior to the start of the first performance period.
(3) Methodology for Calculating a Performance Score for Each Domain
Similar to our proposal for setting a quality standard for each
individual measure at the reporting level in the first program year, we
also proposed setting a quality standard for each domain at the
reporting level. For subsequent program years, we proposed to calculate
the percentage of points an ACO earns for each domain after determining
the points earned for each measure. We planned to divide the points
earned by the ACO across all measures in the domain by the total points
available in that particular domain. Each domain would be worth a
predefined number of points based on the number of individual measures
in the domain.
We proposed that under both the one-sided and two-sided shared
savings models, the quality measures domain scoring methodology would
treat all domains equally regardless of the number of measures within
the domain. We stated in the proposed rule that we believed the key
benefit of weighting the domains equally is that it would not create a
preference for any one domain, which we consider important as we expect
ACOs to vary in composition, and, as a result, to place more emphasis
on different domains. Furthermore, we want to encourage a diverse set
of ACOs and believe that emphasizing certain domains over others would
encourage a certain type of ACO to participate but discourage other
types from participating.
We proposed to aggregate the quality domain scores into a single
overall ACO score which would be used to calculate the ACOs final
sharing rate for purposes of determining shared savings or shared
losses. All domain scores for an ACO would be averaged together equally
to calculate the overall quality score that would be used to calculate
the ACO's final sharing rate used to determine the amount of shared
savings or losses an ACO would receive or owe. We also proposed that
ACOs must report completely and accurately on all quality measures
within all domains to be deemed eligible for shared savings
consideration. Finally, we stated we also considered scoring measures
individually under a method that weights measures equally as well as an
approach that would weight quality measures by their clinical
importance.
(4) The Quality Performance Standard Level
We proposed to set the quality performance standard for the first
year of the Shared Savings Program at the reporting level. That is,
under the one-sided model, we proposed that an ACO would receive 50
percent of shared savings (provided that the ACO realizes sufficient
cost savings under) based on 100 percent complete and accurate
reporting on all quality measures. Similarly, we proposed that under
the two-sided risk model, ACOs would receive 60 percent of shared
savings (provided that the ACO realizes sufficient cost savings) based
on 100 percent complete and accurate reporting on all quality measures.
We stated that setting the quality performance standard for the first
year of the Shared Savings Program at full and accurate reporting would
allow ACOs to ramp up, invest in their infrastructure, engage ACO
providers/suppliers, and redesign care processes to capture and provide
data back to their ACO providers/suppliers to transform care at the
point of care. We also noted that setting the quality performance
standard at the reporting level would be consistent with other value-
based purchasing programs that started as pay for reporting programs.
We indicated that we planned to raise the quality performance
standard requirements in future years through future rulemaking, when
actual performance on the reported measures would be considered in
establishing the quality benchmarks (in addition to the national flat
percent or FFS/MA percentile). We stated in the proposed rule that we
believe this approach would be consistent with section 1899(b)(3)(C) of
the Act, which requires that the Secretary ``seek to improve the
quality of care furnished by ACOs over time by specifying higher
standards,
[[Page 67897]]
new measures, or both for the purposes of assessing such quality of
care.''
While we proposed the performance scoring methodology, we also
considered adopting a minimum quality threshold to assess the
performance of participating ACOs, as described in the proposed rule
(76 FR 19597-98).
Comment: A few commenters suggested weighting each domain equally
or balancing the number of measures in each domain to prevent any
single measure from having a greater impact on the overall score.
Another commenter stated that proposed measures are unfairly weighted
and measured. One commenter believed process measurements should be
scored higher since they are under provider control, whereas another
commenter suggested that outcome measures be weighted heavier than
structure and process measures. One commenter thought the measures
should be more evenly distributed across the 5 equally weighted
domains, so that domains with fewer measures do not have a greater
impact on overall score. A few commenters did not agree with measures
having equal weighting. One commenter recommended that the Patient/
Caregiver Experience and Care Coordination domains be more heavily
weighted as they are the foundation for improving process and outcomes,
while another commenter stated the domains of care coordination and
patient caregiver experience are untested.
One commenter suggested scoring clinical process measures
individually rather than by domain. A number of commenters thought the
proposed approach would exclude a large number of ACOs from sharing in
savings even though they were providing high quality care. Many
commenters took issue with the notion that failing to attain the
standard for one single measure would eliminate the possibility for
sharing in any savings and recommended that the threshold be set at the
domain level rather than the individual measure level. One commenter
suggested CMS provide each ACO with their historical 50th percentile
for each quality metric which the ACO would have to exceed in each
domain to fully share in savings. For each domain that exceeded
benchmark, this commenter recommended the ACO's share of savings would
increase by 20 percent but the ACO would still be responsible for
shared losses under the two-sided model.
Response: We believe that all 4 domains we are adopting in this
final rule are of considerable importance and, therefore, agree with
the comments that supported weighting each domain equally and will
finalize our proposal to do so. This means the 4 measure domains
(patient/caregiver experience, care coordination/patient safety,
preventive health, and at-risk population) will be weighted at 25
percent each in calculating an ACO's overall quality performance score
for purposes of determining its final sharing rate. Additionally, we
are finalizing the following disease categories within the At-Risk
population domain: Diabetes, hypertension, ischemic vascular disease,
heart failure, and coronary artery disease.
Equally weighting the measure domains, and individual measures
within the domains, is consistent with our view that all of these
domains are important to achieving the Medicare Shared Savings Program
goals and should be a focus of ACOs, with the exception of the measure,
Percent of PCPs who Successfully Qualify for an EHR Incentive Payment.
We are double-weighting this measure, as discussed in section II.F. of
this final rule, in an effort to signal the importance of EHR adoption
to ACOs for achieving success in the Shared Savings Program. We note
that, since the Shared Savings Program has not yet begun and ACOs have
not yet formed, we are unsure how we could provide any ACO historical
data on its quality performance since it would require participating
organizations to submit a historical baseline for quality which we
believe would add unnecessary burden to newly forming ACOs.
Comment: Many commenters suggested CMS reward a higher level of
quality and not just a threshold. Several commenters expressed concern
that the quality points scale failed to reward ACOs who are already
providing high quality, efficient care in the first year and fails to
reward high performance, as opposed to minimum threshold, in subsequent
years.
Response: We believe the proposed approach offers a greater
incentive for continuous quality improvements, since it has a sliding
scale in which higher levels of quality performance translate to higher
sharing rates. High performing ACOs should do well under this approach
since it recognizes and provides incentives for ACOs to maintain high
quality performance in order to maximize their sharing of savings and
minimize their sharing of losses.
Comment: Many commenters took issue with the proposed 30 percent/
30th percentile threshold. Several commenters stated that if CMS
establishes benchmarks solely on the participating ACOs, it would be
unfair to assume the bottom 30 percent should receive no credit toward
retaining savings when they may very well be performing well above the
rest of the nation. Several commenters suggested CMS should, instead,
establish specific thresholds for each measure such as a certain
percentage with blood pressure under control or a certain percentage
improvement, particularly for measures which have not been validated or
are not in widespread use among Medicare beneficiaries. However,
another commenter suggested a minimum attainment level higher than the
30th percentile in order to best promote quality improvement. One
commenter suggested maintaining the proposed approach to score
individual measures on a continuum between a threshold (lower bound)
and benchmark (upper bound). One commenter suggested rewarding
performance in the middle range of quality improvement more than the
upper target and lower threshold by taking an average of high and low
performers' scores. A couple of commenters noted that without known
targets it will be difficult for ACOs to know whether they will be able
to achieve the quality performance standards. These commenters
requested that we publish specific thresholds in the final rule so that
ACOs will know before applying for the program whether they have a
reasonable likelihood of success. One commenter suggested establishing
performance thresholds and rewarding those ACOs that achieve or make
improvements toward those thresholds while another recommended
establishing specific numerical targets for all laboratory-based
measures. One commenter advocated for gradual increases in the minimum
attainment level so that health care organizations are encouraged to
continually improve, with clear delineation and rewards for the high
performers.
Response: We are finalizing our proposal to establish the minimum
attainment level for a measure at a national flat 30 percent or where
applicable the national 30th percentile level of performance of FFS or
MA quality rates, because we believe this level is reasonable and
achievable given current levels of performance on measures in other
programs and based on measure community research. As previously
discussed, the first year of the agreement period will be pay for
reporting only, so ACOs would earn their maximum sharing rate for
completely and accurately reporting 100 percent of the required data.
We plan to release performance benchmarks in sub regulatory guidance at
the start of the
[[Page 67898]]
second year of the performance period as we phase in measures to pay
for performance so that ACOs are aware of the actual performance rates
they will need to achieve to earn the maximum quality points under each
domain. We agree with the comment suggesting we gradually raise the
minimum attainment level in order to continue to incentivize quality
improvement over time and would do so through future rulemaking after
providing sufficient advance notice with a comment period to first gain
industry input. We note that performance will be rewarded on a scale
such that levels of quality improvement between an upper and lower
threshold are rewarded. This scale also rewards higher improvement over
time, since higher performance translates to higher shared savings. For
example, an ACO that performs at 80 percent/80th percentile one year
and then at 90 percent/90th percentile the next year, would receive a
higher level of shared savings in their second year than in their first
year, based on their improved quality performance.
Comment: One commenter suggested using the first 2 years of ACO
performance data to establish performance benchmarks, rather than the
first year only, since the first year will require ACOs to develop
infrastructure and reporting systems. A couple of commenters suggested
calculating regional benchmarks so ACOs have a similar chance of
achieving success regardless of geographic location. One of these
commenters recommended benchmarking at the geographic unit level MedPAC
has recommended for MA payments and thought benchmarks should not be
based on ACO providers/suppliers alone. One commenter recommended that
the benchmark should be based on comparable, local, non-assigned, FFS
beneficiaries. However, another commenter thought benchmarks should be
based on a comparison of ACOs to other ACOs or Medicare FFS but not MA.
The commenter thought it would be inequitable to compare ACOs to the MA
program, since patients are locked-in to providers under MA and cannot
change providers, unlike an ACO model under which patients are free to
seek care outside of the ACO. One commenter suggested an evidence-based
approach to any benchmark changes. One commenter recommended CMS
specify in the final rule whether FFS or MA data would serve as the
basis for benchmarks. This commenter advocated for use of FFS data
since these data are more directly relevant to the target population
from which the ACO population is derived. One commenter stated that
relying on existing data sources for measures would have the advantage
of allowing benchmarks to be determined from program onset. This
commenter also believed that having a fixed set of performance targets
around which the ACO can plan its work is essential to the program's
success and that targets should not vary from year to year although the
commenter did suggest a range (for example, good to great) be
established and incentives set accordingly. One commenter asked for
clarification about how benchmarks would be developed for proposed
measures that do not have historical data. One commenter requested
alignment of the scoring methodology with value-based purchasing.
Response: We are finalizing our proposal to establish national
benchmarks for quality measures using a national sample of Medicare FFS
claims data, M A quality data, or a flat percentage if FFS claims/MA
quality data are not available. We believe national benchmarks are more
appropriate than regional benchmarks, since Medicare FFS is a national
program and we would like to measure quality improvement and make
comparisons over time between FFS and ACO populations on a national
basis. Regarding the comment asking how we would develop benchmarks for
measures in which claims or MA quality data are not available, we would
use a flat national percent establishing the minimum at 30 percent and
the maximum at 90 percent as indicated in Table 3. We plan to release
benchmarking data in subregulatory guidance and expect to align with
other pay for performance program benchmarking methodologies over time.
At this time, we are not proposing to compare an ACO's quality
performance to the performance of other ACOs for purposes of
determining an ACO's overall quality score and final sharing rate. We
agree that we should seek to incorporate actual ACO performance on
quality scores into the quality benchmark, however, we would do so in
future rulemaking and then only after seeking industry input. In
addition, we do expect to update the benchmarks over time, consistent
with section 1899(d)(3)(C) of the Act, which requires CMS to seek to
improve the quality of care over time.
Comment: Several commenters recommended a sliding scale in lieu of
complete and accurate reporting. One commenter recommended the standard
for complete and accurate reporting should be 95 to 100 percent and the
threshold should be between the 70th and 100th percentile. A few
commenters suggested CMS consider the PQRS experience with reporting;
one mentioned that CMS lowered the PQRS reporting threshold from 80 to
50 percent for its claims based reporting option and kept the registry
reporting threshold at 80 percent. A couple of commenters requested
clarification on what would constitute a ``reasonable explanation'' for
an ACO not to report quality data. A number of commenters thought the
proposed approach would exclude a large number of ACOs from sharing in
savings even if they provided high quality care. Many commenters took
issue with the notion that failing to attain the standard for one
single measure should eliminate the possibility of sharing in any
savings. One commenter recommended CMS give ACOs credit for measures on
which the ACO scored well, even if it does not meet the threshold for
other measures within the domain, perhaps by setting the threshold at
the domain level rather than the measure level. This commenter stated
this was particularly important early in the program, when ACOs may not
have experience with the measures, the specifications may have been
modified, and the thresholds setting methodology is new and untested.
Response: While it is our intent that ACOs raise the bar in terms
of quality of care improvement and performance, and although we believe
100 percent complete and accurate reporting can be achieved for the
measures we are finalizing, we are sensitive to comments suggesting we
have modified this final rule to allow ACOs more time to ramp up. As a
result, we have modified this final rule to provide a longer phase in
to pay for performance. All 33 measures used for scoring purposes will
be pay for reporting in year 1 of the agreement. In year 2, 8 measures
will continue to be pay for reporting, while 25 measures will be used
for pay for performance. In year 3 (and 4 if applicable), 32 measures
will be pay for performance and 1 measure, the health status/functional
status module will be pay for reporting.
Final Decision: We recognize that achieving the quality performance
standard on 33 out of 33 measures may be difficult especially in the
early years. Accordingly, we have modified this final rule to require
that ACOs achieve the quality performance standard on 70 percent of the
measures in each domain. If an ACO fails to achieve the quality
performance standard on at least 70 percent of the measures in each
domain we will place the ACO on a corrective action plan and re-
evaluate the following year. If the ACO continues to
[[Page 67899]]
underperform in the following year, the agreement would be terminated.
We believe requiring ACOs to achieve the quality performance standard
on 70 percent of the measures in each of the 4 domains establishes a
feasible standard, while signaling to providers that they need to
devote significant focus to performance in each domain.
This approach also means that an ACO could fail one or more
individual measures in each domain measure and still earn shared
savings. ACOs must achieve the minimum attainment level on at least 70
percent of the measures in each domain in order to continue in the
program. As described in section II.H. of this final rule, if an ACO
fails to achieve the minimum attainment level on at least 70 percent of
the measures in each domain, we will give the ACO a warning, an
opportunity to resubmit and re-evaluate the following year. If the ACO
continues to underperform in the following year, the agreement would be
terminated. However, in any year that an ACO scores a zero for an
entire measure domain, it would not be eligible to share in any savings
generated. It should also be noted that if an ACO fails to completely
and accurately report the EHR measure, the ACO would miss the 70
percent cut-off for the Care Coordination domain, since this measure is
double-weighted for both scoring purposes and for purposes of
determining poor performance.
We are also finalizing our proposal that if an ACO fails to report
one or more measures, we will send the ACO a written request to submit
the required data by a specified date and to provide reasonable
explanation for its delay in reporting the required information. If the
ACO fails to report by the requested deadline or does not provide a
reasonable explanation for delayed reporting, we would immediately
terminate the ACO for failing to report quality measures. ACOs that
exhibit a pattern of inaccurate or incomplete reporting or fail to make
timely corrections following notice to resubmit may be terminated from
the program. An ACO that has been terminated from the program is
disqualified from sharing in savings.
Table 3--Sliding Scale Measure Scoring Approach
----------------------------------------------------------------------------------------------------------------
Quality points (all measures except
ACO performance level EHR) EHR measure quality points
----------------------------------------------------------------------------------------------------------------
90+ percentile FFS/MA Rate or 90+ 2 points.............................. 4 points.
percent.
80+ percentile FFS/MA Rate or 80+ 1.85 points........................... 3.7 points.
percent.
70+ percentile FFS/MA Rate or 70+ 1.7 points............................ 3.4 points.
percent.
60+ percentile FFS/MA Rate or 60+ 1.55 points........................... 3.1 points.
percent.
50+ percentile FFS/MA Rate or 50+ 1.4 points............................ 2.8 points.
percent.
40+ percentile FFS/MA Rate or 40+ 1.25 points........................... 2.5 points.
percent.
30+ percentile FFS/MA Rate or 30+ 1.10 point............................ 2.2 points.
percent.
< 30 percentile FFS/MA Rate or < 30 No points............................. No points.
percent.
----------------------------------------------------------------------------------------------------------------
Table 4--Total Points for Each Domain Within the Quality Performance Standard
----------------------------------------------------------------------------------------------------------------
Total Total
individual Total measures for potential Domain weight
Domain measures scoring purposes points per (percent)
(Table F1) domain
----------------------------------------------------------------------------------------------------------------
Patient/Caregiver Experience.......... 7 1 measure with 6 survey 4 25
module measures
combined, plus 1
individual measure.
Care Coordination/Patient Safety...... 6 6 measures, plus the EHR 14 25
measure double-weighted
(4 points).
Preventative Health................... 8 8 measures.............. 16 25
At Risk Population.................... 12 7 measures, including 5 14 25
component diabetes
composite measure and 2
component CAD composite
measure.
-------------------------------------------------------------------------
Total............................. 33 23...................... 48 100
----------------------------------------------------------------------------------------------------------------
As illustrated in Table 4, a maximum of 2 points per measure could
be earned under both the one-sided and two-sided model based on the
ACO's performance, except on the EHR measure, which is weighted double
any other measure and would be worth 4 points. We believe EHR adoption
is important for ACOs to be successful in the Shared Savings Program
and are double weighting this measure as a way to signal this and
provide incentive for greater levels of EHR adoption.
However, the total potential for shared savings will be higher
under the two-sided model, since the maximum potential shareable
savings based on quality performance is 60 percent of the savings
generated, compared to 50 percent under the one-sided model, as
discussed in section II.G. of this final rule. That is, 100 percent
reporting of the quality measures in the first year of the Shared
Savings Program will result in an ACO earning 50 or 60 percent of
shareable savings, depending on whether the ACO is in the one-sided or
two-sided model. For future performance periods, the percent of
potential shareable savings will vary based on the ACO's performance on
the measures as compared with the measure benchmarks as we phase in the
pay for performance measures, as shown in Table 2.
We are establishing the minimum attainment level for each measure
at a national flat 30 percent or the national Medicare FFS or MA 30th
percentile level of performance, as proposed. We believe this level is
reasonable and achievable given current levels of performance on
measures in other programs and based on measure community research.
ACOs will have to score at or above the minimum attainment level in
order to receive any credit for reporting the quality measure. We will
release corresponding national benchmarks, based on Medicare FFS claims
data, Medicare Advantage quality data, or a flat percentage if claims/
quality data are not available in
[[Page 67900]]
subregulatory guidance at the start of the second performance period
and, when certain measures move to pay for performance.
We are also finalizing our proposal for scoring individual measures
in each domain in pay for performance years. Based on their level of
performance on each measure an ACO would earn the corresponding number
of points as outlined in Table 3. The total points earned for measures
in each domain would be summed up and divided by the total points
available for that domain to produce an overall domain score of the
percentage of points earned versus points available.
We are finalizing our proposal to weight each of the 4 measure
domains (patient/caregiver experience, care coordination/patient
safety, preventive health, and at-risk population) equally at 25
percent for purposes of determining an ACO's overall quality
performance score. We believe giving equal weight to the domains will
signal the equal importance of each of these areas and to encourage
ACOs to focus on all domains in order to maximize their sharing rate.
Accordingly, the percentage score for each domain, calculated using the
methodology described previously, will be summed and divided by 4 to
reflect the equal weighting of the domains. The resulting percentage
will then be applied to the maximum sharing rate under either the one-
sided or two-sided model to determine the ACOs final sharing rate for
purposes of determining its shared savings payment or share of losses.
5. Incorporation of Other Reporting Requirements Related to the PQRS
and Electronic Health Records Technology Under Section 1848 of the Act
The Affordable Care Act gives the Secretary authority to
incorporate reporting requirements and incentive payments from these
programs into the Shared Savings Program, and to use alternative
criteria to determine if payments are warranted. Specifically, section
1899(b)(3)(D) of the Act affords the Secretary discretion to ``* * *
incorporate reporting requirements and incentive payments related to
the physician quality reporting initiative (PQRI), under section 1848
of the Act, including such requirements and such payments related to
electronic prescribing, electronic health records, and other similar
initiatives under section 1848 * * *'' and permits the Secretary to
``use alternative criteria than would otherwise apply [under section
1848 of the Act] for determining whether to make such payments.'' Under
this authority, we proposed to incorporate certain reporting
requirements and payments related to the PQRS into the Shared Savings
Program for ``eligible professionals'' within an ACO (76 FR 19598).
Under section 1848(k)(3)(B) of the Act, the term ``eligible
professional'' means any of the following: (1) A physician; (2) a
practitioner described in section 1842(b)(18)(C) of the Act; (3) a
physical or occupational therapist or a qualified speech pathologist;
or (4) a qualified audiologist.
We proposed to incorporate a PQRS GPRO under the Shared Savings
Program and further proposed that EPs that are ACO participant
providers/suppliers would constitute a group practice for purposes of
qualifying for a PQRS incentive under the Shared Savings Program (76 FR
19599). Specifically, we proposed that EPs would be required to submit
data through the ACO on the quality measures we proposed (76 FR 19571)
to qualify for the PQRS incentive under the Shared Savings Program. We
proposed that the ACO would report and submit data on behalf of the EPs
in an effort to qualify for the PQRS incentive as a group practice;
that is, EPs within an ACO would qualify for the PQRS incentive as a
group practice, and not as individuals. In addition, we proposed a
calendar year reporting period from January 1 through December 31, for
purposes of the PQRS incentive under the Shared Savings Program. With
regard to the incorporation of criteria for satisfactory reporting for
purposes of the PQRS incentive for the first performance period under
the Shared Savings Program, we proposed that:
An ACO, on behalf of its EPs, would need to report on all
measures included in the data collection tool;
Beneficiaries would be assigned to the ACO using the
methodology described in the Assignment section of the proposed rule.
As a result, the GPRO tool would be populated based on a sample of the
ACO-assigned beneficiary population. ACOs would need to complete the
tool for the first 411 consecutively ranked and assigned beneficiaries
in the order in which they appear in the group's sample for each
domain, measures set, or individual measure if a separate denominator
is required such as in the case of preventive care measures which may
be specific to one sex. If the pool of eligible assigned beneficiaries
is less than 411, the ACO would report on 100 percent of assigned
beneficiaries for the domain, measure set, or individual measure.
The GPRO tool would need to be completed for all domains,
measure sets, and measures described in Table 1 of the proposed rule.
Accordingly, we proposed that EPs within an ACO that satisfactorily
report the proposed measures during the reporting period would qualify
under the Shared Savings Program for a PQRS incentive equal to 0.5
percent of the Secretary's estimate of total Medicare Part B PFS
allowed charges for covered professional services furnished by the
ACO's EPs during the first performance period. ``Covered professional
services'' are services for which payment is made under, or based on,
the physician fee schedule and which are furnished by an eligible
professional under the ACO participant's TINs.
We proposed to align the incorporated PQRS requirements with the
general Shared Savings Program reporting requirements, such that no
extra reporting would actually be required in order for EPs or the ACO
to earn the PQRS incentive under the Shared Savings Program. Thus, for
ACOs that meet the quality performance standard under the Shared
Savings Program for the first performance period, we proposed that the
PQRS EPs within such ACOs will be considered eligible for the PQRS
incentive under the Shared Savings Program for that year. In the
proposed rule, we stated that this means ACOs would need to report on
all measures proposed (76 FR 19571) in order to receive both the Shared
Savings Program shared savings and PQRS incentive (76 FR 19599). We
also stated that failure to meet the Shared Savings Program quality
performance standard would result in failure to be considered eligible
for shared savings, as well as failure for the EPs within the ACO to
receive a PQRS incentive under the Shared Savings Program for that
year. ACO participant provider/suppliers who meet the quality
performance standard but do not generate shareable savings would still
be eligible for PQRS incentive payments. We also indicated that we
intended to discuss the policy for incorporating the PQRS incentive
under the Shared Savings Program for subsequent years in future
rulemaking (76 FR 19599).
We noted in the proposed rule that ACOs would be eligible for the
PQRS incentive under the Shared Savings Program to the extent that they
contain EPs as defined under Sec. 414.90(b). As a result, not all ACOs
would necessarily be eligible for the PQRS incentive under the Shared
Savings Program. A complete list of PQRS EPs (EP) is available at:
http://www.cms.gov/PQRI/Downloads/EligibleProfessionals.pdf. In
addition, similar to traditional PQRS, we indicated that an EP could
not
[[Page 67901]]
qualify for the PQRS incentive as both a group that is part of an ACO
and as an individual. Furthermore, EPs could not qualify for a PQRS
incentive under both the PQRS under the Shared Savings Program and the
traditional PQRS under the same TIN. For purposes of PQRS incentive
analysis and payment, we stated that we intended to use TINs and NPI
numbers similar to what we have done in the traditional PQRS (75 FR
40169), and we would provide such details in guidance (76 FR 19599). We
invited comment on our proposal to incorporate PQRS requirements and
payments under the Shared Savings Program.
We did not propose to incorporate payments for the EHR Incentive
Program or eRx Incentive Program under the Shared Savings Program.
Professionals in ACOs may still separately participate in the EHR
Incentive Program or Electronic Prescribing Incentive Program. However,
we proposed to require for the Shared Savings Program measures also
included in the EHR Incentive Program and metrics related to successful
participation in the Medicare and Medicaid EHR Incentive Programs for
EPs and hospitals and the eRx Incentive Program.
In addition, as a Shared Savings Program requirement separate from
the quality measures reporting, we proposed requiring that at least 50
percent of an ACO's primary care physicians be determined to be
``meaningful EHR users'' as that term is defined in 42 CFR 495.4 by the
start of the second performance year in order to continue participation
in the Shared Savings Program. The EHR Incentive regulations, including
the definition of meaningful EHR user and certified EHR technology can
be found at 42 CFR part 495, as published on July 28, 2010 (75 FR
44314). The preamble to the July 28, 2010 final rule also describes the
stages of meaningful use. We also sought comment on whether we should
also specify a percentage-based requirement for hospitals. Such a
requirement would be similar to the previous proposal for primary care
physicians and would require 50 percent of eligible hospitals that are
ACO providers/suppliers achieve meaningful use of certified EHR
technology by the start of the second performance year in order for the
ACO to continue participation in the Shared Savings Program. We also
requested public comment related to circumstances where the ACO may
include only one eligible hospital or no hospital and whether we would
need to provide an exclusion or exemption in such a circumstance.
Comment: A few commenters specifically commended CMS's alignment of
the ACO quality reporting requirements with PQRS reporting
requirements. A few commenters recommended a single reporting process
for the measures common to PQRS, ACO, and the EHR Incentive programs to
reduce burden and duplication of effort. However, one commenter
recommended separate reporting for the Shared Savings Program quality
performance standard and the PQRS satisfactory reporting requirement
initially until experience with the measures ACOs report for shared
savings eligibility purposes demonstrates reliability for both ACO and
PQRS needs. One commenter suggested individual PQRS reporting for
providers who may be in more than one ACO. One commenter supported
alignment with traditional PQRS GPRO reporting and suggested a
financial disincentive for non-compliance. One commenter believed that
individual EPs should be allowed to submit quality measures data to the
traditional PQRS without participating in ACOs. Another commenter
expressed concern that professionals could be confused by reporting ACO
PQRS measures via GPRO for their ACO patients if they are also
reporting PQRS measures via claims or a registry for patients not in
the ACO under the traditional PQRS program.
Response: We agree with the recommendations to streamline reporting
as much as possible and are finalizing a set of measures aligned with
other programs, such as the PQRS, EHR Incentive Program, and PGP
Transition Demonstration. In order to reduce reporting burden and
decrease operational complexity for purposes of earning the PQRS
incentive under the Shared Savings Program, we are modifying our
proposal. Although we are requiring that EPs in ACOs meet the criteria
for satisfactory reporting by reporting data on all of the final ACO
GPRO measures, we are not finalizing our proposal to condition the PQRS
incentive payment on the reporting of all of the other ACO quality
measures (that is from claims, CAHPS, and CMS administrative data)
under the Shared Savings. That is, if an ACO, on behalf of its EPs,
satisfactorily reports ACO GPRO measures, the EP's ACO participant TIN
will receive the PQRS incentive even if the ACO does not meet the
quality performance standards and lower growth in costs requirements to
share in savings under the Shared Savings Program. EPs in an ACO that
starts its agreement in April or July 2012 will also qualify for the
2012 PQRS incentive under the Shared Savings Program by satisfactorily
reporting the ACO GPRO measures for the full 2012 PQRS calendar year
reporting period.
We believe only requiring EPs in ACOs to meet the criteria for
satisfactory reporting by reporting data on all of the final ACO GPRO
measures reduces reporting burden, since we are simplifying the
requirements EPs in ACOs must meet to earn a PQRS incentive under the
Shared Savings Program. It also increases the probability that an EP
would receive some level of incentive under the Shared Savings Program.
We believe requiring ACOs to report the final GPRO measures, as opposed
to all of the final ACO quality measures, to earn a PQRS incentive
under the Shared Savings Program also reduces operational complexity
because CMS can calculate the incentive payment under the Shared
Savings Program based on the GPRO quality data after the ACO completes
the GPRO quality data submission. That is, the calculation and
distribution of the PQRS incentive will not be contingent on our
analysis of other ACO quality data from claims, CAHPS and CMS
administrative data under the Shared Savings Program. Requiring ACOs to
report a full 12 months of GPRO quality data also aligns the reporting
period for earning a PQRS incentive under the Shared Savings Program
with the traditional PQRS. In addition, we believe groups that are
currently participating under the traditional PQRS GPRO, but are
considering participating in the Shared Savings Program, would have
greater assurance they could earn a PQRS incentive under the Shared
Savings Program, given that we are not finalizing our proposal that
ACOs comprised of such group practices must also meet other Shared
Savings Program requirements for a shared savings payment for purposes
of earning a PQRS incentive.
We also wish to clarify that ACO participant TINs that wish to
qualify for PQRS would need to participate as group practices in the
PQRS under the Shared Savings Program and may not separately
participate in or earn a PQRS incentive under the traditional PQRS,
outside of the Shared Savings Program. In addition, individual ACO
providers/suppliers who are EPs in an ACO participant TIN may not seek
to qualify for an individual PQRS incentive under the traditional PQRS.
We do not agree with the suggestion that ACO providers/suppliers, who
are EPs in one or more ACOs, be allowed to do individual PQRS
reporting--in either the traditional PQRS or the PQRS under the
[[Page 67902]]
Shared Savings Program--for two main reasons. First, the Shared Savings
Program is concerned with measuring the quality of care furnished by
the ACO as a whole, and not that of individual ACO providers/suppliers.
Second, allowing provider/suppliers to earn more than one PQRS
incentive goes against the rules of traditional PQRS. We do not agree
with the comment that disincentives for non-participation are necessary
at this point. Rather, we believe positive rewards for successful
Shared Savings Program and PQRS participation will be more instrumental
in achieving the desired outcomes.
Comment: A few commenters recommended CMS assure that attestation
through the EHR Incentive Programs will serve as reporting for the ACO
program or that participation in ACO electronic quality measurement
reporting as one avenue of fulfilling meaningful use criteria under the
EHR Incentive Program. One of these commenters also suggested that CMS
should facilitate one-time data extraction to fulfill multiple
programs' reporting requirements.
Response: At this time, the EHR Incentive Program does not have a
mechanism for group reporting, so we are unable to translate quality
data that ACOs will report as a group under the Shared Savings Program
to individual EHR incentives for EPs. The PQRS does allow for group
reporting, which is why we are able to incorporate and align such
reporting and incentive payments under the Shared Savings Program.
Comment: While one commenter supported the proposal that 50 percent
of an ACO's primary care providers be meaningful EHR users by the start
of the second performance year, many commenters stated that the initial
50 percent bar is too high given the lack of experience with the EHR
Incentive Programs, especially for smaller, less integrated practices
and those in rural areas. One commenter did not believe that the Shared
Savings Program should serve to increase the rigor of other CMS
programs or that lack of participation in the EHR incentive programs
should preclude participation in the Shared Savings Program. Some
commenters noted that CMS already is providing incentives for
meaningful use of certified EHR technology, making inclusion of such a
requirement under the Shared Savings Program redundant and unnecessary.
Several commenters suggested phasing in this requirement, potentially
over a 5-year period, or through certain annual percentages starting in
year two. Other commenters suggested delaying or lowering the
threshold, creating exceptions (such as hardship exceptions) or
opportunities for corrective action, excluding from the requirement
professionals who are ineligible for the EHR Incentives, expanding the
scope more broadly than primary care physicians, including hospitals in
the final rule, or generally allowing ACOs to establish their own goals
for meaningful use. Commenters expressed concern about the stages of
meaningful use and which stage would have to be met by the second year
of a given ACO's agreement with CMS, particularly if the second year
began on January 1, 2014.
Response: We have modified our proposal such that EHR participation
is no longer a condition of participation but remains one of our
quality measures. In addition, we have clarified that the measure will
include any PCP who successfully qualifies for an EHR Incentive Program
incentive. We believe this change is consistent with industry comments,
recognizes ACOs providers' current levels of EHR Incentive Program
participation, rewards higher adoption with higher sharing rates, and
signals the importance of EHR adoption to ACOs. To further signal the
importance of EHRs we will score the EHR quality measure with higher
weight than the other quality measures. Although we are not finalizing
the requirement that 50 percent of PCPs in ACOs be meaningful users in
order for the ACO to be eligible to continue to participate for a
second year in the Shared Savings Program, we recognize that ACOs with
more IT infrastructure integrated into clinical practice will likely
find it easier to be successful under the Shared Savings Program. As
providers gain more experience with EHR technology, we will reconsider
using certified EHR technology as an additional reporting mechanism
used by ACOs under the Shared Savings Program, which we would address
in rulemaking for future program years.
In the proposed rule, we also indicated that ACOs would need to
participate separately in the eRx Incentive Program (76 FR 19599). We
strongly recommend that potential ACOs review the CY 2012 Physician Fee
Schedule eRx Incentive Program proposed and final rules carefully, for
details about participation requirements, self-nomination timeframes,
incentive payments and penalties. The CY 2012 Physician Fee Schedule
eRx Incentive Program proposed rule is available at: http://www.gpo.gov/fdsys/pkg/FR-2011-07-19/pdf/2011-16972.pdf.
Final Decision: After considering the issues raised in the public
comments and for the reasons we previously discussed, we are finalizing
our proposal to incorporate PQRS reporting requirements and incentive
payment under the Shared Savings Program. Specifically, in this final
rule we are finalizing the use of the GPRO web interface, as proposed,
as well as our proposal that EPs that are ACO providers/suppliers
constitute a group practice under their ACO participant TIN for
purposes of qualifying for a PQRS incentive under the Shared Savings
Program. Therefore, an ACO, on behalf of its EPs, is required to
satisfactorily submit quality data on the GPRO quality measures we are
finalizing in Table 1 of this final rule. Such EPs within an ACO may
qualify for a PQRS incentive under the Shared Savings Program only as a
group practice and not individuals. ACO participants and ACO providers/
suppliers also may not seek to qualify for the PQRS incentive under
traditional PQRS, outside of the Shared Savings Program. We are also
finalizing the calendar year reporting period of January 1 through
December 31 for purposes of the PQRS incentive under the Shared Savings
Program.
Furthermore, we intend that reporting on the GPRO quality measures
under the Shared Savings Program will also fulfill the reporting
requirements for purposes of avoiding the payment adjustment under
section 1848(a) of the Act that begins in 2015. We plan to address this
issue in more detail in future rulemaking.
With regard to the GPRO quality measures applicable for the PQRS
incentive under the Shared Savings Program, we are finalizing the PQRS
GPRO criteria for satisfactory reporting as described previously.
Accordingly, EPs within an ACO participant TIN that satisfactorily
report the ACO GPRO measures during the reporting period will qualify
under the Shared Savings Program for a PQRS incentive equal to 0.5
percent of the Secretary's estimate of total Medicare Part B PFS
allowed charges for covered professional services furnished by the
ACO's EPs during the first reporting period. ``Covered professional
services'' are services for which payment is made under, or based on,
the physician fee schedule and which are furnished by EPs (under the
ACO participant's TINs).
By satisfactorily reporting the ACO GPRO measures on behalf of the
EPs in the group practice, we note that the ACO participant TIN will
meet the requirements for the PQRS incentive payment and also fulfill a
portion of the quality performance standard requirements for purposes
of Shared Savings Program shared savings
[[Page 67903]]
eligibility. However, ACOs must also completely and accurately report
all of the measures in Table 1, as well as meet the lower growth in
costs criteria, described in section II.G. of this final rule, to be
considered eligible for shared savings.
As we indicated previously, we are not finalizing our proposal
regarding an ACO's failure to report all required ACO quality measures.
That is, if an ACO fails to meet the Shared Savings Program quality
performance standard and is not eligible for shared savings, EPs in a
group practice that is an ACO participant TIN may nevertheless earn the
PQRS incentive under the Shared Savings Program, as long as the ACO
satisfactorily reports, on behalf of its EPs, the ACO GPRO quality
measures for the reporting period. Thus, ACO participant TINs in ACOs
that meet the satisfactory reporting requirements will still be
eligible for a PQRS incentive payment under the Shared Savings Program,
even if the ACO does not generate shareable savings for the Shared
Savings Program.
As we indicated, ACOs are eligible to qualify for the PQRS
incentive under the Shared Savings Program to the extent that they
contain EPs as defined under Sec. 414.90(b). As a result, not all ACO
participants will necessarily be eligible for the PQRS incentive under
the Shared Savings Program. A complete list of PQRS EPs is available
at: http://www.cms.gov/PQRI/Downloads/EligibleProfessionals.pdf. In
addition, similar to traditional PQRS, an EP cannot qualify for the
PQRS incentive as both a group and as an individual under the same TIN.
For purposes of PQRS incentive analysis and payment, we will use TINs
and NPI numbers similar to what we have done in the traditional PQRS
(75 FR 40169), and we will provide such details in guidance (76 FR
19599).
As we noted previously, we did not propose to incorporate the EHR
Incentive Program or eRx Incentive Program reporting requirements or
incentives under the Shared Savings Program. EPs in ACOs may still
separately participate in the EHR Incentive Program or eRx Incentive
Program, and we encourage potential ACOs to follow the applicable
requirements for those programs.
We are also modifying our proposal regarding the EHR Incentive
Program participation criteria as a condition of continued Shared
Savings Program. We are not finalizing the proposal to require that at
least 50 percent of an ACO's primary care physicians be determined to
be ``meaningful EHR users'' as that term is defined in 42 CFR 495.4 by
the start of the second performance year in order to continue
participation in the Shared Savings Program. Instead we will double
weight the quality measure ``Percent of PCPs who Successfully Qualify
for an EHR Incentive Program Payment,'' as described previously in
section II.F, to stress the importance of EHR adoption among ACOs.
6. Aligning ACO Quality Measures With Other Laws and Regulations
As we stated in the proposed rule, different quality frameworks and
rewards may add to confusion and administrative burdens for affected
parties, and mitigate efforts to focus on the highest-quality care.
Therefore, we sought comment from affected parties and other
stakeholders on the best and most appropriate way to align quality
domains, categories, specific measures, and rewards across these and
other Federal healthcare programs, to ensure the highest-possible
quality of care. Specifically, we sought comment on whether quality
standards in different Affordable Care Act programs should use the same
definition of domains, categories, specific measures, and rewards for
performance across all programs to the greatest extent possible, taking
into account meaningful differences in affected parties.
Comment: A number of commenters supported aligning ACO quality
measures with other CMS programs such as PQRS, eRx, Hospital Compare,
Medicare Advantage, the upcoming physician fee schedule value modifier,
and the EHR Incentive Programs to avoid burden, confusion duplicative
reporting. One commenter suggested the EHR Incentive Program
requirements are not aligned with ACO requirements, missing the
opportunity to incentivize adoption and interoperability to lower costs
and improve care. This commenter suggested that ACO standards be
supported in the EHR Incentive Program. One commenter noted `alignment'
does not necessarily mean using exactly the same set of measures across
programs, since ACOs may have data collection capabilities and needs
that are broader than those applicable to the EHR incentive program,
and the pools of provider participants in the two programs will be
different. A few commenters recommended CMS make public its overall
quality measurement strategy including the synergy between measures for
ACOs, hospital IQR, and other initiatives. One commenter supported
alignment with other programs but raised concerns about the fairness of
resultant double jeopardy or double incentives. A few commenters
expressed concern that the lack of complete alignment with MA 5 Star
measures would result in increased burden of reporting and decreased
performance, greater start-up costs, and hinder consumers' ability to
make informed coverage choices. While one commenter believed measures
reported through other programs should be excluded from this program, a
number of commenters recommended that only those measures currently
being reported in other CMS programs should be used initially although
there were varying recommendations about with which program to align.
One commenter recommended using the Hospital Quality Incentive
Demonstration model as had succeeded in improving quality and
decreasing cost. One commenter specifically recommended the ACO program
begin exclusively with measures used in the PGP demonstration.
A few commenters believed it would be desirable to have a single
set of quality measures across payers, including Medicaid, Medicare,
and commercial payers; one noted this would benefit vendors, providers,
and patients. A few commenters suggested alignment with non-federal
programs. One commenter suggested ACO quality reports should explain
differences in measures reported by CMS and those reported by Regional
Health Improvement Collaboratives (RHICs). One commenter recommended
CMS align measures with the goals and domains of the National Quality
Strategy.
Response: We agree, in principle, with alignment across programs.
To that end, we have chosen a final measure set that is closely aligned
with PQRS as discussed previously. At this point in time and for this
particular program, the ambulatory PQRS set was the natural choice
compared with other proposed measurement sets focused on the inpatient
setting or MA plans. However, we will revisit this issue and continue
to work toward alignment with those and other programs in future
rulemaking. We also do intend to further align the Shared Savings
Program with the EHR Incentive Programs as we develop experience with
both programs and EHRs become more widespread. We do not share the one
commenter's concern about ``double jeopardy'' or ``double incentives''
by including measures under more than one program. Rather, we believe
including a measure in more than one program and aligning the measures
specifications signals CMS' desire for better performance in that area
and serves to increase the motivation for such improved performance.
While we
[[Page 67904]]
agree with the principle of alignment across a variety of programs, it
is beyond the purview of this program to align fully with external
programs or to explain differences between our measurement set and the
numerous other measurement sets in existence. However, our final
measurement set is aligned with the National Quality Strategy. In
response to the commenters that recommended we make public our overall
quality measurement strategy, we agree that it is important that we
make our quality strategy publicly available and have done so through
our Web site and a large number of public events.
Final Decision: We will finalize our proposal to align the Shared
Savings Program quality measures reporting requirements with those in
other programs, to the extent possible, as previously discussed.
G. Shared Savings and Losses
1. Authority For and Selection of Shared Savings/Losses Model
Section 1899 of the Act, as added by section 3022 of the Affordable
Care Act, establishes the general requirements for payments to
participating ACOs. Specifically, section 1899(d)(1)(A) of the Act
provides that ACO participants will continue to receive payment ``under
the original Medicare fee-for-service program under Parts A and B in
the same manner as they would otherwise be made.'' However, section
1899(d)(1)(A) of the Act also provides for an ACO to receive payment
for shared Medicare savings provided that the ACO meets both the
quality performance standards established by the Secretary, as
discussed in section II.F. of this final rule, and demonstrates that it
has achieved savings against a benchmark of expected average per capita
Medicare FFS expenditures. Additionally, section 1899(i) of the Act
authorizes the Secretary to use other payment models in place of the
one-sided model outlined in section 1899(d) of the Act. This provision
authorizes the Secretary to select a partial capitation model or any
other payment model that the Secretary determines will improve the
quality and efficiency of items and services furnished to Medicare
beneficiaries without additional program expenditures.
In the November 17, 2010 Federal Register, we solicited public
comment on a number of issues regarding ACOs and the Shared Savings
Program, including the types of additional payment models we should
consider in addition to the model laid out in section 1899(d) of the
Act, either under the authority provided in section 1899(i) of the Act
or using the Innovation Center authority under section 1115A of the
Act. We further asked about the relative advantages and disadvantages
of any such alternative payment models.
In the proposed rule, we described and sought comment on several
options for structuring the Shared Savings Program. One option we
considered was to offer a pure one-sided shared savings approach using
the calculation and payment methodology under section 1899(d) of the
Act. This option would have the potential to attract a large number of
participants to the program and introduce value-based purchasing
broadly to providers and suppliers, many of whom may never have
participated in a value-based purchasing initiative. Another reason we
considered this option was that a one-sided model with no downside
performance risk might be more accessible and attract smaller group
participation. However, as some RFI commenters suggested, while such a
model may provide incentive for participants to improve quality, it may
not be enough of an incentive for participants to improve the
efficiency and cost of health care delivery. Therefore, we considered a
second option to use our authority under section 1899(i) of the Act to
create a performance risk-based option in the Shared Savings Program.
Such a model would have the advantage of providing an opportunity for
more experienced ACOs that are ready to share in losses to enter a
sharing arrangement that provides greater reward for greater
responsibility.
Another approach we considered would be to offer a hybrid approach.
A hybrid approach would combine many of the elements of the one-sided
model under section 1899(d) of the Act with a performance risk-based
approach under section 1899(i) of the Act.
Based on the input of commenters on the November 17, 2010 RFI,
other stakeholders and policy experts we proposed to implement a hybrid
approach. Specifically, we proposed that ACOs participating in the
Shared Savings Program would have an option between two tracks:
Track 1: Under Track 1, shared savings would be reconciled annually
for the first 2 years of the 3-year agreement using a one-sided shared
savings approach, with ACOs not being responsible for any portion of
the losses above the expenditure target. However, for the third year of
the 3-year agreement, we proposed to use our authority under section
1899(i) of the Act to establish an alternative two-sided payment model.
Under this model, an ACO would be required to agree to share losses
generated as well as savings. ACOs that enter the Shared Savings
Program under Track 1 would be automatically transitioned to the two-
sided model in the third year of their agreement period. In that year,
the ACO's payments would be reconciled as if it was in the first year
of the two-sided model. However, quality scoring would still be based
on the methods for the third year (that is, it would not revert back to
the first year standard of full and accurate reporting). Thereafter,
those ACOs that wish to continue participating in the Shared Savings
Program would only have the option of participating in Track 2, that
is, under the two-sided model. As proposed, we envisioned that this
track would provide an entry point for organizations with less
experience with risk models, such as some physician driven
organizations or smaller ACOs, to gain experience with population
management before transitioning to a risk-based model.
Track 2: More experienced ACOs that are ready to share in losses
with greater opportunity for reward could elect to immediately enter
the two-sided model). An ACO participating in Track 2 would be under
the two-sided model for all 3 years of its agreement period. Under this
model, the ACO would be eligible for higher sharing rates than would be
available under the one-sided model. We proposed that this track would
provide an opportunity for organizations more experienced with care
coordination and risk models that are ready to accept performance-based
risk, to enter a sharing arrangement that provides greater reward for
greater responsibility.
In general, we proposed the same eligibility requirements and
methodologies for the two tracks. That is, we proposed to use the same
eligibility criteria, beneficiary assignment methodology, benchmark and
update methodology, quality performance standards, data reporting
requirements, data sharing provisions, monitoring for avoidance of at-
risk beneficiaries, and transparency requirements for ACOs under the
one-sided and two-sided models. We also explained our belief that the
proposed monitoring procedures in combination with our proposed use of
a retrospective beneficiary assignment methodology and proposed
beneficiary notification requirements were sufficient to guard against
the prospects that two-sided model ACOs might try to avoid at-risk
beneficiaries in order to minimize the possibilities of realizing
losses against
[[Page 67905]]
their benchmarks. However, we invited comments on the sufficiency of
the proposed monitoring procedures as well as additional areas and
mechanisms for monitoring two-sided model ACOs.
We proposed adding some requirements to the program in order to
provide further assurance about the ability of an ACO operating under
the two-sided model to repay the Medicare program in the event of
incurred losses. We proposed requiring all ACOs to demonstrate, as part
of their application and in advance of entering the two-sided model,
the establishment of a repayment mechanism to ensure repayment of
losses to the Medicare program. We stated our belief that the proposed
eligibility requirements for ACOs in addition to the requirement that
ACOs demonstrate an adequate repayment mechanism were sufficient to
ensure the ability of ACOs to repay CMS in the event they incur losses.
We sought comment on whether additional eligibility requirements were
necessary for ensuring that ACOs entering the two-sided model would be
capable of repaying CMS if actual expenditures exceeded their
benchmark.
Further, we proposed to provide greater financial incentives to
ACOs that participate under the program's two-sided model to encourage
ACOs to enter the two-sided model, which we believe has a greater
potential than the one-sided model to induce meaningful and systematic
change in providers' and suppliers' behavior.
In the proposed rule, we described our intention to design and test
partial capitation models in the Innovation Center first in order to
gain more experience with such models, introduce them to providers of
services and suppliers, and refine them, before applying them more
widely in the Shared Savings Program.
Comment: Many comments indicated general support for our proposal
to base the Shared Savings Program on a framework of existing FFS
payments. However, some commenters urged CMS not to confine its payment
method to the current, traditional Medicare fee-for-service payments to
ACO participants but instead to employ a variety of alternative payment
approaches. In some cases, commenters recommended these alternatives to
facilitate participation by specific provider types or the inclusion of
specific types of services. One commenter suggested this is necessary
to ensure the success of the program. Another commenter, generally,
supported testing of various payment and care delivery models through
the Innovation Center.
Of those who recommended alternative payment models, commenters
most commonly recommended inclusion of the following payment models in
the Shared Savings Program: blended fee-for-service payments;
prospective payments; episode/case rate payments; bundled payments;
patient-centered medical homes and surgical homes payment models;
payments based on global budgets; full capitation; partial capitation
such as condition-specific capitation; and enhanced FFS payments for
care management, such as care coordination fees. Several others
suggested CMS allow ACOs to use incentives to ensure beneficiaries
adhere to treatment regimens or seek care within the ACO.
In the case of enhanced FFS payments, commenters offered a variety
of suggestions on the form for such payments. Most commonly, commenters
suggested CMS pay for physicians' consultative or coordination services
provided via e-mail or telephone, such as self-management support for
patients with chronic diseases, or through a per-member per-month
(PMPM) care management fee (for example, in the range of $10-$50 PMPM).
One commenter offered a specific proposal for incorporating enhanced
FFS payments. Specifically, CMS should use its authority under section
1899(i) of the Act to authorize payment for CPT codes for telephone
calls and other non-face-to-face services used by ACOs that accept
downside risk to improve care management and hold ACOs accountable for
repaying a portion of these payments should they bill for these codes
but fail to achieve savings. CMS should then collect data on the impact
of paying for these services to determine if this payment policy should
be expanded to FFS Medicare. Another suggested example would be for CMS
to authorize payment for telemedicine codes reported by ACOs. Another
commenter suggested using a budget neutral way to provide these
payments by reallocating dollars from inpatient and specialty
reimbursement.
Some commenters recommended CMS offer other targeted payment models
to facilitate participation by certain types of ACOs, such as small
physician-only ACOs, and ACO participants, namely small- and medium-
sized physician practices, especially those in rural areas; or to
support care for particular types of patients, such as dual eligible
beneficiaries.
Several comments related to the overall design of the proposed
program. One commenter suggested the Shared Savings Program is an
overly complex approach to cost management and urged CMS to find a
simpler solution. The commenter suggested setting expenditure
benchmarks relative to geographic areas, allowing ACOs that meet
quality thresholds to keep FFS payments received, and penalizing ACOs
that do not reduce expenditures. Another commenter suggested allowing
ACOs to share in first dollar savings for all Medicare beneficiaries
seen by the ACO, not just those assigned to the ACO. A third commenter
urged CMS to ensure a consistent approach and level playing field as
between the Shared Savings Program and Medicare Advantage.
Response: We appreciate commenters' interest in and support for
adopting other payment models in the Shared Savings Program, but
disagree with suggestions that CMS use its authority under section
1899(i) of the Act to include additional alternative payment models in
the program at this time. We believe many of the suggested payment
models remain untested. We are concerned that immediately adopting
models on a national scale with which we have no experience could lead
to unintended consequences. However, as discussed in section II.B.6. of
this final rule, it is the Innovation Center's task to test novel
payment models under its demonstration authority. We anticipate that as
we gain experience through the Innovation Center with novel payment
models what we learn could be more widely adopted in the Shared Savings
Program. We would note that a number of commenters expressed support
for testing alternative models through the Innovation Center.
Comment: Several comments reflected confusion about the proposed
payment model under the Shared Savings Program. For instance, some
commenters asserted that the program will, in fact, make partial
capitation payments, or questioned if providers electing not to
participate in the program will continue to receive payment as usual.
Response: We would like to clarify that consistent with section
1899(d)(1)(A) of the Act, fee-for-service providers will continue to
receive payments ``under the original Medicare fee-for-service program
under Parts A and B in the same manner as they would otherwise be
made'' regardless of whether they participate in the Shared Savings
Program. Also, as indicated previously, we do not plan to adopt partial
capitation (or other such payment methodologies) at this time, but may
do so in the future through
[[Page 67906]]
appropriate rule-making, depending on lessons learned through
demonstrations.
Comment: A few commenters noted concerns that uncertainty about the
Sustainable Growth Rate (SGR) for FY 2012 could undermine the program,
as doctors could be subject to lower reimbursement rates and also be
potentially subject to shared losses under the Shared Savings Program.
One commenter suggested that CMS delay publication of the final rule
for the Shared Savings Program until clarification of the FY 2012 SGR.
Further, one commenter suggested that physician reimbursement rates are
already too low to cover costs, and the ``flawed'' SGR formula needs to
be addressed to allow physicians to adapt new care delivery models.
Another commenter suggested that the SGR and the Shared Savings Program
are redundant mechanisms to control utilization and focus on
prevention, quality and efficiency, and as such CMS should develop a
process for waiving SGR requirements for physicians participating in
ACOs.
Response: We decline to use our authority under section 1899(f) of
the Act to waive the requirements of the SGR methodology for ACO
participants as it is not necessary to waive these requirements in
order to carry out the provisions of section 1899 and implement the
Shared Savings Program. Rather, the statute at section 1899(d)(1)(A)
expressly provides that we continue to make payments to the providers
and suppliers participating in an ACO ``* * * in the same manner as
they would otherwise be made * * *.'' Accordingly, addressing concerns
about the SGR methodology is beyond the scope of this rule for the
Shared Savings Program. We note, however, the publication of the
proposed rule for the 2012 Medicare Physician Fee Schedule on July 1,
2011, and the publication of the final rule, to include the Secretary's
initial estimate of the SGR for 2012, later this year.
Comment: The comments reflected a variety of opinions on the
proposed two track approach. Several commenters supported retaining the
proposed two track approach in the final rule. As one commenter
explained, a shared savings only track may be appropriate for newly
formed organizations to gain experience with accountable care models,
but a model that includes shared performance-based risk is necessary to
drive meaningful change. A few commenters strongly favored the proposal
to transition ACOs under the one-sided model to a shared savings and
risk model in the third year while offering more mature ACOs the option
to enter into a shared savings and risk model in the first year;
indicating the importance of shared performance-based risk in the
delivery transformation necessary to achieve the three-part aim and for
``good stewardship'' of Medicare Trust Fund dollars.
However, most commenters expressed concerns with requiring ACOs to
quickly accept performance risk for the costs of their patients, or
even to accept risk at all, and suggested this proposal could diminish
participation. Several comments noted that for organizations
(particularly small- and medium-sized practices) that do not have any
experience with care management or managing performance-based risk, a
shared savings only option would better enable them to feel comfortable
making the significant investments necessary to transition to the
accountable care model. Along these lines, commenters suggested that
including a shared savings only model would encourage participation by
certain groups, such as: small- and medium-sized physician practices,
loosely formed physician networks, safety net providers, small ACOs,
and rural ACOs.
Some commenters expressed reservations about the proposed inclusion
of the two-sided model. Some commenters were concerned that a downside
risk payment model could jeopardize the financial health of ACOs and
may ultimately result in market dynamics similar to those precipitating
the managed care backlash in the 1990s; although, several commenters
noted the additional proposed program protections would safeguard
against these problems. One commenter cautioned that absent sufficient
care coordination systems, blame for losses might lie with certain
groups of physicians (such as emergency medicine physicians). Another
commenter explained that risk emphasizes financial outcomes over
patient-centered care. Further, several commenters questioned the
authority for including shared losses in the program. For example,
commenters suggested that Congress intended only a shared savings
program, or expressed concern that a requirement for ACOs to repay
shared losses would constitute an unlicensed quota share reinsurance
arrangement.
Commenters offered the following specific reasons for why ACOs
entering Track 1 should not automatically transition to the two-sided
model in their third performance year:
Insufficient time exists for ACOs to gain necessary
experience with population management to generate savings prior to
being required to accept risk.
The risk for substantial loss already exists for new ACOs
because of the unknowns about the potential for ACOs to generate
savings given the significant upfront investments needed to build ACO
infrastructure and the anticipated high operational costs.
Potential ACOs may lack access to Medicare claims data
that would enable them to evaluate the nature or magnitude of the
downside risks they would be accepting.
When beneficiaries retain freedom to see any provider and
when assignment is retrospective, Medicare ACOs may lack the ability to
have certainty over identification of their assigned population and
even when identified, there is a possibility for significant turnover
or lack of cooperation with an ACO's efforts to control expenditures.
The proposed cap on risk adjustment may increase ACO risk
for losses or reduced savings.
The potential for increased costs that are beyond the
ACO's control exists.
Risk may incent ACOs to cherry pick patients, for example,
by excluding from the ACO physicians which treat high cost patients.
Hence, commenters suggested a variety of alternatives to our proposal,
for example, that we--
Establish a one-sided, shared savings only track--the most
commonly made recommendation.
Remove the two-sided model as an option for ACOs.
Remove the one-sided model as an option for ACOs.
Extend the length of time available in a one-sided shared
savings model by extending an agreement period or allowing ACOs to
participate in a one-sided model for additional performance years or
agreement periods.
Exempt some ACOs from downside risk, such as small, rural
and physician-only ACOs. For instance, extend an exemption from the
two-sided model to those ACOs exempted from the 2 percent net sharing
requirement, or develop additional tracks tailored for smaller medical
practices or rural providers and suppliers. Other commenters suggested
exempting ACOs in low cost States and those in areas where high
hospital readmission rates result from a lack of access to community-
based services beyond the ACO's control.
Make the ACO's population the determinant of the
applicable model, for instance, beneficiaries with high cost
[[Page 67907]]
conditions would be under the one-sided model and the remainder of the
beneficiary population would be under two-sided model.
Develop a 4-tiered approach to hold organizations at
different stages of development to different standards.
However, some patient advocate groups generally cautioned against
amending policies to make the program more attractive to providers at
the expense of clinical or financial benefits which could accrue from
ACOs.
Response: We believe that maintaining a two track approach is
important for attracting broad participation, including providers and
suppliers new to value-based purchasing and more experienced ACOs that
are ready to share in losses. Commenters supported our belief that
models where ACOs bear a degree of financial risk hold the potential to
induce more meaningful systematic change, which underscores the
importance of transitioning ACOs from the one-sided model to risk-based
arrangements. However, the commenters also persuaded us that ACOs new
to the accountable care model--and particularly small, rural, safety
net, and physician-only ACOs--would benefit from additional time under
the one-sided model before being required to accept risk. Commenters
persuaded us further that revising Track 1 to be a shared savings only
option, while retaining Track 2 as a shared savings/losses model, would
be the most appropriate means to achieve this objective. Accordingly,
we will finalize our proposal to offer the two-sided model under Track
2 to ACOs willing and able to take on performance-based risk in
exchange for higher reward, but will offer Track 1 as a shared savings
only track for the duration of the first agreement period for ACOs
needing more experience before taking on risk. We believe this
modification will increase interest in the Shared Savings Program by
providing a gentler ``on ramp'' while maintaining the flexibility for
more advanced ACOs to take on greater performance-based risk for
greater reward immediately. However, we continue to believe that models
that hold a degree of financial risk have the potential to induce more
meaningful changes. As such, an ACO will be eligible for no more than
one agreement period under the shared savings only model.
We were also encouraged by commenters' interest in including
alternative payment models in the Shared Savings Program. As indicated
in the proposed rule, it is our intent to gain experience with several
alternative payment models through the Innovation Center before
potentially adopting them more widely in the Shared Savings Program.
Comment: We received a few comments on the alignment of the one-
and two-sided models on eligibility criteria, beneficiary assignment
methodology, benchmark and update methodology, quality performance
standards, data reporting requirements, data sharing provisions,
monitoring for avoidance of at-risk beneficiaries, and transparency
requirements. Several commenters suggested that retrospective
assignment could be particularly problematic for ACOs under the two-
sided model, expressing concern that ACOs would be accountable for
losses from assigned beneficiaries whom they could not identify and
whose care they could not influence.
Response: Unless stated otherwise elsewhere in this final rule, we
decline to further differentiate the program's two models on the basis
of eligibility criteria, beneficiary assignment methodology, benchmark
and update methodology, quality performance standards, data reporting
requirements, data sharing provisions, monitoring for avoidance of at-
risk beneficiaries, and transparency requirements for ACOs because we
believe the policies being adopted in this final rule are appropriate
for all ACOs, regardless of whether they are participating in a one-
sided or two-sided model. In addition, we believe that the preliminary
prospective assignment methodology that we are adopting in this final
rule will sufficiently address commenters' concerns about the ability
of an ACO to identify its potential assigned beneficiaries in order to
allow for effective care management.
Accordingly, we are finalizing our proposal to offer ACOs a choice
of two tracks, but modify our proposal for Track 1. Track 1 will be a
shared savings only model (under the one-sided model) for the duration
of the ACO's first agreement period. We will make final our proposal
that ACOs electing Track 2 will be under the two-sided model for the
duration of their first agreement period.
In the proposed rule we discussed several options about how to
incorporate a two-sided model into the Shared Savings Program. The
major options we considered were--
Base the program on a two-sided model, thereby requiring
all participants to accept risk from the first program year.
Allow applicants to choose between program tracks, either
a one-sided model or two-sided model, for the duration of the
agreement.
Allow a choice of tracks, but require ACOs electing the
one-sided model to transition to the two-sided model during their
initial agreement period.
We explained that requiring all ACOs to initially take downside
risk would likely inhibit the participation of some interested
entities, particularly organizations which lack the experience and
capital to accept significant downside risk. We further explained that
allowing ACOs to choose from either a one-sided model or a two-sided
model created concerns, in particular that ACOs capable of taking risk
could take advantage of the option that allows for gain by realizing
savings without any risk for incurring added costs. In the proposed
rule, we stated that we believed it is important that all Shared
Savings Program participants quickly move to taking on downside risk
because payment models where ACOs bear a degree of financial risk have
the potential to induce more meaningful systematic change in providers'
and suppliers' behavior. We further explained our belief that, by
introducing a risk model, we could elicit applicants to the program who
are more serious about their commitment to achieving the program's
goals around accountability for the care of Medicare beneficiaries and
the three-part aim of enhancing the quality of health care, improving
patient satisfaction with their care, and better controlling the growth
in health care costs.
We proposed that applicants would have the option of choosing
between a one-sided model and a two-sided model initially. Under Track
1, ACOs enter the program under the one-sided model and must transition
to the two-sided model for the third year of their initial agreement
period. Alternatively, under Track 2, an ACO may enter the two-sided
model option immediately for a full 3-year agreement period. We further
proposed that all ACOs, whether participating under Track 1 or Track 2,
must participate in the two-sided model in subsequent agreement
periods. Thus, under our proposal, an ACO could only participate for a
maximum of 2 years under the one-sided model, during its first
agreement period, before it must transition and participate thereafter
in the Shared Savings Program under the two-sided model. We stated our
belief that this approach would allow ACOs to gain experience with the
accountable care model under the one-sided model, while also
encouraging organizations to take on greater risk with the opportunity
for greater reward by migrating them to the two-sided model. We invited
[[Page 67908]]
comment on this proposal and other options for incorporating a two-
sided model into the Shared Savings Program, including mechanisms for
transitioning ACOs to two-sided risk arrangements.
Comment: Some commenters urged CMS to allow ACOs to accept risk on
a voluntary basis, ``at their own pace.'' MedPAC, among others, favored
extending the time an ACO could participate under the one-sided model,
but to ultimately require ACOs to accept downside risk. Those favoring
transition to the two-sided model suggested it provides greater
incentives for ACOs to eliminate unnecessary expenditures and improve
integration and care coordination. The most common suggestion was to
allow ACOs to participate under the one-sided model for an initial 3
year agreement period and thereafter require ACOs to accept risk.
Others suggested extending the availability of the one-sided model to
ACOs beyond the first agreement period, with suggestions ranging from
4, 5, or 6 years. Some commenters suggested allowing certain types of
ACOs additional time under the one-sided model, such as small, rural
and physician-only ACOs; for instance expanding the proposed exemption
of these organizations from a 2 percent net sharing rate to the
requirement to transition to the two-sided model. One commenter
suggested making the one-sided model available only to early adopters.
A hybrid approach would be to allow ACOs two agreement periods under
the one-sided model with the option to voluntarily switch to the two-
sided model at the beginning of any calendar year.
Other commenters recommended alternatives for transitioning Track 1
ACOs to risk in their third year, but exempting them from repaying some
or all of their losses. For instance, one commenter suggested holding
Track 1 ACOs harmless for the first 2 percent of losses in year 3 if
they generated savings in their first two performance years, based on
the idea that our compensation through the proposed 2 percent net
sharing requirement for the one-sided model. Alternatively, this
commenter suggested, more generally, using savings generated in a prior
performance year to off-set the amount of losses owed.
Several commenters were concerned that an automatic transition to
risk would result in ACOs under the two-sided model that lacked the
capacity to bear risk. One commenter recommended a more measured
approach, whereby CMS would evaluate an ACO's readiness to assume risk
before transitioning it to the two-sided model. Commenters suggested
various options for ACOs unable to accept risk at the point of required
transition to the two-sided model: Termination by CMS, voluntarily
withdrawal, and completion of the agreement period under the one-sided
model with no opportunity to continue in the program.
Response: Earlier in this section, we specify that in this final
rule we are adopting a final policy under which ACOs will have a choice
of two tracks for their first agreement period: a shared savings only
model (Track 1) or the two-sided model (Track 2). However, we are
finalizing our proposal to require an ACO to participate under the two-
sided model after its initial agreement period. We continue to believe
that accountability for losses is an important motivator for providers
to change their behavior and to maximize reductions in unnecessary
expenditures, and that the prospect of accountability for losses will
ensure that the program attracts participants that take seriously their
commitment to achieving the program's goals.
We appreciate commenters' concerns about a mandatory transition to
risk and their recommendations to allow ACOs to voluntarily assume
risk. Because ACOs will be required to enter the two-sided model only
in subsequent agreement periods, ACOs will have the option to decide
whether to continue to participate. As a result, those ACOs that decide
to continue participating in the program at the end of their first
agreement period will be voluntarily entering the two-sided model. In
selecting the length of time an ACO could remain under the one-sided
model, we found support in comments for limiting the period to the
first agreement period. Further, as discussed later in this final rule,
we are revising our proposed policy in order to allow ACOs that have a
net loss during their first agreement period to continue to participate
in the program, provided they meet all other participation
requirements. We believe that this policy provides further support for
limiting participation under the one-sided model to an ACO's initial
agreement period. Underperforming ACOs would be allowed to continue in
the Shared Savings Program, but all ACOs that elect to do so would be
required to be accountable for their losses. Lastly, we disagree with
commenters' suggestions that we exempt some ACOs entirely from the two-
sided model, or otherwise allow ACOs to participate in the one-sided
model for an extended or indefinite period of time. Absent a limit on
participation under the one-sided model we anticipate that ACOs capable
of taking on risk would take advantage of the option that allows for
gain by realizing savings without any risk for incurring losses by
remaining in the one-sided model.
We appreciate commenters' concerns about the transition of ACOs to
the two-sided model when they lack the financial reserves necessary to
safely assume risk. We believe the repayment mechanism in this final
rule, is sufficient to safeguard against ACOs entering the two-sided
model when they lack the capacity to bear risk.
Additionally, we proposed that an ACO may not reapply to
participate in the Shared Savings Program if it previously experienced
a net loss during its first agreement period. We explained that this
proposed policy would ensure that under-performing organizations would
not get a second chance. We sought comment on this proposal and whether
denying participation to ACOs that previously underperformed would
create disincentives for the formation of ACOs, particularly among
smaller entities.
Comment: Commenters expressed concern about the proposal to
disallow continued participation by financially under-performing ACOs.
Commenters suggested this policy could serve as a disincentive to
participation, particularly by small ACOs. They believed organizations
may be reluctant to make the necessary investments to form ACOs given
the uncertainty over their ability to produce shared savings during the
initial agreement period and their ability to continue in the program
beyond 3 years. Some commenters suggested it may take several years for
an ACO to demonstrate shared savings, indicating that some well-
intentioned ACOs may not be able to do so by the end of their initial
agreement period. Several commenters suggested eliminating the proposed
policy. Others suggested adopting a more flexible approach to avoid
penalizing well-meaning ACOs, such as:
Allowing continued participation for ACOs that, despite
experiencing a net loss, demonstrate a consistent decrease in the net
loss over the initial 3 years of the agreement.
Judging ACOs' readiness to continue in the program based
on quality, not cost, performance. For instance, allow continued
participation for ACOs which meet the program's quality performance
requirements.
Response: We are modifying our proposal to allow continued
participation by ACOs electing to do so who experience a net loss
during their first agreement period. We recognize that it may take
longer than the term of
[[Page 67909]]
an ACO's initial agreement period for an ACO to achieve shared savings,
particularly ACOs new to the accountable care model. Commenters have
persuaded us that barring ACOs that demonstrate a net loss from
continuing in the program could serve as a disincentive for ACO
formation given the anticipated high startup and operational costs of
ACOs. Our policies on monitoring and termination will help to ensure
that ACOs that underperform on the quality standards do not continue in
the program. Further, continued participation by previously
underperforming ACOs could benefit the Trust Funds- as compared to FFS
providers not engaged in the Shared Savings Program--as these ACOs will
participate under the two-sided model and therefore will have an even
greater incentive to improve the quality and efficiency of the care
they provide in order to avoid being accountable for shared losses.
While there appear to be a number of benefits to allowing financially
underperforming ACOs to continue to participate in the program, we
believe this policy could be cause for concern, as it may allow ongoing
participation by organizations that are not dedicated to the
accomplishment of the program's goals but that reap the benefits from
participation, such as legal protections under the waivers. Therefore
we are further requiring ACOs which experience a net loss in their
initial agreement period, applying to participate in a subsequent
agreement period, to identify in their application the cause(s) for the
net loss and to specify what safeguards are in place to enable the ACO
to potentially achieve savings in its next agreement period. Further,
we will monitor closely this aspect of the program, and may revise our
policy in future rulemaking.
We are modifying our proposal to allow an ACO which experiences a
net loss during its first agreement period to reapply to participate in
the Shared Savings Program.
Final Decision: As provided in Sec. 425.600, we will establish the
Shared Savings Program on existing FFS payments, using both shared
savings only (Track 1) and shared savings and losses models (Track 2).
While making final our proposal to offer ACOs a choice of two tracks,
we are modifying our proposal for Track 1 so that it will be a shared
savings only model for the duration of the ACO's first agreement
period. We will make final our proposal that ACOs electing Track 2 will
be under the two-sided model for the duration of their first agreement
period. We are also finalizing our proposal to require all ACOs to
participate in the two-sided model in agreement periods subsequent to
the initial agreement period. We are modifying our proposal to allow
continued participation by ACOs electing to do so who experience a net
loss during their first agreement period. Specifically, we are
requiring ACOs, which experience a net loss in their initial agreement
period and apply to participate in a subsequent agreement period, to
identify in their application the cause(s) for the net loss and to
specify what safeguards are in place to enable the ACO to potentially
achieve savings in its next agreement period. Further, we will monitor
closely this aspect of the program, and may revise our policy future
rulemaking.
2. Shared Savings and Losses Determination
a. Overview of Shared Savings and Losses Determination
We proposed that the shared savings model (one-sided model) and a
shared savings/losses model (two-sided model) would share many program
elements in common, including a similar methodology for determining
whether an ACO has achieved savings against the benchmark. Unless
specifically noted, the elements discussed in the rest of this section
will apply to both the one-sided and two-sided models. However, we also
explained the necessity to develop some policies for the two-sided
model that would not be necessary under a one-sided model, including,
for example, a methodology for determining shared losses. The following
table provides an overview of our final decisions on elements of the
program's financial models.
Table 5--Shared Savings Program Overview
----------------------------------------------------------------------------------------------------------------
One-sided model Two-sided model
----------------------------------------------------------------------------------------------------------------
Issue Proposed Final Proposed Final
----------------------------------------------------------------------------------------------------------------
Transition to Two-Sided Model. Transition in First agreement Not Applicable.. Not Applicable.
third year of period under one-
first agreement sided model.
period. Subsequent agreement
periods under two-
sided model.
Benchmark..................... Option 1 reset Finalizing proposal.. Option 1 reset Finalizing proposal.
at the start of at the start of
each agreement each agreement
period. period.
Adjustments for health status Benchmark Historical benchmark Benchmark Historical benchmark
and demographic changes. expenditures expenditures expenditures expenditures
adjusted based adjusted based on adjusted based adjusted based on
on CMS-HCC CMS-HCC model. on CMS-HCC CMS-HCC model.
model. Performance year: model. Performance year:
Newly assigned Newly assigned
beneficiaries beneficiaries
adjusted using CMS- adjusted using CMS-
HCC model; HCC model;
continuously continuously
assigned assigned
beneficiaries (using beneficiaries (using
demographic factors demographic factors
alone unless CMS-HCC alone unless CMS-HCC
risk scores result risk scores result
in a lower risk in a lower risk
score). Updated score). Updated
benchmark adjusted benchmark adjusted
relative to the risk relative to the risk
profile of the profile of the
performance year. performance year.
Adjustments for IME and DSH... Include IME and IME and DSH excluded Include IME and IME and DSH excluded
DSH payments. from benchmark and DSH payments. from benchmark and
performance performance
expenditures. expenditures.
[[Page 67910]]
Payments outside Part A and B Exclude GME, Finalize proposal.... Exclude GME, Finalize proposal.
claims excluded from PQRS, eRx, and PQRS, eRx, and
benchmark and performance EHR incentive EHR incentive
year expenditures; payments for payments for
eligible eligible
professionals, professionals,
and EHR and EHR
incentive incentive
payments for payments for
hospitals. hospitals.
Other adjustments............. Include other Finalize proposal.... Include other Finalize proposal.
adjustment adjustment
based in Part A based in Part A
and B claims and B claims
such as such as
geographic geographic
payment payment
adjustments and adjustments and
HVBP payments. HVBP payments.
Maximum Sharing Rate.......... Up to 52.5 Up to 50 percent Up to 65 percent Up to 60 percent
percent based based on the maximum based on the based on the maximum
on the maximum quality score. maximum quality quality score.
quality score score plus
plus incentives incentives for
for FQHC/RHC FQHC/RHC
participation. participation.
Quality Sharing Rate.......... Up to 50 percent Finalizing proposal.. Up to 60 percent Finalizing proposal.
based on based on
quality quality
performance. performance.
Participation Incentives...... Up to 2.5 No additional Up to 5 No additional
percentage incentives. percentage incentives.
points for points for
inclusion of inclusion of
FQHCs and RHCs. FQHCs and RHCs.
Minimum Savings Rate.......... 2.0 percent to Finalizing proposal Flat 2 percent.. Finalizing proposal:
3.9 percent based on number of Flat 2 percent.
depending on assigned
number of beneficiaries.
assigned
beneficiaries.
Minimum Loss Rate............. 2.0 percent..... Shared losses removed 2.0 percent..... Finalizing proposal.
from Track 1.
Performance Payment Limit..... 7.5 percent..... 10 percent........... 10 percent...... 15 percent.
Performance payment withhold.. 25 percent...... No withhold.......... 25 percent...... No withhold.
Shared Savings................ Sharing above 2 First dollar sharing First dollar First dollar sharing
percent once MSR is met or sharing once once MSR is met or
threshold once exceeded. MSR is exceeded. exceeded.
MSR is exceeded.
Shared Loss Rate.............. One minus final Shared losses removed One minus final One minus final
sharing rate. from Track 1. sharing rate. sharing rate applied
to first dollar
losses once minimum
loss rate is met or
exceeded; shared
loss rate not to
exceed 60 percent.
Loss Sharing Limit............ 5 percent in Shared losses removed Limit on the Finalizing proposal.
first risk from Track 1. amount of
bearing year losses to be
(year 3). shared phased
in over 3 years
starting at 5
percent in year
1; 7.5 percent
in year 2; and
10 percent in
year 3. Losses
in excess of
the annual
limit would not
be shared.
----------------------------------------------------------------------------------------------------------------
The basic requirements for establishing and updating the benchmark,
as well as determining whether an ACO has achieved savings against the
benchmark, are outlined in section 1899(d)(1)(B) of the Act. Section
1899(d)(1)(B)(i) of the Act establishes that an ACO shall be eligible
for payment of shared savings ``only if the estimated average per
capita Medicare expenditures under the ACO for Medicare fee-for-service
beneficiaries for parts A and B services, adjusted for beneficiary
characteristics, is at least the percent specified by the Secretary
below the applicable benchmark * * *.'' Consistent with the statute, we
proposed to take into account payments made from the Medicare Trust
Fund for Parts A and B services, for assigned Medicare FFS
beneficiaries, including payments made under a demonstration, pilot or
time limited program when computing average per capita Medicare
expenditures under the ACO. The statute further requires the Secretary
to establish the percentage that expenditures must be below the
applicable benchmark ``to account for normal variation in expenditures
under this title, based upon the number of Medicare fee-for-service
beneficiaries assigned to an ACO.'' We will refer to
[[Page 67911]]
this percentage as the ``minimum savings rate'' (MSR).
Section 1899(d)(1)(B)(ii) of the Act requires the Secretary to
establish and update the ``* * * benchmark for each agreement period
for each ACO using the most recent available 3 years of per-beneficiary
expenditures for parts A and B services for Medicare fee-for-service
beneficiaries assigned to the ACO.'' This section also requires the
benchmark to ``be adjusted for beneficiary characteristics and such
other factors as the Secretary determines appropriate and updated 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 service program, as estimated by the Secretary.'' A new
benchmark is to be established consistent with these requirements at
the beginning of each new agreement period.
Section 1899(d)(2) of the Act provides that, if the ACO meets the
quality performance standards established by the Secretary, as
discussed in section II.F. of this final rule ``a percent (as
determined appropriate by the Secretary) of the difference between such
estimated average per capita Medicare expenditures in a year, adjusted
for beneficiary characteristics, under the ACO and such benchmark for
the ACO may be paid to the ACO as shared savings and the remainder of
such difference shall be retained by the program under this title.'' We
will refer to this percentage as the ``sharing rate.'' This section
also requires the Secretary to ``establish limits on the total amount
of shared savings that may be paid to an ACO.'' We will refer to this
limit as the ``sharing cap''.
Thus, in order to implement the provisions of section 1899(d) of
the Act for determining and appropriately sharing savings, we must make
a number of determinations about the specific design of the shared
savings methodology described by the statute.
First, we must establish an expenditure benchmark, which involves
determining: (1) The patient population for whom the benchmark is
calculated; (2) appropriate adjustments for beneficiary characteristics
such as demographic factors and/or health status that should be taken
into account in the benchmark; (3) whether any other adjustments to the
3-year benchmark are warranted, so as to provide a level playing field
for all participants; and (4) appropriate methods for trending the 3-
year benchmark forward to the start of the agreement period, and
subsequently for updating the benchmark for each performance year
during the term of the agreement with the ACO.
Second, we must compare the benchmark to the assigned beneficiary
per capita Medicare expenditures in each performance year during the
term of the agreement in order to determine the amount of any savings.
Third, we must establish the appropriate MSR, as required by the
statute ``to account for normal variation in expenditures[hellip] based
upon the number of Medicare fee-for-service beneficiaries assigned to
an ACO'' and we must determine the appropriate sharing rate for ACOs
that have realized savings against the benchmark and meeting or
exceeding the MSR.
Finally, we must determine the required sharing cap on the total
amount of shared savings that may be paid to an ACO. We discuss all
these issues, and our final policies for addressing them, in this
section.
In light of the greater potential for a two-sided model to bring
about positive changes in the operation of the FFS system by improving
both the quality and efficiency of medical practice, we believe that it
is appropriate to provide greater incentives for organizations that
participate in the two-sided model. For example, as we described in the
proposed rule, we believe that it is appropriate to provide a higher
sharing rate for organizations participating in the Shared Savings
Program under the two-sided model than for those organizations
participating under the one-sided model.
In addition to a methodology for determining shared savings, the
two-sided model requires a methodology for determining shared losses in
those cases where an ACO realizes a loss as opposed to a savings
against its benchmark in any performance year. We proposed to mirror
the structure and features of the shared savings methodology as much as
possible in the determination of loss sharing. As discussed later in
this final rule, for purposes of the loss-sharing methodology, we
proposed adopting a similar structure of minimum loss rate (the
equivalent of minimum savings rate on the savings side), shared loss
limit, and loss sharing rate.
We address the methodological steps for determining shared savings
and losses, related comments, responses, and our final policy
decisions, in the sections discussed later in this final rule.
Comment: We received a wide range of comments requesting or
suggesting adjustments to specific policies so that an ACO could share
in a higher level of savings or lower amount of losses than what was
proposed. Generally, commenters expressed the view that the reward to
risk ratio for participating in the program as proposed is unattractive
to providers, and commenters favored policies that would attract broad
participation by providers. Commenters explained that financial rewards
must be sufficient to offset provider risks and startup-costs.
According to one commenter ``the program as envisioned under the
proposed rule places inordinate investment pressure on medical
providers for an insufficient return that carries a significant amount
of risk, regardless of the type of ACO.'' Comments reflected concern
that this pressure is increased for small ACOs, such as those comprised
largely of small and medium sized physician practices; small hospitals
and safety net providers, particularly those serving rural areas; and
providers serving high risk patients (for example, dual eligibles and
oncology patients). Commenters suggested that participation in the
proposed program will be effectively limited to those few large
entities already organized under an ACO-like structure; entities that
already have ready access to capital, substantial infrastructure
development, and experience operating under an integrated service/
payment model (for example, MA). Even entities which might meet these
criteria questioned the ``business case'' for adoption of the ACO model
as outlined in the proposed rule. Further, some commenters expressed
concern that the cost of ACO formation may foster the development of
large health system-based or hospital-based ACOs thereby financially
undermining small, independent physician practices.
Several commenters questioned the adequacy of the program's
incentives for primary care physicians, on which the program focuses.
These commenters highlighted primary care physicians' critical role in
coordinating care across care settings from the home to the hospital
and ensuring that beneficiaries see the appropriate specialists. They
indicated that primary care physicians will have to incur additional
costs for case management and coordination of patient care to achieve
the program's goals with what will be a potentially insufficient and
uncertain incentive--the chance that there will be a cost savings
disbursed to them. Further, commenters suggested that to the extent
these physicians experience financial failure as a result of assuming
risk, the program could exacerbate the primary care physician shortage,
for example by discouraging physicians from specializing in primary
care practice.
Typically, recommendations we received for improving the value
[[Page 67912]]
proposition of program participation included the following:
Revise the methodology for establishing the benchmark to
encourage participation by organizations that are already efficient or
in low cost areas.
Risk adjust expenditures with the CMS-HCC model during
both the benchmark and performance periods to account for changes in
acuity and movement in the assigned beneficiary population.
Standardize the benchmark and performance year
expenditures by excluding payments made in pursuit of policy goals,
such as IME and DSH payments.
Make it easier for ACOs that perform well on quality to
receive savings, by increasing the sharing rate based on quality
performance and reducing or eliminating the MSR and the 2 percent net
sharing requirement.
Allow ACOs to receive a larger share of savings achieved
by lowering or eliminating the 25 percent payment withhold and
performance payment limit.
Include a non-risk option, so that ACOs may participate
under a shared savings-only model while they gain experience with the
accountable care model.
Commenters' specific concerns about particular aspects of the
shared savings and losses methodology are further detailed in this
section of this final rule.
Response: Commenters' arguments persuaded us of the need to improve
the financial attractiveness of the program to encourage broad
participation by providers and suppliers, particularly those likely to
comprise smaller ACOs, such as small and medium sized physician
practices, rural and safety net providers. One particularly compelling
argument suggested that allowing ACOs to receive a greater share of
savings would support ongoing investment in and achievement of the
program's goals. Further, we agree with commenters' suggestions on the
need to adjust policies related to determining shared savings/losses to
avoid unintended consequences for certain groups of beneficiaries and
providers or suppliers. For instance, updating ACOs' risk scores to
better reflect changes in their assigned populations could remove
incentives for ACOs to avoid beneficiaries with high cost or complex
conditions. Excluding IME and DSH payments may allay concerns that
inclusion of these payments could incent ACOs to avoid certain types of
providers, such as Academic Medical Centers. Accordingly, as described
in the later sections of this final rule, we are revising several of
our proposed policies to make the program, overall, more financially
rewarding to ACOs, to better adjust for changes in assigned
beneficiaries' health status, and to ensure ACOs include providers and
suppliers that can provide the high quality care for Medicare
beneficiaries. Underlying our decisions regarding the policies we are
adopting in this final rule is the need to address the (sometimes
competing) interests of ACOs, beneficiaries, the Medicare Trust Funds,
and the goal of achieving the intended transformative effects. We
believe the financial models presented in the final rule offer an
appropriate balance of payment incentives, while still furthering the
purpose and intent of the program.
b. Establishing the Benchmark
Section 1899(d)(1)(B)(ii) of the Act specifies several requirements
with regard to establishing an ACO's benchmark. These requirements are
as follows:
First, the law requires the Secretary ``to estimate a
benchmark for each agreement period for each ACO using the most recent
available 3 years of per-beneficiary expenditures for parts A and B
services for Medicare fee-for-service beneficiaries assigned to the
ACO.''
Second, the law requires that ``[s]uch benchmark shall be
adjusted for beneficiary characteristics and such other factors as the
Secretary determines appropriate.''
Third, the law requires that the benchmark be ``updated 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, as estimated by the Secretary.''
Finally, the law requires that ``[s]uch benchmark shall be
reset at the start of each agreement period.''
In the proposed rule, we considered two legally permissible
approaches to implementing the statutory language for estimating the
benchmark, which we called Option 1 and Option 2. Both approaches
involved benchmarks derived from prior expenditures of assigned
beneficiaries and adjusted for certain beneficiary characteristics, and
other factors, the Secretary determines appropriate and updated by the
projected absolute amount of growth in national per capita
expenditures. Under both approaches, we proposed to reset the benchmark
at the start of each agreement period. However, a key difference
between these two approaches was the beneficiary population used to
determine expenditures for purposes of the benchmark. Specifically,
under Option 1, we proposed estimating an ACO's benchmark based on the
Parts A and B FFS expenditures of beneficiaries who would have been
assigned to the ACO in each of the 3 years prior to the start of an
ACO's agreement period using the ACO participants' TINs. As such, this
methodology would generate benchmark expenditures based on the average
population cared for by the ACO participants during the preceding 3
years. In contrast, under Option 2, we proposed basing the benchmark on
the Parts A and B FFS expenditures of individual beneficiaries assigned
to the ACO during each performance year, with the benchmark
expenditures being those incurred in the 3 years immediately preceding
the ACO's agreement period for each of those assigned beneficiaries.
Under both Option 1 and Option 2, the benchmark would be reset (or
rebased) the start of each agreement period. In the proposed rule, we
proposed to adopt Option 1 to establish each ACO's benchmark; however,
we solicited comments on both options. For a detailed description of
Options 1 and 2, please see our April 7, 2011 proposed rule (76 FR
19604 through 19606).
Comment: We received numerous comments related to our proposal to
base the benchmark on an ACO's own past cost experience. One commenter
commended us for establishing the benchmark based on an ACO's
historical per capita expenditures. This commenter noted that a similar
approach has proven successful in a private sector value based
purchasing initiative, and that this methodology offers important
confidence to groups that the starting budgets represent a fair and
appropriate allocation of resources.
The majority of comments, however, expressed concern with our
proposal to establish the benchmark based on ACOs' historical per
capita expenditures, regardless of whether Option 1 or Option 2 was
implemented. In most cases, commenters expressed concern that the
proposed benchmarking methodology would disadvantage efficient
providers or those in low-spending areas and reward poor performers in
high cost areas. Thus, commenters suggested that efficient
organizations may be less willing to participate in the program because
they have already invested in the systems and infrastructure to produce
high-quality, low cost care, and will have difficulty achieving
additional efficiencies, and hence savings, given the proposed
benchmark methodology. In particular, some commenters suggested the
proposed policy would
[[Page 67913]]
deter participation by rural providers, asserting they already operate
at or near the lowest cost possible. Another commenter suggested that
providers operating in the Indian Health System may have difficulty
reaching savings requirements and other benchmarks because of the
current funding and delivery system structure. One commenter suggested
that further cost control in already efficient areas may lead to
undesirable results, including, for example, limited ACO interest in
participation or reduced beneficiary access to needed care. However,
one commenter suggested effort will be needed by providers in both
higher cost and lower cost areas to reduce costs, and it may not
necessarily be 'easier' for providers in higher cost markets to achieve
this transformation.
Relative to their concerns, as an alternative, some commenters
suggested that CMS exercise its authority under section 1899(i) of the
Act to develop and implement an alternative benchmarking methodology.
Commenters suggested alternatives such as using local, regional or
national experience to establish the ACOs' benchmarks; however,
opinions varied as to which approach among these would be most
appropriate. Some commenters suggested a blended approach based on
local and national spending, for instance use of a combination of local
and national averages or a phased approach to transition from initial
use of local averages to a national average over time.
Other suggestions for establishing the initial benchmark included
applying alternatives including the following:
A prospective benchmark based on burden of illness with
bonus payments that reflect quality care through better clinical and
patient-reported outcomes.
A peer-to-peer benchmarking methodology. For instance, one
commenter suggested that existing high cost ACOs should be required to
achieve a higher percentage of improvement in order to share in savings
while ACOs with historically lower costs should be rewarded for smaller
improvements over the threshold.
A matched cohort of Medicare fee-for-service beneficiaries
as a basis for comparison for those beneficiaries being treated under
an ACO.
A fixed percentage of total operating funds for all ACO
providers, such as 85 percent of geographic-adjusted expenditure per
capita. The difference between this benchmark and the medical loss
ratio incurred by any ACO would be shared savings.
Methodologies specifically for ACOs in low-cost regions,
such that these ACOs would have the opportunity to earn greater
rewards.
A menu of benchmarking methodologies from which the
organization can choose, similar to the methodology used in the
Hospital Value-Based Purchasing program.
A rolling 3 year look-back.
A benchmark established by determining which beneficiaries
would have been assigned to the ACO, determining their actual
utilization during the relevant 3-year period, and re-pricing the cost
of those services using the ACO's fee schedule for the relevant
performance year being compared.
Response: We understand concerns raised by commenters on basing
benchmarks on ACO's historical per capita expenditures. Section
1899(d)(1)(B)(ii) of the Act is clear, however, that ``The Secretary
shall estimate a benchmark for each agreement period for each ACO using
the most recent available 3 years of per-beneficiary expenditures for
parts A and B services for Medicare fee-for-service beneficiaries
assigned to the ACO.'' Thus, consistent with statute, we plan to make
final our proposal to establish ACO benchmarks using the most recent
available 3 years of per-beneficiary expenditures for parts A and B
services for Medicare fee-for-service beneficiaries assigned to the
ACO.
Comment: As mentioned previously, very few comments addressed the
specific methodology that we should use for establishing ACO
benchmarks--that is, Option 1 or Option 2--although a few commenters,
including MedPAC, suggested CMS adopt a benchmarking methodology
similar or identical to that proposed for the Innovation Center's
Pioneer Model ACOs, which tends to align with Option 2. For instance,
MedPAC, among others, recommended calculating ACOs' benchmarks based on
expenditures of individual beneficiaries assigned to the ACO. A number
of commenters raised concerns about the accuracy of the benchmark and
performance year expenditures in circumstances when we have only
partial data for an assigned beneficiary--issues that would more
typically occur under Option 2 than Option 1. For instance, several
commenters suggested that using Option 2 would require an additional
adjustment to account for beneficiaries who cross over to or from
another payer, such as Medicaid or Medicare Advantage, and to account
for decedents and beneficiaries treated in an institutional setting
where their costs may not be attributable to an ACO under the proposed
assignment methodology. Moreover, when adjusting expenditures for
decedents, commenters tended to oppose the methods we discussed under
Option 2 for adjusting for decedents, specifically the method of
excluding the expenditures of deceased beneficiaries from actual
expenditures during the agreement period. Several commenters suggested
that while excluding these expenditure data would protect ACOs from
catastrophic costs incurred in the patient's last year of life, it
would have unintended consequences such as discouraging better end of
life care management, and one commenter suggested CMS consider a method
to risk adjust for expected costs in a beneficiary's final year of
life. Another commenter favored the second method we discussed under
Option 2: Comparing average expenditures for each deceased beneficiary
during the agreement year to the average expenditures for beneficiaries
included in the benchmark. Under this option, we would make no
adjustment if the agreement year expenditures were 5 percent or less
above the benchmark, but would make adjustments if expenditures were
greater than 5 percent above the benchmark.
Response: On balance, we believe Option 1 is the most appropriate
approach for establishing ACO benchmarks for at least initial use in
the program, and plan to make final this proposal. We believe Option 1
establishes a statistically stable benchmarking methodology based on
the ACO's average population by which we can assess improvements the
ACO makes in the quality and efficiency of care delivery for its
average population. We also acknowledge there are drawbacks to this
benchmark methodology, including that it provides incentives for ACOs
to seek and/or avoid specific beneficiaries during the agreement period
so that their average expenditures would likely be less than for their
historical beneficiaries included in the benchmark. For this reason we
favor a benchmarking methodology based on an ACO's actual assigned
population, such as Option 2, MedPAC's suggested approach, or as
proposed for Pioneer Model ACOs. However, we lack experience with this
model of benchmarking and the related need to adjust for decedents,
sudden increases in individual costs, and incomplete expenditure data
on some assigned beneficiaries. We support the Innovation Center's
testing of this benchmarking approach through the Pioneer Model ACO
initiative, and look forward to applying lessons learned from the
Pioneer experience towards
[[Page 67914]]
developing a robust benchmarking methodology for possible use within
the Shared Savings Program. We intend to revisit use of a benchmarking
methodology based on the ACO's assigned population in future rule
making, as soon as practicable, once we gain more experience with this
benchmarking approach through the Pioneer Model.
Comment: Some commenters expressed concerns that the proposed
assignment methodology would exclude some of Medicare FFS
beneficiaries' costs from the ACOs' benchmark and thereby disadvantage
certain providers and the populations they serve. One commenter
expressed concern that assignment of beneficiaries based on primary
care services rendered by physicians with primary care specializations
could exclude beneficiaries with disabilities and those needing medical
rehabilitation services which rely on care by specialists. This
commenter favored a step-wise approach to assignment in which
beneficiaries are assigned first on the basis of care by primary care
physicians followed by a second ``sweep'' of assignment based on
specialists would help ensure that these beneficiaries' costs would be
counted.
Many commenters expressed concern that Medicare FFS beneficiaries
treated by FQHCs and RHCs would not be assigned to an ACO or have their
costs reflected in an ACO's benchmark under the proposed assignment and
benchmarking methodologies. A commenter stated: ``The statute does not
appear to require the specific methodology that has been proposed by
CMS to determine the benchmark, and certainly does not require a single
uniform methodology for all primary care providers. Under the wording
of this provision, CMS appears to have the flexibility to apply a
methodology to `estimate a benchmark' specifically for FQHCs.'' This
commenter and some others suggested various ways to compute the
benchmark for FQHCs absent 3 years of benchmark data: (1) CMS could use
the data and claims it will have from FQHCs for 2011 and assume similar
and comparable data and claims for the two years prior with some
adjustments as appropriate relating to inflation, etc.; (2) CMS could
assign beneficiaries utilizing the 2011 data and recover billing data
from the prior 2 years with use of health center office visit revenue
codes to determine the 3 year benchmark; (3) CMS could further
investigate the methods that are being used to create benchmarks for
demonstrations, such as the methods that were considered for the
Pioneer ACO Model Request for Applications; (4) a number of FQHCs have
been recording HCPCS codes for all of their patients and have this
information stored in their practice management systems, dating back
prior to the requirement to report to CMS starting on January 1, 2011.
Those centers that are able to provide CMS with the data it requires to
establish the 3-year benchmark should be allowed to do so; and (5) CMS
could allow each health center to voluntarily choose whether it would
provide any specific requested information. Further, commenters
suggested that section 1899(i), if not section 1899(d) of the Act,
provides CMS flexibility to estimate a benchmark specifically for
FQHCs.
One commenter advocated allowing those RHCs and FQHCs who wish to
participate in ACOs the opportunity to provide the requisite data so
that they may fully participate in the program. However, another
commenter appreciated the Department's reluctance to impose reporting
requirements in this rule for both FQHCs and RHCs and other entities
without either a statutory requirement or clear support for such a
regulatory change from the community at large.
Response: In the section II.E. of this final rule, we establish a
step-wise approach to beneficiary assignment that simultaneously
maintains the primary care-centric approach to assignment and
recognizes the necessary and appropriate role of specialists in
providing primary care services. Through this assignment methodology we
will be able to attribute to ACOs expenditures for beneficiaries who
predominantly rely on care from specialists.
Based on the assignment process that we are adopting in this final
rule (see section II.E. of this final rule), we are able to compute a
benchmark for ACOs that include FQHCs and RHCs, in the same manner as
we would for any other ACO. For ACOs that consist of FQHCs and/or RHCs
(either independently or in partnership with other eligible entities),
we will establish such ACO's initial benchmark based on the Parts A and
B FFS expenditures of beneficiaries who would have been assigned to the
ACO in any of the 3 years prior to the start of an ACO's agreement
period.
Comment: As described in section II.G. of this final rule, several
commenters recommended that we trend and update the benchmark and risk
adjust by categories of beneficiaries, including aged, disabled and
ESRD beneficiaries, among others.
Response: We agree with commenters' suggestions for taking a
categorical approach to establishing the benchmark and are adopting
this approach for calculating expenditures for the historical
benchmark. In this final rule, we are adopting a policy whereby the
historical benchmark expenditures will be calculated for cost
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. We will
sort beneficiaries according to these categories in the order in which
they are stated. We will make a distinction between the aged/dual
eligible and aged/non-dual eligible populations since modeling has
suggested the expected expenditures for these populations is
significantly different. The ESRD and disabled categories include both
dual eligible and non-dual eligible beneficiaries, however, since
modeling has indicated expenditures are less divergent for these
populations. As described in section II.G. of this final rule, we are
adopting this categorical approach to establishing the benchmark,
updating the benchmark and calculating performance year expenditures.
Comment: We received a number of comments on our proposal to
minimize variation from catastrophically large claims by truncating an
assigned beneficiary's total annual Parts A and B FFS per capita
expenditures at the 99th percentile of national Medicare FFS
expenditures as determined for each benchmark year and performance
year. Mostly commenters were supportive of the proposal to adjust for
outliers. Some commenters suggested that the proposed limitations may
provide ACOs inadequate protections from high-cost beneficiaries, and
suggested a variety of additional or alternate limitations including
the following:
Remove outliers altogether from the assigned populations
used to establish the benchmark and performance year expenditures. For
instance, one commenter suggested excluding all costs incurred by
patients with rare and extreme diagnoses or for care received in the
tertiary care setting, while another recommended CMS use in the Shared
Savings Program an approach similar to what was proposed for the
Pioneer Model ACOs, in which ACOs have the option to exclude from
benchmark and performance year expenditures claims above the 99th
percentile for national per capita expenditures.
Reduce the outlier threshold from the 99th percentile to
the 75th or 95th percentile, for instance, to help ensure
[[Page 67915]]
that ACOs are not penalized for using innovative technologies.
Use a flat dollar amount, such as $100,000 per year,
instead of a percentile as a basis for truncating claims.
Use ``alternate windsoring techniques'' for adjusting a
distribution for outliers; for example, calculating separate savings
among different cost categories of beneficiaries, such as the top 5
percent of beneficiaries by cost versus the remaining 95 percent of
beneficiaries.
Exclude claims for high cost treatments demanded by the
patient that have a negative result, in part as a means of addressing
higher medical costs in States with high rates of medical malpractice
litigation.
One commenter expressed concern that under the proposed policy,
ACOs would have little incentive to effectively coordinate care for
high cost beneficiaries. This commenter explained that the proposed
policy may negatively impact dialysis patients because these patients'
costs may be close to the 99th percentile threshold. If an ACO knows
its risk exposure is limited for what may be a small portion of its
assigned population, such as ESRD beneficiaries, the ACO may have
little incentive to spend time and money needed to provide high quality
care to these beneficiaries.
Several commenters asked for clarification about the proposed
truncation methodology, including whether the same 99th percentile will
be applied to the benchmark or performance year expenditures or if it
will be determined within each performance year. Several commenters
asked for clarification as to whether the expenditure amount includes
hospital outlier payments, or otherwise how outlier payments to
inpatient facilities will be handled. One commenter asked generally how
CMS will ensure providers with high cost patients are able to receive
savings.
Response: We are finalizing our proposal to truncate an assigned
beneficiary's total annual Parts A and B FFS per capita expenditures at
the 99th percentile of national Medicare fee-for-service expenditures
as determined for each benchmark year and performance year. We disagree
with those commenters that suggested placing greater limitations on
ACOs' accountability for the cost of outliers, such as by completely
removing outliers from ACO benchmark and performance year expenditures
or lowering the threshold (such as the 95th percentile). Doing so would
give ACOs less incentive to coordinate care and services for high-cost
beneficiaries, for whom improved care coordination could be especially
valuable, to improve outcomes and control unnecessary costs.
The 99th percentile represents a dollar amount (roughly $100,000)
that matches in dollar terms an attachment point that is fairly common
in the reinsurance market. The important reason for its inclusion is
that it reduces variation in expenditure growth, thereby lowering the
risk of paying ACOs savings or requiring ACOs to pay losses that result
from random variation. A lower percentile might have been chosen, but
the incremental benefit in terms of lowered variation would be offset
by further reduction in the incentive for ACOs to increase efficiency
for high-cost patients. Therefore, we believe that truncating claims at
the 99th percentile achieves an appropriate balance between limiting
catastrophic costs and continuing to hold ACOs accountable for those
costs that are likely to be within their control.
We appreciate commenters' concerns that by limiting ACO's
accountability for catastrophic costs, ACOs may have an incentive to
avoid managing the care for the select few very high-cost
beneficiaries. However, we believe that truncating claims at the 99th
percentile in conjunction with the opportunity to receive shared
savings, as well as monitoring protections, help assure ACOs will not
avoid treating at-risk beneficiaries. We also note, in response to the
commenter who expressed concern that an ACO could not achieve savings
for high cost beneficiaries, that one of the purposes of risk
adjustment is to make it possible for ACOs that improve the quality and
efficiency of the care they provide to achieve savings in the cost of
care for both high and low cost beneficiaries.
Accordingly, as specified in the proposed rule, we will truncate
all Parts A and B FFS per capita expenditures at the 99th percentile
for each beneficiary in each benchmark year and for each assigned
beneficiary in each performance year. Further, we will truncate for
outliers in the ACO's assigned population as opposed to accounting for
outlier payments made to hospitals (potential ACO participants) which
will be included in the calculation of actual expenditures during the
performance year.
Comment: Several comments generally suggested that the proposed
policy for weighting benchmark expenditures at 60 percent for BY3, 30
percent for BY2 and 10 percent for BY1 was appropriate. Several others
recommended alternative approaches to weighting benchmark expenditures.
For instance, one commenter recommended that CMS weight the most
expensive benchmark year the highest, followed by the second highest
and finally the least expensive. Another commenter suggested, relative
to Option 2 for establishing the benchmark, to weight BY3 at 60 percent
and BY2 at 40 percent.
Response: We thank the commenters for their support of our proposed
policy. We continue to believe that our proposed approach to weighting
base year expenditures, compared to the alternatives suggested by
commenters, will result in a more accurate benchmark. This approach
recognizes that the ACO's financial performance in the most recent base
year is the most current of the three base years and therefore reflects
more accurately the latest expenditures and health status of the ACO's
assigned beneficiary population. Further, weighting BY1 at zero, as
suggested by one commenter, would not meet the statutory requirement
under section 1899(d)(1)(B)(ii) of the Act to establish the benchmark
using the most recent available three years of per-beneficiary
expenditures for Parts A and B services for Medicare fee-for-service
beneficiaries assigned to the ACO. Accordingly, we are finalizing our
proposal to weight the most recent year of the benchmark, BY3, at 60
percent, BY2 at 30 percent and BY1 at 10 percent.
Comment: Many commenters urged CMS not to reset the benchmark for
ACOs that continue in the program after the first agreement period, or
to limit how far the baseline could be moved from one agreement period
to the next. They indicated that rebasing the benchmark each agreement
period will make savings more difficult to attain and eventually make
savings unattainable. They further suggested this could discourage
initial participation in the program, as organizations will have little
incentive to make the needed investment in ACO formation. Commenters
recommended a number of alternatives to mitigate these anticipated
effects which included the following:
Never rebasing.
Delayed rebasing, for example apply the original baseline
for longer than 3 years, such as 6 or 9 years (covering a second and
third agreement period).
Apply partial, as opposed to full, rebasing.
Rewarding ACOs for maintaining, rather than further
decreasing, their expenditures.
[[Page 67916]]
Using rebasing as a mechanism to facilitate ACOs'
transition from FFS to capitated payments.
On the other hand, several commenters favored resetting the benchmark
more frequently than we proposed, stating their preference for a
rolling 3 year look back to reset the ACO's benchmark annually.
Further, some commenters provided technical suggestions on how to
reset the benchmark. One commenter suggested that we take inflation
into consideration when resetting the benchmark as to not penalize ACOs
for market increases beyond their control. Another commenter suggested
that reset benchmarks must include payments for care management and
coordination services and urged CMS to establish rates that ACOs could
bill for such services. This commenter further suggested that such
rates should vary based on the beneficiary's number of chronic
conditions and the acuity of these conditions (such as severe mental
illness and/or chemical dependence), as well as socio-economic or
environmental risk factors that would require additional social
services.
Response: We are finalizing our proposal to reset the benchmark at
the start of each agreement period, as required under section
1899(d)(1)(B)(ii) of the Act. Moreover, we believe that resetting the
benchmark at the beginning of each agreement period will most
accurately account for changes in an ACO's beneficiary population over
time. As we indicated in the proposed rule, turnover in assigned
beneficiaries could be approximately 25 percent year to year. By the
end of the agreement period, an ACO's assigned population may be
significantly different from the historically assigned beneficiary
population used to calculate the ACO's initial benchmark. Resetting the
benchmark at the beginning of subsequent agreement periods will allow
the benchmark to more accurately reflect the composition of an ACO's
population, and therefore will protect both the Trust Funds and ACOs.
We appreciate commenters' concerns that resetting the benchmark after 3
years could ultimately make it more challenging for ACOs to achieve
savings, particularly for low-cost ACOs; however, we believe that one
of the fundamental purposes of the Shared Savings Program is to provide
incentives for ACOs to strive continually to make further advances in
the quality and efficiency of the care they provide. We also appreciate
commenters' technical suggestions on resetting the benchmark in
relation to beneficiary health status, and socio-economic and
environmental factors. While at this time we decline to use authority
under section 1899(i) of the Act to adopt an alternate approach to
resetting the benchmark, we may reconsider the issue in future
rulemaking.
Final Decision: We are making final our proposed methodology under
Sec. 425.602 for establishing an ACO's initial benchmark based on the
Parts A and B FFS expenditures of beneficiaries who would have been
assigned to the ACO in any of the 3 years prior to the start of an
ACO's agreement period using the ACO participants' TINs identified at
the start of the agreement period. We will calculate benchmark
expenditures by categorizing beneficiaries in the following cost
categories, in the order in which they appear: ESRD, disabled, aged/
dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual
eligible Medicare and Medicaid beneficiaries. This benchmarking
methodology will apply to all ACOs, including those consisting of FQHCs
and/or RHCs (either independently or in partnership with other eligible
entities). We are also making final our proposals to truncate an
assigned beneficiary's total annual Parts A and B FFS per capita
expenditures at the 99th percentile of national Medicare fee-for-
service expenditures as determined for each benchmark and performance
year; weight the most recent year of the benchmark, BY3, at 60 percent,
BY2 at 30 percent and BY1 at 10 percent; and reset the benchmark at the
start of each agreement period. Further, as specified in section II.C.
of this final rule, we will use a 3-month run-out of claims data and a
completion factor to calculate benchmark expenditures.
c. Adjusting the Benchmark and Actual Expenditures
(1) Adjusting Benchmark and Performance Year Average per Capita
Expenditures for Beneficiary Characteristics
Section 1899(d)(1)(B)(i) of the Act stipulates that an ACO is
eligible for shared savings ``only if the estimated average per capita
Medicare expenditures under the ACO for Medicare fee-for-service
beneficiaries for Parts A and B services, adjusted for beneficiary
characteristics'' is below the applicable benchmark. Likewise, section
1899(d)(1)(B)(ii) of the Act specifies that the benchmark ``shall be
adjusted for beneficiary characteristics and such other factors as the
Secretary determines appropriate * * *'' This requirement to adjust for
``beneficiary characteristics'' implicitly recognizes that, under a
shared savings model, the realization of savings against a benchmark
could be a function of two factors. One factor is reduced expenditure
growth as a result of greater quality and efficiency in the delivery of
health care services. The other factor could be changes in the
characteristics of the beneficiaries who are under the care of the ACO.
Thus, in the absence of risk adjustment, some organizations may realize
savings merely because they are treating a patient mix with better
health status than the patient population reflected in their benchmark.
On the other hand, some organizations may share in savings on a risk
adjusted basis that would not have shared in savings if expenditures
were not risk adjusted.
When applying a risk adjustment model, it is necessary to guard
against changes that result from more specific or comprehensive coding
as opposed to improvements in the coordination and quality of health
care. An ACO's ability to share in savings can be affected not only by
changes in the health status of the ACO's assigned population but also
by changes in coding intensity and changes in the mix of specialists
and other providers within an ACO, which in turn could affect the
characteristics of its assigned beneficiary population, relative to the
benchmark period. As we stated in the proposed rule, our goal is to
measure improvements in care delivery of an ACO and to make appropriate
adjustments to reflect the health status of assigned patients as well
as changes in the ACO's organizational structure that could affect the
case mix of assigned patients rather than apparent changes arising from
the manner in which ACO providers/suppliers code diagnoses.
To address these concerns, in the proposed rule, we considered 3
options for risk adjusting the initial benchmark. One option was to
employ a method that considered only patient demographic factors, such
as age, sex, Medicaid status, and the basis for Medicare entitlement
(that is, age, disability or ESRD), without incorporating diagnostic
information. The second option was to employ a methodology that
incorporates diagnostic information, in addition to demographic
variables, specifically the CMS-HCC prospective risk adjustment model
that has been used under the Medicare Advantage (MA) program. The third
option was to implement the MA ``new enrollee'' demographic risk
adjustment model: a model that includes adjustments for age, sex,
Medicaid enrollment status, and
[[Page 67917]]
originally disabled status, but would not take into account the health
status of the assigned beneficiaries.
We proposed to adjust Medicare expenditure amounts using the CMS-
HCC model because it more accurately predicts health care expenditures
than the demographic-only model as it accounts for variation in case
complexity and severity. We also noted that incorporating diagnosis
data in the risk adjustment model would encourage ACOs to code more
fully or intensely for purposes of population management and quality
reporting, and to optimize their risk scores to achieve shared savings.
We elected not to propose the MA new enrollee model because it could
have an adverse effect on ACOs that include providers and suppliers
that typically treat a comparatively sick beneficiary population,
including academic medical centers and tertiary care centers.
We also considered, and sought comment on, several approaches to
account for the upward trend in risk scores which may result from
coding changes alone, without improved methods of beneficiary care,
such as the following:
Use of normalization factors and coding intensity
adjustments, as is done for the MA program.
Use of an annual cap in the amount of risk score growth we
would allow for each ACO. For instance, we considered setting a fixed
growth percentage for all ACOs and negating any risk score growth over
the cap. Alternatively, we could establish a risk score for the ACO's
assigned population during the agreement period based on the calculated
risk score of beneficiaries who were used to calculate the ACO's
benchmark.
Use of a methodology similar to the MA methodology that
would reduce the amount of growth in the risk scores for beneficiaries
assigned to ACOs, but continue to allow increases.
We further explained our expectation that the ACO's average
population risk scores would remain stable over time, given that there
is expected to be stability in ACO participants and therefore case mix
and we will have calculated the benchmark risk adjustment score for the
ACO's historically assigned beneficiary population under conditions
when the ACO providers/suppliers would not have had the same incentive
to increase coding. We stated that we considered the benchmark risk
adjustment score for the ACO's historically assigned beneficiary
population to be a reasonable approximation of the actual risk score
for the beneficiary population assigned to the ACO during the agreement
period, while avoiding any distortion due to changes in coding
practices. Therefore, we proposed a cap of zero percent growth on risk
adjustment by calculating a single benchmark risk score for each ACO
and applying this same risk score throughout the agreement period to
the annual assigned patient population's per capita expenditures for
assigned beneficiaries.
We specified our intent to monitor and evaluate the issue of more
complete and accurate coding as we gained experience with the Shared
Savings Program, and that we would consider making revisions and
adaptations to the final risk adjustment model through future
rulemaking if warranted. Further, to assure the appropriateness of ACO
coding practices and our methodology for risk adjusting, we proposed to
retain the option to audit ACOs, especially those ACOs with high levels
of risk score growth relative to their peers, and to adjust the risk
scores used for purposes of establishing the 3-year benchmark
accordingly. We sought comment on these proposals.
Comment: Commenters typically expressed support for adjusting
benchmark expenditures based on the CMS-HCC model; although, some
commenters raised technical concerns about the accuracy of HCC risk
adjustment. For example, one commenter suggested that CMS needs to
improve the accuracy of the HCC risk adjustment model. Other commenters
expressed concern that the proposed risk adjuster lacks the capacity to
account for socioeconomic status. Another commenter suggested the need
for physician input into risk adjustment factors, for example, to be
able to identify patients with multiple chronic conditions. Commenters
also made a number of recommendations about the proposed risk
adjustment methodology, including the need to define other
``beneficiary characteristics'' that might be used to risk adjust,
modify the HCC model to exclude zero spend beneficiaries (while these
beneficiaries are included in the HCC model as used in MA, it could
disadvantage ACOs whose assigned populations would by definition
exclude zero spend beneficiaries), and risk adjust for including safety
net providers, such as RHCs, FQHCs and Method I CAHs.
While commenters supported use of the CMS-HCC model for adjusting
benchmark expenditures, they also expressed concern that benchmark and
performance expenditures would not also be annually updated for risk
using this same mechanism. Numerous commenters expressed concern that a
cap on risk adjustment in cases where care furnished to a patient is
documented and appropriate would diminish the level of shared savings,
and serve as a disincentive to manage patients with complex health care
needs who can most benefit from better care coordination. MedPAC, among
other commenters, expressed concern that this approach would create
incentives for ACO providers to encourage existing patients who are
costly to seek care elsewhere and to avoid taking on new patients that
could be costly. Another commenter suggested that accurate risk
adjustment is especially important for providers, such as academic
medical centers, that disproportionately treat the sickest and most
complex patients.
Some commenters were concerned that the proposed cap on risk
adjustment would not adequately capture changing severity of disease in
the ACO's assigned population. For example, one commenter encouraged
CMS to allow for timely and appropriate risk adjustment for cancer
patients, particularly to address the circumstance under which a
patient has not been diagnosed with cancer when the benchmark is set,
but is later diagnosed with and treated for cancer. Another commenter
noted that individuals with multiple health conditions will still need
more services than other beneficiaries with lower acuity. Another
commenter expressed concern that the proposed risk adjustment
methodology would not account for changes in beneficiaries' health
status which result from aging.
Others were concerned that the proposed cap on risk adjustment
would not address changes in the ACO's population as beneficiaries move
to different providers during the agreement period. For instance, some
commenters pointed to our experience with the PGP demonstration, which
showed approximately a 25 percent variation in assignment from year to
year. One commenter suggested, based on its own experience in the
demonstration, that the turnover rate may be higher.
Accordingly, several commenters encouraged CMS to adopt policies
that would encourage ACOs to care for high-risk and high-cost
beneficiaries. The alternative most often recommended by commenters is
for CMS to annually update performance expenditures for risk. In their
view, these annual updates would help keep pace with a changing patient
population, for example in terms of beneficiary age, acuity or severity
of health status and movement of beneficiaries into and out of the
ACO's assigned patient population. As one
[[Page 67918]]
commenter recommended, the ACO's risk adjustment score should be
determined by the population the ACO is actually treating, and should
therefore be recalculated for each year of the agreement period. This
commenter further suggested that the potential for, and presumably
consequences of, increased coding intensity are far outweighed by
concerns about creating incentives to avoid complex patients or
penalizing institutions that treat patients in their performance period
who are more complex compared to their benchmark population. One
commenter noted the importance of adjusting the ACO's benchmark for
changes in risk scores during the agreement period, indicating that
doing so could limit incentives for ACOs to avoid high-cost and high-
risk beneficiaries.
Among the alternatives offered by comments, some commenters
recommended a narrower approach, suggesting that CMS annually update
ACOs' risk scores for select populations of beneficiaries, such as the
aged, disabled and ESRD populations, and beneficiaries with chronic
disease codes, or create exceptions for safety net providers. One
commenter suggested CMS apply a cap of 10 percent on any annual
increase in risk scores, based on coding severity, unless an ACO can
provide a satisfactory sampling of assigned beneficiaries audited to
support the use of proper coding and therefore higher risk adjustments.
Another commenter recommended that risk adjustment be made
retrospectively, on an annual basis, based on the ACO's assigned
patients.
A number of commenters specifically addressed the relationship
between coding accuracy and coding intensity. One commenter viewed the
concept of coding intensity as synonymous with coding accuracy. Several
commenters suggested that improvements in coding will likely occur over
time as a result of ACO formation, for example, as more providers adopt
EHR and can code more completely. One commenter pointed out that this
improvement in coding should be viewed positively, and suggested that
the issue of disproportionate relative risk growth for a subpopulation
due only to improved coding accuracy will self-correct. One commenter
encouraged CMS to educate physicians and other providers in preparation
for the implementation of ICD-10 in 2013, which could result in a
significant change in coding. Another commenter noted their agreement
with the proposal to address coding accuracy by the proposed audit
process.
Commenters suggested a number of alternatives to mitigate the
effects of increased coding intensity which included the following:
Adjust for increased coding intensity as is done for the
MA program.
Do not subject new enrollees or those transitioning from
MA to the risk score change limitations.
Allow ACOs to request a one-time benchmark recalculation
during the agreement period.
One commenter suggested CMS investigate, on an ongoing basis, risk
adjustment methods that could capture the unexplained variation in
spending or risk of a population.
Response: We continue to believe that risk adjusting benchmark
expenditures based on the CMS-HCC model accounts for variation in case
complexity and severity and therefore more accurately predicts health
care expenditures compared to a demographic-only model or other
alternatives suggested by commenters. We did not intend for our
proposed risk adjustment methodology to discourage ACOs from accepting
responsibility for beneficiaries that might present higher than average
risk, but commenters have persuaded us of the need to better account
for risk associated with changes in the ACO's beneficiary population,
for instance in terms of acuity and beneficiary movement, during the
agreement period. However, we remain concerned that liberally adjusting
for changes in risk scores for beneficiaries assigned to the ACO for
the entire agreement period could create an incentive for ACOs to use
coding practices intended to optimize their risk scores to achieve
shared savings. Thus, we are modifying our initial proposal so that ACO
benchmarks will better reflect the risk associated with their assigned
beneficiaries. We will adjust expenditures to account for changes in
severity and case mix for beneficiaries newly assigned in the current
performance year (``newly assigned''), and those who are continuously
assigned to the ACO year-to-year (``continuously assigned''). A newly
assigned beneficiary is a beneficiary assigned in the current
performance year who was neither assigned nor received a primary care
service from any of the ACO's participants during the most recent prior
calendar year. A continuously assigned beneficiary is a beneficiary
assigned to the ACO in the current performance year who was either
assigned to or received a primary care service from any of the ACO's
participant during the most recent prior calendar year.
First, for newly assigned beneficiaries we will annually update an
ACO's CMS-HCC prospective risk scores to adjust for changes in severity
and case mix in this population. Second, each year, we will recalculate
the ACO's CMS-HCC prospective risk scores for continuously assigned
beneficiaries. If the continuously assigned population shows a decline
in its CMS-HCC prospective risk scores, we will adjust for health
status changes for this population using this lower risk score. If the
continuously assigned population shows no decline, this population will
be adjusted using demographic factors only. We believe that this
approach to risk adjustment strikes a fair balance between accounting
for changes in the health status of an ACO's population while not
incenting changes in coding practices for care provided to
beneficiaries who remain continuously assigned to the ACO, nor
encouraging ACOs to avoid high risk beneficiaries. This methodology
implicitly adjusts for beneficiaries who are assigned in the prior year
but not the current performance year (patients which leave the ACO), as
these beneficiaries will be excluded from the continuously assigned
population. We will monitor HCC scores for beneficiaries which are
assigned in the prior year who are not assigned in the current
performance year, to determine if there is trend in changes in health
status for this population. Based on our findings, in future rule
making, we may make a more explicit adjustment for beneficiaries
assigned to the ACO in the prior year who are not assigned in the
current performance year. Further, we agree with the commenter's
suggestion on the need for benchmark expenditures to be adjusted
relative to the risk profile of the performance year assigned
beneficiaries. Therefore the ACO's updated benchmark will be restated
in the appropriate performance year risk to ensure fairness recognizing
changes in the level of risk among the ACO's assigned beneficiaries.
Additionally, we agree with commenters' suggestions about the need
to take account of variations in risk scores across categories of
beneficiaries to reflect differences in disease severity across
subpopulations. Therefore, in adjusting for health status and
demographic changes, we will make adjustments for separate 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
[[Page 67919]]
beneficiaries as described in section II.G.2.b. of this final rule.
Also, we agree with the comment recommending that we use the audit
process to address coding inaccuracies. Therefore, to assure the
appropriateness of ACO coding practices and our methodology for risk
adjusting, we are finalizing our proposal to retain the option to audit
ACOs, especially those ACOs with high levels or risk score growth
relative to their peers, and to adjust the risk scores used for
purposes of establishing the 3-year benchmark accordingly. In addition,
as we stated in the proposed rule, we intend to monitor and evaluate
the issue of more complete and accurate coding and, as we gain
experience with the program, we may consider making further revisions
through future rulemaking.
Final Decision: We are making final our proposal under Sec.
425.602 to risk adjust an ACO's historical benchmark expenditures using
the CMS-HCC model. We are modifying our proposal under Sec. 425.604
and Sec. 425.606 to make additional risk adjustments to performance
year assigned beneficiaries instead of capping growth in risk
adjustments during the term of the agreement at zero percent. For newly
assigned beneficiaries, we will annually update an ACO's CMS-HCC
prospective risk scores, to take into account changes in severity and
case mix for this population. We will use demographic factors to adjust
for severity and case mix for the continuously assigned population
relative to the historical benchmark. However, if the continuously
assigned population shows a decline in its CMS-HCC prospective risk
scores, we will lower the risk score for this population. An ACO's
updated benchmark will be restated in the appropriate performance year
risk relative to the risk profile of the performance year assigned
beneficiaries. Further, we will make adjustments for each of the
following categories of beneficiaries: ESRD, disabled, aged/dual
eligible Medicare and Medicaid beneficiaries, and aged/non-dual
eligible Medicare and Medicaid beneficiaries. We are also making final
our proposal to monitor and evaluate the issue of more complete and
accurate coding for future rule making and to use an audit process to
assure the appropriateness of ACO coding practices and to adjust ACO
risk scores. We will also monitor HCC scores for beneficiaries assigned
in the prior year that are not assigned in the current performance
year, and may make a more explicit adjustment for this population in
future rule making.
(2) Technical Adjustments to the Benchmark and Performance Year
Expenditures
Consistent with the statute, we proposed to take into account
payments made from the Medicare Trust Fund for Parts A and B services,
for assigned Medicare FFS beneficiaries, including payments made under
a demonstration, pilot or time limited program when computing average
per capita Medicare expenditures for an ACO during both the benchmark
period and performance years.
In the proposed rule, we stated our belief that all relevant
Medicare costs should be included in an ACO's benchmark to maintain
sufficient incentives for ACOs to ensure their assigned beneficiaries
receive care in the most appropriate settings. We noted that payment
adjustments achieve policy goals such as supporting teaching hospitals
and hospitals that serve a disproportionate share of low income
beneficiaries, adjusting for local wage differences, or accounting for
providers' performance on quality initiatives. We further explained
that adjustments to payment rates can affect both expenditures during
the benchmark period and also during each subsequent performance year.
Additionally, changes in these payment factors, between the benchmark
and performance years could also influence whether an ACO realizes
savings or incurs losses under the program.
In the proposed rule, we addressed the issue of whether to exclude
some adjustments to Parts A and B payments when determining ACOs'
benchmark and performance year expenditures. We considered a number of
specific claims-based payment adjustments in the proposed rule,
including: IME and DSH payments, geographic payment adjustments, and
some bonus payments and penalties. We also discussed some payment
adjustments which are outside the payments for Parts A and B services
and therefore would not be included in our calculation of ACOs'
expenditures.
We explained that section 1899(d) of the Act provides a way of
adjusting for such payments in the benchmark. Section 1899(d)(1)(B)(ii)
of the Act states, among other things, that the benchmark must be
adjusted for ``* * * beneficiary characteristics and such other factors
as the Secretary determines appropriate * * *.'' However, when it comes
to performance year expenditures, section 1899(d)(1)(B)(i) of the Act
provides authority to adjust expenditures in the performance period for
beneficiary characteristics, but does not provide authority to adjust
for ``other factors.'' Therefore, we noted that while we could make
some adjustments to the benchmark, to exclude certain payments, we
could not make similar adjustments in our calculation of performance
year expenditures. We did not discuss the possible use of our authority
under section 1899(i) of the Act, which authorizes use of other payment
models, to adjust performance year expenditures for ``other factors.''
Comment: We received a number of comments on adjusting for payments
and policies not mentioned in the proposed rule. Commenters requested
clarification, or made recommendations, on the treatment of a number of
payments or costs. Among these, commenters recommended that we exclude
the following:
Costs of preventive services from an ACO's benchmark and
spending calculations to avoid incentives to withhold preventive care.
Costs of urgent care center visits from ACO's benchmark
and performance year expenditures to avoid creating incentives for ACOs
to refer their non-emergent patients to their own emergency departments
instead of to urgent care centers in the community.
Costs of beneficiaries who seek care outside the ACO.
New technology payments under the Inpatient Prospective
Payment System and transitional pass through payment expenditures under
the Outpatient Prospective Payment System for drugs, biological and
devices. Commenters believed exclusion of these payments would avoid
incentives for ACOs to underuse new technologies and therapies. One
commenter, for example, suggested that CMS' exclusions keep pace with
the latest recommended treatments.
Rural health payment adjustments under which CMS
reimburses some providers under alternative, specialized methodologies
due to their designation as rural or critical access facilities.
Low cost county payments.
Primary care incentive payments under the primary care
incentive program established by the Affordable Care Act.
Federal hospital insurance trust fund payments.
TEFRA relief payments, the inclusion of which could
provide incentives for ACOs to avoid forming joint ventures with and
including cancer centers.
Commenters offered differing opinions on the treatment of Part D
costs. One commenter urged us to include Part D costs, suggesting this
could maximize ACO's opportunity for success because of the
opportunities for
[[Page 67920]]
cost savings and improved quality associated with drug benefits.
Several commenters expressed concern that in some clinical areas (such
as cancer care and cardiac ablation for atrial fibrillation) ACOs may
have an incentive to move patients from appropriate treatments or
procedures reimbursed through Parts A or B to Part D therapies which
are excluded from the shared savings calculation. Commenters suggested
safeguards may be needed for certain clinical areas. One commenter
outlined a process for CMS to exclude the costs of certain Part A and B
drugs/biologics or medical procedures from the shared savings
calculation, but to account for use of Part D drugs as an alternative
to procedures paid under Parts A and B. One commenter identified a
seemingly countervailing effect resulting from the proposed additional
incentive for ACOs to include FQHCs and RHCs, which may be entities
eligible for the 340B Drug Pricing Program. The commenter explained
that the incentive for including FQHCs and RHCs may prompt ACOs to
shift treatment protocols and patients from an inpatient setting to an
outpatient setting in order to have access to 340B pricing discounts.
Several commenters expressed the need for CMS to take into
consideration payment policies and causes for payment changes which
could affect ACO financial performance. One commenter noted that some
payment rules can run counter to the goals of the Shared Savings
Program, for instance post-acute care transfer policies that reduce
payments if the beneficiary is moved to certain other types of
providers prior to reaching the geometric mean average length of stay
for that diagnosis-related group. ACOs will be mindful these types of
payment adjustments, which could result in higher Medicare spending.
This commenter suggested the need to align payment policies to be
consistent with the goals of the Shared Savings Program, and
recommended that CMS not apply payment policies that penalize providers
for directing the setting of care. Several other commenters suggested
that we consider adjustments to the benchmark and performance year
expenditures to account for changes in the structure of ACO providers
and suppliers which may have a significant impact on annual payment
rates, such as a hospital receiving the status of ``sole community
provider,'' or a hospital incorporating a provider-based billing clinic
that was previously freestanding. Another commenter suggested CMS
develop a method to account for the defensive practice of medicine
which results in higher medical costs, particularly in States with
higher rates of medical malpractice litigation.
One commenter recommended that CMS offer a process where individual
ACOs could petition for specific benchmark adjustments that might be
relevant to their providers or beneficiaries, but would not be relevant
to all ACOs.
As described section II.G. of this final rule, several commenters
recommended that we trend and update the benchmark and risk adjust by
categories of beneficiaries, including aged, disabled, and ESRD
beneficiaries, among others.
Response: We disagree with commenters' suggestions that we adjust
ACO benchmark and performance year expenditures to account for various
differences in cost and payment among providers and suppliers. We
believe that making such extensive adjustments, or allowing for
benchmark adjustments on a case-by-case basis, would create an
inaccurate and inconsistent picture of ACO spending and may limit
innovations in ACOs' redesign of care processes or cost reduction
strategies. Similarly, we do not believe it is appropriate to consider
Part D spending in our calculation of benchmark and performance year
expenditures. The statute is clear in requiring that we take into
account only payments made from the Medicare Trust Fund for Parts A and
B services, for assigned Medicare FFS beneficiaries, when computing
average per capita Medicare expenditures under the ACO. Although
commenters pointed out important concerns about the potential for
inappropriate cost shifting to Part D therapies and unintended shifts
in the site of care for beneficiaries with high cost therapies, we
believe that the program's quality measurement and program monitoring
activities will help us to prevent and detect any avoidance of
appropriately treating at-risk beneficiaries. Furthermore to the extent
that these lower cost therapies are not the most appropriate and lead
to subsequent visits or hospitalizations under Parts A and B, then any
costs associated with not choosing the most appropriate treatment for
the patient would be reflected in the ACO's per capita expenditures.
As we indicated in the discussion of establishing and updating the
benchmark and risk adjusting ACO expenditures, we agree with
commenters' suggestions for taking a categorical approach to
calculating ACO expenditures. Consistent with our policies stated
elsewhere in section II.G. of this final rule, we are adopting a policy
whereby performance year expenditures will be calculated for cost
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, as
described in section II.G.2.b. of this final rule.
Final Decision: We are finalizing our proposal under Sec. 425.602,
Sec. 425.604, and Sec. 425.606 to take into account payments made
from the Medicare Trust Fund for Parts A and B services, for assigned
Medicare FFS beneficiaries, including individual beneficiary
identifiable payments made under a demonstration, pilot, or time
limited program, when computing average per capita Medicare
expenditures under the ACO. Further, we will calculate ACO expenditures
for each of the following categories of beneficiaries: ESRD, disabled,
aged/dual eligible Medicare and Medicaid beneficiaries, and aged/non-
dual eligible Medicare and Medicaid beneficiaries. Lastly, as specified
in section II.C. of this final rule, we will use a 3-month run-out of
claims data and a completion factor to calculate performance year
expenditures.
(a) Impact of IME and DSH
In the proposed rule, we explained that teaching hospitals receive
additional payment to support medical education through an IME
adjustment. In addition, hospitals that serve a disproportionate share
of low-income beneficiaries also receive additional payments, referred
to as the Medicare DSH adjustment. Many hospitals, especially academic
medical centers, receive both adjustments, which can provide
substantial increases in their Medicare payments compared to hospitals
that do not qualify for these adjustments. We stated our belief that
the higher payments provided to these types of hospitals could provide
ACOs with a strong incentive to realize savings simply by avoiding
referrals to hospitals that receive IME and DSH payments.
In developing the proposed rule, we considered whether it would be
appropriate to remove IME and DSH payments or a portion of these
payments from the benchmark and the calculation of actual expenditures
for an ACO. However, we explained that because of our limited statutory
authority under section 1899(d) of the Act, we could adjust the
benchmark under this provision by removing IME and DSH payments, but we
could not also do so in our calculation of performance year
[[Page 67921]]
expenditures. We further noted reasons for including these payments in
the calculation of both the benchmark and performance year
expenditures. First, if we were to remove IME and DSH payments from the
benchmark, the benchmark would be set artificially low relative to the
performance period, thus making it more difficult for an ACO to achieve
savings under this program. Second, excluding these payments could
result in an artificial and incomplete representation of actual
spending of Medicare Trust Fund dollars. Third, section
1899(d)(1)(B)(ii) of the Act requires that we update an ACO's benchmark
during each year of the agreement period based on ``the projected
absolute amount of growth in national per capita expenditures for parts
A and B under the original Medicare fee-for-service program* * *.,''
which would necessarily include the effects of these payments. Lastly,
including all relevant Medicare costs in an ACO's benchmark would
maintain sufficient incentives for ACOs to ensure their assigned
beneficiaries receive care in the most appropriate settings. We
indicated, for example, that this could advantage ACOs which include
teaching hospitals or DSH hospitals because their benchmarks would be
set higher, and they could potentially earn shared savings when they
refer patients to a more appropriate, less intensive care setting. We
proposed not to remove IME and DSH payments from the per capita costs
included in an ACO's benchmark. We invited comment on this proposal.
Comment: While a few comments supported our proposal not to remove
IME and DSH payments from the benchmark, most comments urged us to use
our authority under section 1899(i) of the Act to remove IME and DSH
from both the benchmark and performance year expenditures. Others
suggested that section 1899(d) of the Act provides implicit authority
to adjust the performance year expenditures for ``other factors,'' such
as IME and DSH payments. Many commenters favoring exclusion of IME and
DSH payments also recommended that CMS exclude direct graduate medical
education (DGME) payments.
Commenters explained that our proposed policy would incentivize
ACOs to avoid referring beneficiaries to higher-cost academic medical
centers, thus limiting beneficiary access to high quality, medically
necessary care. One commenter pointed out that the inclusion of IME and
DSH payments to teaching hospitals in establishing the benchmark may be
attractive to ACOs because it would generate a higher benchmark against
which an ACO could work to achieve savings. However, on the performance
side, ACOs may see the cost structure of teaching hospitals as too
prohibitive to achieve the desired savings during the performance
years. Or, as another commenter suggested, ACOs may be motivated to
shift their referrals away from academic centers so as to achieve
apparent savings due to avoiding education-related payments, and not
due to achieving actual efficiencies. Commenters expressed concern that
the proposed policy could ultimately decrease support for the societal
benefits provided by teaching hospitals, including the training of
health professionals, discovery of advanced treatments, and ensuring
the presence of the highest level of clinical care in a community.
Several commenters also suggested that the proposed policy
disadvantages hospitals serving low income populations, including those
which serve a large number of Medicare and Medicaid patients.
Other comments supported inclusion of teaching hospitals in ACOs
participating in the Shared Savings Program because of their potential
to achieve the program's goals. One commenter noted that teaching
hospitals tend to offer a wider variety of technologically
sophisticated services, such as transplant services, compared to what
is available at other hospitals, and, as a result, attract sicker
patients, requiring more complex and costly treatments. This commenter
further suggested that teaching hospitals are well positioned to
generate savings and improve quality through better care coordination
under the Shared Savings Program.
One commenter noted that certain State policies may lead to a
discrepancy between Federal DSH payments to hospitals and the amount
actually received by DSH hospitals. The commenter described a policy in
the Texas under which a portion of a hospital's Federal DSH payment
accrues to the State general revenue fund instead of the institution.
Several commenters suggested alternatives to excluding IME and DSH
payments. One commenter recommended that CMS exclude teaching and DSH
payments from the benchmark and savings calculations except for ACOs
that include at least one major teaching hospital and one hospital that
receives high DSH payments, or a single hospital that satisfies both
criteria. This commenter further recommended that we account for other
reforms under the Affordable Care Act that relate to hospitals that
receive high DSH payments. Other commenters suggested that, in the
longer term, CMS use risk adjustment methodologies or additional
metrics to assess savings and quality improvements specific to
hospitals receiving IME and DSH payments. In the event that CMS decides
to favor including IME and DSH costs in the calculation of the
benchmark and performance year expenditures, one commenter suggested
that ACOs that include hospitals receiving IME and DSH adjustments
should have an opportunity to receive additional shared savings
payments, as we proposed for ACOs including FQHCs and RHCs as
participants.
Response: We are modifying our proposal in order to adopt an
alternate payment methodology that excludes IME and DSH payments from
ACO benchmark and performance year expenditures, as authorized by
section 1899(i) of the Act. We believe that care should be provided in
the most appropriate setting whether it be a physician office,
outpatient clinic, community hospital or teaching hospital. We further
recognize the role of teaching hospitals in providing high quality,
medically necessary care to Medicare beneficiaries. Commenters have
persuaded us that including IME and DSH payments in determining ACO
cost performance could create incentives for ACOs to avoid appropriate
referrals to teaching hospitals in an effort to demonstrate savings. We
remain committed to the societal benefits supported through IME and DSH
payments, such as educating the nation's medical workforce, advancing
the state of medical science, and ensuring access to care by vulnerable
populations.
To exercise our authority under section 1899(i) of the Act, we must
demonstrate that this policy (1) ``* * * does not result in spending
more for such ACO for such beneficiaries than would otherwise be
expended * * * if the model were not implemented * * *.'' and (2) ``* *
* will improve the quality and efficiency of items and services
furnished under this title.'' First, we believe that the intent of the
program is to reward the prevention of unnecessary services and
redundancies in care. By removing IME and DSH payments from benchmark
and performance year expenditures we can reward more accurately actual
decreases in unnecessary utilization of health care services. Second,
excluding IME and DSH payments from determinations of ACO financial
performance could help ensure participation of hospitals receiving IME
and DSH payments in
[[Page 67922]]
ACOs, and their engagement in the accountable care model. We believe
that removing the disincentive for ACOs to refer patients to teaching
hospitals will help ensure beneficiaries continue to be referred to the
most appropriate place of service for their care. In combination, these
factors could result in Medicare beneficiaries receiving higher
quality, better coordinated and more cost-efficient care in these
settings. For these reasons, we do not expect that excluding IME and
DSH payments from the determinations of ACO financial performance will
result in greater payments to ACOs than would otherwise have been made
if these payments were included. However, we intend to monitor this
issue and will revisit it if we determine that excluding these payments
has resulted in additional program expenditures.
Compared to other alternatives suggested by commenters, we believe
that excluding IME and DSH payments from the determination of an ACO's
eligibility for shared savings is presently the most effective approach
to ensure participation by hospitals that receive IME and DSH payments.
We plan to monitor this issue to help us determine whether these
adjustments should be maintained and may revisit it in future
rulemaking as we gain more experience with the Shared Savings Program.
DGME payments are made outside of the payments of Parts A and B
claims. By virtue of this fact, under the methodology in either our
proposed or final rules, DGME payments would not be included in an
ACO's benchmark and performance year expenditures. Therefore, we do not
need to make adjustments to individual claims for these payments.
Final Decision: We are modifying our proposal under Sec. 425.602,
Sec. 425.604, and Sec. 425.606 so as to exclude IME and DSH payments
from ACO benchmark and performance year expenditures.
(b) Geographic and Other Payment Adjustments
In addition to IME and DSH payments, in the proposed rule we also
considered whether to include or exclude a number of other payments
from ACO benchmark and performance year expenditures.
In the proposed rule we explained that another factor in the
Medicare FFS payment systems that could affect an ACO's ability to
realize savings is the geographic payment adjustment applied under
Medicare payment systems (for example, the IPPS wage index adjustments
and the physician fee schedule geographic practice cost index (GPCI)
adjustments). These adjustments increase and decrease payments under
these systems to account for the different costs of providing care in
different areas of the country. We further noted that there have been a
number of temporary legislative adjustments to the wage indexes for
various parts of the country during recent years. In some cases these
have been extended on virtually an annual basis while others have been
updated more intermittently. The timing of these adjustments could
result in changes being made during an ACO's agreement period and
between the benchmark and the performance years, thus influencing an
ACO's ability to realize savings under the program.
We explained that, as in the case of IME and DSH adjustments, under
section 1899(d)(1)(B)(i) and (ii) of the Act, we could adjust the
benchmark by removing geographic payment adjustments, but we could not
make a similar adjustment to performance year expenditures. Consistent
with our proposed treatment of IME and DSH payments, we proposed not to
remove geographic payment adjustments from the calculation of benchmark
expenditures. We welcomed comment on this issue, and in particular the
likely impact of this proposal in areas that are affected by temporary
geographic adjustments.
Further, we addressed bonus payments and penalties for eligible
professionals and hospitals. We proposed to exclude from ACO benchmark
and performance year expenditures incentive payments for eligible
professionals under section 1848 of the Act for the Physician Quality
Reporting System, eRx, and EHR. We explained that section 1899(b)(3)(D)
of the Act provides authority for the Secretary to incorporate these
incentive payments into the Shared Savings Program, as the Secretary
determines appropriate. The statute further provides that these
incentive payments ``shall not be taken into consideration when
calculating any payments otherwise made under subsection (d).'' We
reasoned that section 1899(b)(3)(D) of the Act does not, however,
provide authority for the Secretary to exclude Medicare expenditures or
savings for incentive payments and penalties under other provisions of
the Act from benchmark and actual expenditures. Therefore, we proposed
to include in both the computation of actual expenditures and benchmark
expenditures for Part A and B services any incentive payments not made
under section 1848 of the Act that are reflected in Part A and B claims
for services furnished to assigned FFS beneficiaries, such as EHR
incentive payments to hospitals and payments under the Hospital
Inpatient Value-Based Purchasing Program, which are made under section
1886 of the Act, and EHR incentive payments to CAHs, which are made
under section 1814 of the Act.
We explained that incentive payments for programs such as these can
affect actual expenditures and the benchmark, and thus an ACO's ability
to realize savings. For example, an ACO's chances to share in savings
or the level of savings that would be shared with the ACO would be
reduced when an ACO professional or hospital participating in the ACO
fails to receive an incentive payment (or is penalized with a payment
reduction) under one of these programs during a benchmark year and
subsequently receives an incentive payment from that program in an ACO
performance year. This is because, all else being equal--(1) the ACO's
expenditures in the performance year would be higher than they would
have been in the absence of the incentive; and (2) the ACO's
expenditures during the benchmark year would be relatively lower than
they would have been had an incentive been received. Conversely, an ACO
would be more likely to share in savings if it received an incentive
payment under one of these other programs in a benchmark year and
received no incentive or was penalized during a performance year. We
stated our belief that the effect of including these incentive payments
in the calculation of the benchmark and actual expenditures could
create perverse incentives with the result that participation in the
Shared Savings Program has the potential to adversely affect the
performance of providers of services and suppliers with respect to
other important Medicare efforts. We further stated that excluding
these costs and savings would reduce the chances that incentives that
were intended to encourage and reward participation in one Medicare
program would discourage full participation in another.
Comment: MedPAC, among other commenters, suggested standardizing
costs for ACOs, so that ACOs would be judged based on their success in
controlling the growth in service use by their patients isolated from
payments unrelated to resource use or changes in prices (such as input
prices in their markets) that may be outside of ACOs' control. These
commenters were among those that urged CMS to use its implicit
authority under section 1899(d) of the Act or its authority under
section 1899(i) of the Act to make additional adjustments to exclude
certain claims-
[[Page 67923]]
based payments including: IME and DSH payments, geographic adjusters
(such as payments based on the area wage index), GPCI, HVBP bonuses,
hospital EHR incentive payments, transitional pass-through payments for
new technologies, primary care incentive payments, and low cost county
payments. Absent existing statutory authority to make these
adjustments, some commenters suggested that CMS request that Congress
amend the statute to allow for this possibility. The focus of other
comments was on ensuring that any adjustments, or the lack thereof, to
the benchmark be applied consistently to the calculation of performance
year expenditures. One commenter cautioned that the data used for some
cost-based incentive payments may be flawed.
Of the comments received, most favored excluding geographic
payments from benchmark and performance year expenditures. In
particular, commenters specified the exclusion of payments based on the
following: area wage index, low cost county payment adjustments, GPCI,
and the frontier States policy adjustment. Several commenters expressed
concerns about including geographic payment adjustments in the
benchmark calculations. One commenter, capturing the concerns indicated
by several others, explained their view that variations in cost growth
across geographic areas as well as inaccuracies in current CMS methods
for accounting for differences in local input and practice costs
(recently reviewed by the Institute of Medicine) may create incentives
that reward ACO formation in some markets compared to others. For
instance, some commenters were especially concerned that the GPCI,
which differentially advantages providers based on location, is based
on outdated payment location definitions. Another commenter suggested
that inclusion of these geographic payment adjustments could have
unintended consequences for referral patterns by ACOs, such as driving
referrals based on geographic wage adjustments rather than performance.
Others were generally concerned about including geographic payment
adjustments that would disadvantage some ACOs more than others. Several
commenters urged CMS to consider the findings from the Institute of
Medicine's study on the impact of geographic adjustment factors on
Medicare payment policy before addressing geographic payment
adjustments in the Shared Savings Program.
Commenters agreed with the proposed exclusion of bonus payments for
eligible professionals, in particular PQRS, eRx, and EHR incentives
from benchmark and performance year expenditure calculations. Many
commenters urged exclusion of all incentive bonus payments and
penalties from calculations of the benchmark or the performance year
expenditures.
Many commenters expressed concern that inclusion of Hospital EHR
incentives and HVBP payments in ACO cost calculations could send mixed
messages to hospitals, and could result in misaligned incentives. For
example, several commenters suggested that by including VBP incentive
payments in the cost of patient care, the proposed methodology for
determining average per beneficiary costs would penalize ACOs with high
quality hospitals. Similarly, as another commenter noted, ACOs could be
penalized for including hospitals that earn EHR incentives during their
agreement periods. Commenters described the consequences of including
hospital EHR incentives and HVBP payments in calculating ACO financial
performance, namely the proposed policy could force hospitals to choose
between participating in the Shared Savings Program and other Medicare
initiatives, which could result in discouraging hospital participation
in ACOs. One commenter noted the importance of ensuring that incentives
of the various programs are properly aligned so that their interactions
support rather than impede each of the programs' goals. To this end,
most commenters favored excluding EHR incentive payments to hospitals
and CAHs as well as payments under the HVBP program from ACO benchmark
and performance year expenditures. Further, one commenter suggested
excluding EHR incentive payments for hospitals because the EHR bonus
payments are not calculated on a per beneficiary basis and therefore
will be difficult to apportion among assigned beneficiaries, and also
because reductions in expenditures when the EHR incentives expire in
future years will not be due to any change in the quality of patient
care furnished by the hospitals.
Response: Some incentive payments and penalties discussed in the
proposed rule are included in payments for Parts A and B services, for
example, payments to hospitals through the Hospital Inpatient Value-
Based Purchasing Program, which will be made under section 1886 of the
Act. Other incentives we discussed, such as PQRS, eRx, and EHR
incentives to eligible professionals, hospitals and CAHs are paid
outside of payments for Parts A and B services. We wish to clarify that
some bonus payments and penalties paid outside of Part A and B claims
would be effectively excluded from the benchmark and performance year
expenditures because of our proposal to take into account payments made
from the Medicare Trust Fund for Parts A and B services furnished to
assigned Medicare FFS beneficiaries when determining ACO's historical
and actual costs. This is because bonus payments made outside of Parts
A and B claims would not be captured in either the benchmark and
performance year expenditures.
We are encouraged by the comments supporting our proposed
methodology which would exclude payments that fall outside of Part A
and B claims in calculating the benchmark and performance year
expenditures; for example, DGME payments, PQRS, eRx, and EHR incentive
payments for eligible professionals, and EHR incentive payments for
hospitals.
We believe it is appropriate to finalize our proposal to include
all Part A and B expenditures with the exception of the IME and DSH
adjustments, as previously discussed, in the calculation of the
benchmark and shared savings payments (that is, we would not
standardize payments for example, by making adjustments for geographic
or HVBP payments). We have experience with the PGP demonstration which
calculated all Part A and B expenditures without such adjustments.
Unlike the IME/DSH adjustments, we do not believe these other payments
that are included in Part A and B expenditures (such as geographic
payment adjustments, and HVBP payments) would result in a significant
incentive to steer patients away from particular hospitals or providers
since ACOs will be compared to their own historical expenditure
benchmark as updated. Additionally, we are concerned about the
complexity resulting from standardizing payments, given its relatively
minor impact under our benchmarking methodology. However, we intend to
evaluate this issue and may address it in future rule-making.
Final Decision: We are making final our proposal under Sec.
425.602, Sec. 425.604, and Sec. 425.606 to include all Parts A and B
expenditures, with the exception of IME and DSH adjustments, in the
calculation of the benchmark and performance year expenditures.
However, we intend to evaluate this issue and may address it in future
rulemaking.
[[Page 67924]]
(3) Trending Forward Prior Year's Experience To Obtain an Initial
Benchmark
Section 1899(d)(1)(B)(ii) of the Act requires the use of ``* * *
the most recent available 3 years of per-beneficiary expenditures for
parts A and B services * * *.'' to estimate a benchmark for each ACO.
As the statute requires the use of historical expenditures, the per
capita costs for each year must be trended forward to current year
dollars and then averaged using the weights previously described to
obtain the benchmark for the first agreement period. The statute
further requires that we update the benchmark for each year of the
agreement period based on the ``* * * projected absolute amount of
growth in national per capita expenditures for parts A and B services *
* *.'' under the FFS program, as estimated by the Secretary.
(a) Growth Rate as a Benchmark Trending Factor
The statute does not specify the trending factor to be used in
estimating the initial benchmark. In the proposed rule we considered
two options for trending forward the most recent 3 years of per
beneficiary expenditures for Parts A and B services in order to
estimate the benchmark for each ACO. We considered trending these
expenditures forward using growth rates in expenditures for Parts A and
B services for FFS beneficiaries. We also considered trending these
expenditures forward using a flat dollar amount equivalent to the
absolute amount of growth in per capita expenditures for Medicare Parts
A and B under the FFS program.
We explained that a growth rate would more accurately reflect each
ACO's historical experience. That is, in contrast to a flat dollar
amount, a growth rate would neither raise the bar for ACOs in
historically higher growth rate areas nor lower it for ACOs in lower
growth areas. We also noted that use of a growth rate could perpetuate
current regional differences in medical expenditures. We explained our
belief that use of a flat dollar amount for a trending factor was more
consistent with the method designated by the under section
1899(d)(1)(B)(ii) of the Act for updating the benchmark during the
agreement period. Further, we indicated that use of a flat dollar
trending factor could provide a stronger incentive for ACO development
in areas with historically lower expenditures and growth rates.
Conversely, potential ACOs in areas with historically higher growth
rates could be reluctant to participate in the program because the
challenge to reduce their growth rate would be greater in these areas
relative to low expenditure, low growth ones.
We explained that, on balance, we believed that for purposes of
establishing an initial expenditure benchmark, expenditures should be
trended forward in a relatively neutral and comparable way across
geographic areas. Therefore, we proposed to trend forward the most
recent 3 years of per-beneficiary expenditures using growth rates in
per beneficiary expenditures for Parts A and B services. We provided an
example of how an ACO's historical experience would be trended forward.
We would use 2009, 2010, and 2011 claims year data to set the benchmark
for an ACO starting its agreement period January 1, 2012. The 2009 and
2010 data would be trended forward using the factor described later in
this final rule so that all benchmark dollars would be in 2011 dollars.
We welcomed comment on this proposal, and especially on whether use of
a flat dollar amount to trend the benchmark would be more consistent
with our proposal to update the benchmark as specified under section
1899(d)(1)(B)(ii) of the Act.
Comment: Commenters generally agreed with the proposed use of a
growth rate, as opposed to a flat dollar amount, to trend forward the
most recent 3 years of per beneficiary expenditures for Parts A and B
services in order to estimate the benchmark for each ACO. One commenter
expressed concerns that a flat dollar trending factor would not account
for either high cost geographic areas or annual growth in payments to
hospitals (such as IME and DSH payments) outside the ACO's control, and
that the flat dollar amount would be based on growth rates across all
Medicare beneficiaries (those assigned to and not assigned to ACOs).
Based on CMS' experience with the PGP demonstration and the
benchmarking methodology for the PGP Transition demonstration, one
commenter generally recommended that we use separate benchmarks for
specific groups of beneficiaries--specifically the aged, disabled and
ESRD populations--to account for significant variations in the costs of
these beneficiaries. Another commenter suggested that we weight the
concentration of Medicaid spending by categorizing patients into tiers
based on their level of Medicaid spending.
Response: We are finalizing our proposal to use a growth rate as a
trending factor. Further, we were persuaded by comments pointing to the
need to account for variation in costs between different populations of
Medicare beneficiaries. We believe that trending forward the benchmark
expenditures, and updating the benchmark (as explained later in this
final rule), for several categories of beneficiaries would provide a
more accurate benchmark compared to the methodology we proposed.
Expanding upon the commenter's suggestions, we are finalizing our
proposal and clarifying that we will add to our methodology for
trending the benchmark the calculation of separate cost 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, as specified in
section II.G.2.b. of this final rule. We believe that trending
historical expenditures for these four categories provides a more
complete and accurate benchmark for an ACO since it captures more
accurately the proportion of ACO assigned patients that make up these
categories, their expenditure growth patterns, and changes in the
health status of these patients over time. It will also enable us to
provide a more accurate risk adjustment as described in section
II.G.2.c.1. of this final rule for an ACO's patient population, by
capturing changes in the composition of the patient population over
time, while reducing the impact of changes in the health status of an
ACO's population due to more complete and accurate coding.
Final Decision: In establishing an ACO's benchmark, we are
finalizing our proposal under Sec. 425.602 to trend forward the most
recent 3 years of per-beneficiary expenditures using growth rates in
per beneficiary expenditures for Parts A and B services. That is, we
will trend BY1 and BY2 forward, based on a growth rate, to BY3 dollars.
Further, to trend forward the benchmark, we will make calculations for
separate cost 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.
(b) National Growth Rate as a Benchmark Trending Factor
In the proposed rule, we considered use of national, State or local
growth factors for trending the benchmark. We explained that using the
national growth rate in Medicare A and B FFS expenditures appeared to
be more consistent with the methodology that was specified in statute
for updating each ACO's benchmark. Further, a national growth rate
would allow a single growth factor to be applied to all
[[Page 67925]]
ACOs regardless of their size or geographic area. However, a national
rate could also disproportionately encourage the development of ACOs in
areas with historical growth rates below the national average that
would benefit from having a relatively higher base, which increases the
chances for shared saving, while discouraging the development of ACOs
in areas with historically higher growth rates above the national
average that would have a relatively lower base.
In contrast, we explained that trending expenditures based on State
or local area growth rates in Medicare A and B expenditures may more
accurately reflect the experience in an ACO's area and mitigate
differential incentives for participation based on location. Therefore,
we considered an option to trend the benchmark by the lower of the
national projected growth rate or the State or the local growth rate.
This option balanced providing a more accurate reflection of local
experience with not rewarding historical growth higher than the
national average. We believed this method would instill strong saving
incentives for ACOs in both high-cost growth and low-cost growth areas.
We proposed to employ the national growth rate in Medicare Parts A
and B expenditures for FFS beneficiaries for trending forward the most
recent 3 years of per beneficiary expenditures for Parts A and B
services in order to estimate the benchmark for each ACO. We believed
this approach would help to ensure that ACOs in both high spending,
high growth and low spending, low growth areas would have appropriate
incentives to participate in the Shared Savings Program. We further
indicated that this approach would allow us to move toward establishing
a national standard to calculate and measure ACO financial performance.
We sought comment on this proposal and on the alternatives to using a
national growth rate.
Comment: Some commenters supported the proposal to employ a
national growth rate, however many more favored use of either local,
regional, or State growth rates. Commenters expressed concerns that the
use of a national growth rate would discourage participation of ACOs in
higher cost areas, including areas where many academic medical centers
are located, where there is a high prevalence of chronic illness, or in
States (such as Vermont) that have increased health care spending due
to initiatives to expand health insurance coverage. These commenters
suggested that benchmarking using more localized growth rates could
reflect the experience of ACOs in different geographic settings, as
well as local economies and local populations, and thereby encourage
ACOs to participate nationwide, instead of only in certain pockets of
the country. Others urged CMS to adopt policies which would not
disadvantage already efficient providers or those operating in lower
cost areas of the country.
Several commenters recognized the importance of using national
growth rates, for rationalizing overall spending across regions
nationwide, but thought it premature to introduce this approach to
benchmarking at the outset of the program: suggesting instead that we
begin with a local or regional growth rate and migrate to a national
growth rate over time. One commenter favored the alternate option we
considered, to trend the benchmark by the lower of the national
projected growth rate or the State or the local growth rate, whereas
several others suggested using the lower of either the national or
local growth rates. In addition, commenters offered a number of
alternative approaches for trending benchmark expenditures, including
the following:
Use a blend of national average growth and absolute dollar
growth, such as that planned for the Pioneer Model ACOs.
Use the ACO's own percentage growth rate to trend forward
the historical benchmark data.
Account for local variation after analyzing national and
local growth rates.
Account for adjustments for new technology costs.
Response: We believe that implementing a historical benchmark
trending factor using the national growth rate for Parts A and B FFS
expenditures appropriately balances commenters' concerns that benchmark
trending should encourage participation among providers that are
already efficient or operating in low cost regions without unduly
rewarding ACOs in high-cost areas. The net effect of using the same
trending factor for all ACOs will be to provide a relatively higher
expenditure benchmark for low-growth/low spending ACOs and a relatively
lower benchmark for high growth/high spending ACOs. ACOs in high cost
high growth areas have an incentive to reduce their rate of growth more
to bring their costs more in line with the national average; while ACOs
in low cost low growth areas have an incentive to continue to maintain
or improve their overall lower spending levels. Therefore we are
finalizing our proposal to use a national growth rate in Medicare Parts
A and B expenditures for FFS beneficiaries for trending forward the
most recent 3 years of per beneficiary expenditures for Parts A and B
services in order to estimate the benchmark for each ACO.
As we proposed, using CMS Office of the Actuary national Medicare
expenditure data for each of the years making up the historical
benchmark, we will determine the national growth rates for the first
and second benchmark years and trend expenditures for these benchmark
years forward to the third benchmark year (BY3) dollars. Further, to
trend forward the benchmark, we will make calculations for separate
cost categories for each of the following populations of beneficiaries:
ESRD, disabled, aged/dual eligible and aged/non-dual eligible.
Final Decision: We are finalizing our proposal under Sec. 425.602
to use a national growth rate in Medicare Parts A and B expenditures
for FFS beneficiaries for trending forward the most recent 3 years of
per beneficiary expenditures for Parts A and B services in order to
estimate the benchmark for each ACO. In doing so, we will make
calculations for separate cost categories for each of the following
populations of beneficiaries: ESRD, disabled, aged/dual eligible and
aged/non-dual eligible.
d. Updating the Benchmark During the Agreement Period
Section 1899(d)(1)(B)(ii) of the Act states that the benchmark
shall be ``updated 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, as estimated by the
Secretary.'' We considered two options for updating the benchmark
during the agreement period, but proposed to use a flat dollar amount
equivalent of the absolute amount of growth in the national FFS
expenditures. We explained our view that in enacting section
1899(d)(1)(B)(ii) of the Act, Congress demonstrated interest in
mitigating some of the regional differences in Medicare spending among
ACOs and that this approach would help to ensure that ACOs in both high
spending/high growth and low spending/low growth areas would have
appropriate incentives to participate in the Shared Savings Program. We
described the effect this update methodology might have in the second
and third years of an agreement period: using a flat dollar increase,
which would be the same for all ACOs, provides a relatively higher
expenditure benchmark for low growth, low spending ACOs and a
relatively lower benchmark for high growth, high
[[Page 67926]]
spending ACOs. All else being equal, an ACO can more likely share in
savings when its actual expenditures are judged against a higher,
rather than a lower benchmark. Thus, with a flat dollar increase to the
benchmark, ACOs in high cost/high growth areas must reduce their rate
of growth more to bring their costs more in line with the national
average. We acknowledged that this approach to updating the benchmark
could contribute to selective program participation by participants in
low growth areas that could result in Medicare costs due to an increase
in the amount of bonus payments for unearned savings.
We also considered and sought comment on a second option which
would be to use our authority under section 1899(i) of the Act to
update the benchmark by the lower of the national projected absolute
amount of growth in national per capita expenditures or the local/State
projected absolute amount of growth in per capita expenditures. This
option could instill strong saving incentives for ACOs in low-cost
areas, as well as for those in high-cost areas. Incorporating more
localized growth factors reflects the expenditure and growth patterns
within the geographic area served by ACO participants, potentially
providing a more accurate estimate of the updated benchmark based on
the area from which the ACO derives its patient population. Capping the
update at the projected absolute amount of growth in national per
capita expenditures, however, can advantage ACOs in low cost/low growth
areas that have already achieved greater efficiencies, while still
offering a strong incentive for those in high cost/high growth areas to
reduce their spending.
Comment: Commenters were mixed in their preference for either the
proposed policy of updating benchmark by absolute growth in national
FFS expenditures, or use of the lower of the national projected
absolute amount or the local/State projected absolute amount. For
example, one commenter disagreed with the option to use the lower of
the national projected absolute amount or the local/State projected
absolute amount, suggesting it negatively prejudges all high growth
sectors without regard to the underlying clinical or quality issues.
However, another commenter favored this approach because this
adjustment would afford ACOs the greatest potential for achieving
shared savings and minimize the threat of an ACO being disadvantaged by
virtue of pricing within its geographic location. Along these lines,
one commenter felt the proposed approach offered insufficient
incentives for efficient providers to form an ACO. More generally, many
commenters urged CMS to adopt policies to encourage participation by
organizations that are already efficient or in low cost areas.
Several commenters urged use of regional or market-specific expense
data for calculating the benchmark update. One commenter questioned
whether the update would occur in the first performance year, as we
specifically mentioned the potential effect resulting from the update
in the second and third performance years.
Response: We considered commenters' suggested alternatives, but on
the whole we believe our proposed method for updating the benchmark
could best address the program's goals and commenters' overall concerns
about the participation of efficient/low cost ACOs. The net effect of
using the same update for all ACOs is to provide a relatively higher
expenditure benchmark for low growth/low spending ACOs and a relatively
lower benchmark for high growth/high spending ACOs. Further, with a
flat dollar increase to the benchmark equivalent of the absolute amount
of growth in the national FFS expenditures, ACOs in high cost, high
growth areas must reduce their rate of growth more (compared to ACOs in
low cost, low growth areas) to bring their costs in line with the
national average.
In light of the alternatives we considered, we disagree with the
commenter who indicated that the proposed updating methodology offers
insufficient incentives for efficient providers to form ACOs.
Benchmarks for efficient/low cost providers updated to account for
growth in regional or local expenditures would be comparatively lower,
and therefore less advantageous, than benchmarks updated based on
national experience. Thus, under the proposed update methodology, low
cost ACOs could achieve a greater amount of savings, based on the same
performance, than a comparable ACO in a higher cost area. Moreover, we
believe that a benchmark methodology which encourages providers in
higher cost areas to bring their spending more in line with the
national average is a desirable outcome in furtherance of the program's
goal of lowering Medicare expenditures. Lastly, updating the benchmark
during the agreement period using a national growth factor aligns with
our approach of using a national growth rate to trend forward base year
expenditures to obtain the initial benchmark. This could facilitate
analysis of trends in ACO financial performance relative to national
trends in Medicare expenditures. For these reasons, we are finalizing
our proposal to use the flat dollar amount equivalent of the projected
absolute amount of growth in the national FFS expenditures to update
the benchmark. Also, to clarify, the proposed update to the benchmark
will occur in each year of the agreement period.
Comment: Based on CMS' experience with the PGP demonstration and
the benchmarking methodology for the PGP Transition demonstration, one
commenter generally recommended that we use separate benchmarks for
specific groups of beneficiaries--specifically the aged, disabled and
ESRD populations--to account for significant variations in the costs of
these beneficiaries. Another commenter suggested that we weight the
concentration of Medicaid spending by categorizing patients into tiers
based on their level of Medicaid spending. Another commenter asked
whether the projected absolute amount of growth in national per capita
expenditures for Parts A and B would be scaled to reflect risk
differences between the ACO and the Medicare average.
Response: To clarify, we will not risk adjust (that is, based on
the CMS-HCC model) the flat dollar amount used to update the benchmark.
However, as discussed in section II.G.2.c.(1). of this final rule, the
updated benchmark will be adjusted relative to the risk profile of the
performance year assigned beneficiaries. We agree with commenter's
concerns about the need to account for variation in costs between
different populations of Medicare beneficiaries. To align with our
modified methodology for trending the benchmark, we will also make
category-specific adjustments when updating the benchmark. We believe
that updating the benchmark for several categories of beneficiaries
would provide a more accurate benchmark compared to what we proposed,
as applying national growth dollars to each of the benchmark strata
separately reflects the different expected growth rates for these types
of beneficiaries. Consistent with our policies stated elsewhere in
section II.G. of this final rule, we are modifying our proposal to
incorporate into the methodology for updating the benchmark the
calculation of separate cost categories for each of the following
populations of beneficiaries: ESRD, disabled, aged/dual eligible and
aged/non-dual eligible.
Final Decision: We are finalizing our proposal under Sec. 425.602
to update the benchmark by the projected absolute amount of growth in
national per capita expenditures for Parts A and B services
[[Page 67927]]
under the original Medicare fee-for-service program using data from
CMS' Office of the Actuary. Further, in updating the benchmark, we will
make calculations for separate cost categories for each of the
following populations of beneficiaries: ESRD, disabled, aged/dual
eligible and aged/non-dual eligible.
e. Determining Shared Savings
(1) Minimum Savings Rate
Section 1899(d)(1)(B)(i) of the Act states that ``an ACO shall be
eligible to receive payment for shared savings * * * only if the
estimated average per capita Medicare expenditures under the ACO for
Medicare fee-for-service beneficiaries for parts A and B services,
adjusted for beneficiary characteristics, is at least the percent
specified by the Secretary below the applicable benchmark * * *.'' We
call this percent the minimum savings rate (MSR). Section
1899(d)(1)(B)(i) of the Act further specifies that the ``Secretary
shall determine the appropriate percent * * * to account for normal
variation in expenditures under this title, based upon the number of
Medicare fee-for-service beneficiaries assigned to an ACO.'' Section
1899(d)(2) of the Act provides that, if an ACO has savings in excess of
the MSR and meets the quality standards established by the Secretary,
``a percent (as determined appropriate by the Secretary) of the
difference between such estimated average per capita Medicare
expenditures in a year, adjusted for beneficiary characteristics, under
the ACO and such benchmark for the ACO may be paid to the ACO as shared
savings and the remainder of such difference shall be retained by the
program under this title.'' We call the percent paid to the ACO the
shared savings rate.
As we discussed in the proposed rule, a goal of the Shared Savings
Program is to use a portion of the savings (the difference between the
ACO's actual expenditures and the benchmark) to encourage and reward
participating ACOs for coordinating the care for an assigned
beneficiary population in a way that controls the growth in Medicare
expenditures for that patient population while also meeting the
established quality performance standards. However, observed savings
can also occur as a result of normal year-to-year variations in
Medicare beneficiaries' claims expenditures in addition to the ACO's
activities. Thus, even if an ACO engages in no activities to improve
the quality and efficiency of the services it delivers, in certain
cases, differences between the benchmark expenditures (updated
according to statute) and assigned patients' expenditures would be
observed during some performance periods merely because of such normal
variation. Consequently, under the one-sided model, the statute
requires us to specify a MSR to account for the normal variations in
expenditures, based upon the number of Medicare FFS beneficiaries
assigned to the ACO. The MSR should be set in a way that gives us some
assurance that the ACO's performance is a result of its interventions,
not normal variation. However, we also do not want an outcome where
savings that have been earned are not recognized.
Establishing an MSR on the basis of standard inferential statistics
that take into account the size of an ACO's beneficiary population
provides confidence that, once the savings achieved by the ACO exceed
the MSR, the change in expenditures represents actual performance
improvements by the ACO as opposed to normal variations.
Under the PGP demonstration, the MSR was initially set at a flat 2
percent of the benchmark, regardless of number of assigned
beneficiaries, and PGP practices received back 80 percent of the
savings achieved in excess of the MSR. However, in establishing a MSR,
section 1899(d)(1)(B)(i) of the Act calls on us to take into account
``the number of Medicare fee-for-service beneficiaries assigned to an
ACO.'' As such, we would need to apply statistical sampling techniques
to determine a MSR based on the number of assigned beneficiaries with
some level of statistical confidence.
The MSR in combination with the savings rate will determine the
amount of shared savings that an ACO can receive. For example, fewer
savings would be shared if the MSR were set at a higher percentage.
Conversely, shared savings would be higher if the MSR were set at a
lower percentage. There are several policy implications associated with
the methodology used to set the MSR. A higher MSR would provide greater
confidence that the shared savings amounts reflect real quality and
efficiency gains, and offer greater protection to the Medicare Trust
Funds. However, due to the larger barrier to achieving savings, a
higher MSR could also discourage potentially successful ACOs,
especially physician-organized ACOs and smaller ACOs in rural areas,
from participating in the program. In contrast, a lower MSR would
encourage more potential ACOs to participate in the program, but would
also provide less confidence that savings are a result of improvements
in quality and efficiency made by an ACO. In the proposed rule, we
stated that we believed that the most appropriate policy concerning
determination of the ``appropriate percent'' for the MSR would achieve
a balance between the advantages of making incentives and rewards
available to successful ACOs and prudent stewardship of the Medicare
Trust Funds.
(a) One-Sided Model
For the one-sided model we proposed a sliding scale confidence
interval (CI) based on the number of assigned beneficiaries. The MSR
would be established for each ACO based on increasing nominal
confidence intervals for larger ACOs so that an ACO with the minimum
5,000 assigned beneficiaries would have an MSR based on a 90 percent
CI; an ACO with 20,000 assigned beneficiaries would have a MSR based on
a 95 percent CI and an ACO with 50,000 assigned beneficiaries would
have an MSR based on a 99 percent CI. In addition, the MSR would not be
allowed to fall below 2 percent for larger ACOs. Table 6 displays the
minimum savings rate an ACO would have to achieve before savings could
be shared based on the number of its assigned beneficiaries. We
proposed that an ACO that exceeds its MSR would be eligible to share up
to 50 percent of the savings in the one-sided model (based on quality
performance), as discussed in section II.F. of this final rule.
In order to improve the opportunity for groups of solo and small
practices to participate in the Shared Savings Program, we proposed to
vary confidence intervals by the size of the ACO, which is determined
based on the number of assigned beneficiaries. In response to our
November 17, 2010 RFI, many RFI commenters recognized the prevalence of
solo and small practices and the importance of these providers for
rural areas and for the treatment of specific patient populations, for
example, individuals with mental health and substance abuse disorders
or beneficiaries residing in skill nursing facilities. Many of these
RFI commenters urged us to consider policies and models that encourage
the participation of solo and small practices and to address barriers
they face in forming ACOs, such as access to up-front capital to invest
in the infrastructure and resources required to redesign care. One
option that would help accomplish this would be to vary the confidence
intervals used to establish MSRs so that smaller practices would have
relatively lower MSRs. Conversely, in recognition that they are
[[Page 67928]]
likely to be already established, possess prior experience, and thus
better able to achieve savings, larger ACOs would have their MSRs based
on a higher confidence interval, resulting in a relatively higher MSR.
We proposed that the MSRs would be estimated to provide confidence
that an ACO with a given number of beneficiaries and assumed to be of
average national baseline per-capita expenditure and expenditure growth
rate would be unlikely to achieve a shared savings payment by random
chance alone. A specific MSR is a function of both the number of
assigned beneficiaries and a chosen confidence interval. Recognizing
the higher uncertainty regarding expenditures for smaller ACOs and the
desire to encourage participation by smaller ACOs, for the one-sided
model, we proposed to set the confidence interval at 90 percent for
ACOs of 5,000 beneficiaries, resulting in an MSR of 3.9 percent. For
ACOs with 20,000 and 50,000 beneficiaries, we proposed to set the
confidence interval at 95 percent and 99 percent, respectively,
resulting in MSRs of 2.5 percent and 2.2 percent. As ACO size increases
from 5,000 to 20,000 (or similarly from 20,000 to 50,000), we proposed
blending the MSRs between the two neighboring confidence intervals,
resulting in the MSRs as shown later in the document in Table 6. We
specified an MSR at both the high and low end of each range of ACO
population size. A particular ACO would be assigned a linearly-
interpolated MSR given its exact number of beneficiaries. For example,
an ACO with 7,500 beneficiaries would be assigned an MSR of 3.3 percent
because it lies at the midpoint between 7,000 and 7,999 beneficiaries,
sizes at which the MSR would be 3.4 percent and 3.2 percent,
respectively. For ACOs serving more than 60,000 assigned beneficiaries,
we proposed that the MSR would not be allowed to fall below 2 percent.
This lower bound was designed to protect the shared savings formula
from expenditure reduction due to random chance that can occur in group
claims due to factors that persist regardless of a group's size. This
lower bound is also consistent with the flat 2 percent MSR we proposed
to use in the two-sided model and is the minimum level that was used in
the PGP Demonstration.
The proposed confidence intervals were determined assuming that the
variation in the per capita expenditure growth for a particular ACO
would be equal to the variation in per capita expenditure growth
nationally. We acknowledged that this would not be the case for the
majority of ACOs, however, as regional growth rates tend to vary from
the national average due to a number of variables. Therefore, the
confidence intervals generated using only the national expenditure
growth variation would overstate the relative confidence associated
with an increasing group size. This would be compensated for in two
ways: (1) the 2 percent floor; and (2) increasing the confidence
interval as group size increases.
Table 6--Proposed Minimum Savings Rate By Number of Assigned
Beneficiaries
[One-sided model]
------------------------------------------------------------------------
MSR (low end MSR (high end
of assigned of assigned
Number of beneficiaries beneficiaries) beneficiaries)
(percent) (percent)
------------------------------------------------------------------------
5,000-5,999............................. 3.9 3.6
6,000-6,999............................. 3.6 3.4
7,000-7,999............................. 3.4 3.2
8,000-8,999............................. 3.2 3.1
9,000-9,999............................. 3.1 3.0
10,000-14,999........................... 3.0 2.7
15,000-19,999........................... 2.7 2.5
20,000-49,999........................... 2.5 2.2
50,000-59,999........................... 2.2 2.0
-------------------------------
60,000 +................................ 2.0
------------------------------------------------------------------------
In the proposed rule, we stated that we would welcome comment on
the most appropriate means to establish the MSR for an ACO, including
the appropriate confidence intervals.
Comment: Several comments supported the proposed MSRs under the
one-sided model. In particular, MedPAC specified that CMS should keep
the proposed MSRs if it allows for a shared savings only track in the
first agreement period. Most comments on this topic, however, expressed
concern that the proposed methodology for establishing the MSR on a
sliding scale based on population size would disadvantage smaller ACOs
and discourage participation, particularly by setting a bar that is too
high to encourage participation by smaller ACOs, including ACOs likely
to form in rural areas and those largely comprised of small- and
medium-sized physician practices. Some commenters considered the
potential long term consequences of this dynamic, indicating it could
ultimately result in diminished provider competition in some markets or
stifle the development of innovative care coordination strategies.
Some commenters suggested it would be unfair to hold smaller ACOs
to what they perceived to be a relatively higher MSR than what exists
for larger ACOs. One commenter indicated that the MSR is financially
beneficial to CMS at the expense of ACOs. Further, as other commenters
indicated, smaller ACOs are likely to be in greatest need of additional
capital to support start-up and operational expenses. One commenter
suggested our proposal could make it harder for ACOs to continue to
achieve savings in excess of the MSR as they become increasingly
efficient over time. Some commenters suggested the MSRs may make it
impossible for smaller ACOs to ever share in savings, particularly
given the program's rigorous quality standards.
Thus, commenters recommended a variety of alternatives to the
proposed MSRs. Most commonly, commenters suggested that we either-- (1)
apply a common threshold rather than a sliding scale, such as a flat 1
or 2 percent MSR, for all ACOs; or (2) reduce the MSR that
[[Page 67929]]
smaller ACOs must achieve. Several comments suggested that CMS
generally adjust the sliding scale to be based on lower thresholds (for
example, a range of 2 to 3 percent), eliminate the MSR, or eliminate it
for certain ACOs. In lieu of an MSR, commenters offered alternate
suggestions to protect against random variation such as making the
percent of shared savings for which a provider is eligible inversely
proportional to their percentile in expenditures per Medicare
beneficiary. A number of commenters offered that other aspects of the
proposed program, for example, the rigorous quality performance
standards or the requirement that all ACOs ultimately accept downside
performance risk, are sufficient to ensure savings are a result of
actions by ACOs and obviate the need for an MSR. One commenter
suggested a blended approach such that if an ACO exceeds the 2 percent
MSR, it would be eligible for a lower sharing rate, but would not
receive the full sharing rate unless it exceeded its statistically
adjusted MSR. Another commenter suggested a rolling confidence interval
option for small ACOs that would allow them to cumulate cost experience
(and savings) over time. Under this approach, CMS would base the ACO's
MSR on the sum of its assigned beneficiaries across all 3 years of
participation (for example, a 5,000 member ACO would have the CI of a
15,000 member ACO over 3 years). Further, the commenter recommended
allowing ACOs to include their entire patient base, including privately
insured patients for purposes of computing their MSR. Another commenter
asked whether CMS would consider rewarding those ACOs who can maintain
lower costs than their initial MSR for 3 years. Finally, one commenter
asked that we defend our assumption that variation within an ACO is
comparable to national variation.
Response: We agree with comments by MedPAC and others supporting
the proposed sliding scale, based on the size of the ACO's assigned
population, to establish the MSR for ACOs under the one-sided model. In
particular, given our decision to allow for a shared savings only
model, we are following MedPAC's advice to retain the proposed MSR
methodology. Alternatives suggested by commenters that allow for lower
MSRs for smaller ACOs under the one-sided model (such as a flat 1 or 2
percent MSR for all ACOs) provide insufficient protection to the
Medicare Trust Funds against shared savings resulting from random
variation, absent some additional protection such as accountability for
shared losses. We believe the relatively lower MSR under the two-sided
model is appropriate since there is a balancing of the risk of random
variation because the ACO is accountable for losses. Thus, while there
is some minimal risk that an ACO will achieve savings due to random
variation, there is also some risk that the ACO will incur losses due
to random variation. Therefore, we find it appropriate to finalize the
proposal to establish MSRs for ACOs under the one-sided model to
protect the Trust Fund from paying out incentives for random variations
in costs rather than for real improvements made by ACOs. With respect
to the comments that expressed concern that our proposed MSR
methodology did not provide appropriate incentives for smaller ACOs, we
believe the change to our proposed methodology to provide for a shared
savings-only track, in addition to other changes to increase the
financial attractiveness of the program, will be sufficient to
encourage participation.
The proposed MSRs were defined to recognize variation due to the
number of beneficiaries assigned to the ACO, as required by the
statute. Therefore in developing the proposed MSRs, we examined
variation in expenditure growth rates for groups sampled on a national
basis in order to isolate variation based on group size rather than
regional factors that can cause added variation relative to the
national average growth rate.
Final Decision: We are finalizing our proposal under Sec. 425.604
to use a sliding scale, based on the size of the ACO's assigned
population, to establish the MSR for ACOs participating under the one-
sided model.
(b) Two-Sided Model
In the proposed rule, we stated that the MSR remains important
under the two-sided model to guard against normal variation in costs,
so that ACOs share savings or losses with the program only under those
circumstances in which we can be confident that such savings or losses
are the result of the ACO's behavior rather than normal variation. At
the same time, we noted that we believed it was more appropriate to
employ a fixed minimum savings rate under this model than under the
one-sided model. First, given the potential for shared loss, the
greater predictability of a fixed MSR is more likely to attract
organizations to participate under this model. Second, greater
protection to the Medicare Trust Fund is afforded by ACOs accepting the
risk of paying Medicare back for losses. Therefore, based on our
experience with the PGP demonstration and consistent with the lowest
applicable MSR under the one-sided model, we proposed to adopt a fixed
2 percent MSR for organizations operating under the two-sided model, in
place of the variable minimum savings rate for organizations operating
under the one-sided model.
Comment: Commenters' suggestions for revising the proposed policy
for the MSR for ACOs under the two-sided model largely tracked those
described previously for the one-sided model. For instance, several
commenters recommended removing the MSR from the two-sided model given
ACOs' accountability for shared savings and losses under this model.
Response: We are finalizing our proposal to adopt a fixed 2 percent
MSR for ACOs under the two-sided model. We find support for the
application of a flat 2 percent MSR to ACOs participating in the two-
sided model in commenters' suggestions that we apply a common threshold
of 1 or 2 percent to all ACOs. We disagree with suggestions that we
reduce, or eliminate altogether, the MSR in the two-sided model.
Although greater protection to the Medicare Trust Fund is afforded by
ACOs accepting the risk of paying Medicare back for losses, there
remains a need to protect the Trust Fund from paying out incentives for
random variations in costs rather than for real improvements made by
ACOs. We continue to believe that a flat 2 percent MSR is appropriate
for the two-sided model. As explained previously, unlike the one-sided
model, under the two-sided model there is a balancing of risk of random
variation because the ACO is accountable for losses. Thus, while there
is some minimal risk that an ACO will achieve savings due to random
variation, there is also some risk that the ACO will incur losses due
to random variation. Further, as indicated in the proposed rule, a 2
percent MSR reflects the lowest MSR under the one-sided model and is
also the MSR that was used in the PGP demonstration.
Final Decision: We are finalizing our proposal under Sec. 425.606
to apply a flat 2 percent MSR to all ACOs participating under the two-
sided model.
(2) Quality Performance Sharing Rate
As discussed in section II.F. of the proposed rule (76 FR 19620 and
19621), we proposed that ACOs choosing to participate in the one-sided
model could share in savings if they exceed a MSR. For those ACOs whose
savings exceed the MSR in the one-sided model, we proposed a savings
sharing rate of up to 50 percent of total savings, above a 2 percent
savings threshold, with a payment cap of 7.5 percent of an ACO's
[[Page 67930]]
benchmark. We also proposed an additional increase of up to 2.5
percentage points for including FQHCs and/or RHCs as ACO participants,
as discussed in section II.F of the proposed rule. Thus, under our
proposal, an ACO participating in the one-sided model could realize a
maximum shared savings rate of 52.5 percent. Under the two-sided model,
we proposed that an ACO that realized savings against its benchmark
could qualify for a final sharing rate of up to 65 percent if it was
eligible for the maximum adjustments. The 65 percent final sharing rate
was comprised of a savings rate of up to 60 percent for quality
performance, plus 5 percentage points for including FQHCs and/or RHCs
as ACO participants.
Comment: Commenters favored allowing higher sharing rates based on
ACO quality performance for both the one-sided and two-sided models,
and offered a variety of rationales for increasing the sharing rate.
Typically, commenters suggested that higher sharing rates would better
incent participation, particularly considering the costs of ACO
formation. Others indicated that the proposed shared savings
percentages were too low when compared with other Medicare shared
savings initiatives, such as the 80 percent shared savings rate under
the Physician Group Practice Demonstration, and the higher sharing
rates proposed by the Innovation Center for Pioneer Model ACOs.
Commenters suggested sharing rates ranging from 50 to 95 percent
(most commonly 75 percent) under the one-sided model and 66 to 95
percent (most commonly 80 percent) under the two-sided model. MedPAC
recommended increasing the sharing rates for both models, suggesting,
for example, offering a savings rate of up to 75 percent for the one-
sided model and 95 percent for the two-sided model for the first
agreement period. Several commenters suggested we initially establish
higher sharing rates than what was proposed, while incrementally
decreasing the maximum sharing rate over time; for instance, setting
the sharing rate at 75 percent or 95 percent for the initial
performance year and then gradually tapering it off in subsequent
years. Several commenters suggested approaches whereby ACOs meeting a
quality standard would obtain a guaranteed minimum amount of shared
savings, and thereafter receive an additional percentage of shared
savings on a sliding scale based on higher quality performance. For
instance, creating a minimum sharing rate of 50 percent for Track 1 and
60 percent for Track 2, and using an ACO's quality score to award
additional shared savings up to a maximum sharing rate of 80 percent
for Track 1 and 90 percent for Track 2.
One commenter suggested the sharing rates should be the same for
both models. More commonly, however, commenters supported a policy of
establishing different sharing rates for the two models, to provide a
greater reward to ACOs taking risk. Some commenters recommended that
CMS increase the difference in sharing rates between the models.
Several commenters suggested maintaining or lowering the proposed
sharing rate for the one-sided model, while increasing the sharing rate
for the two-sided model. One commenter suggested downwardly adjusting
the sharing rate for the one-sided model over time to encourage ACOs to
move to the two-sided model. Others suggested higher sharing rates for
certain types of ACOs, such as early adopters of the ACO model, or ACOs
in low cost areas. Overall, commenters' suggestions for the amount of
difference in the sharing rates between the two models ranged from zero
to 40 percent, however most commenters tended to recommend differential
of between 5 and 25 percent.
Response: We carefully considered commenters' requests for a higher
sharing rate based on quality performance for both the one-sided and
two-sided model as a means of encouraging participation in the program.
In the proposed rule we explained that the sharing rate based on
quality performance was a function of equally weighting the five
proposed domains for quality measurement. As such, under the one-sided
model, each domain would account for 10 percent, for a total sharing
rate of 50 percent. We further specified the need to differentiate
between the program's models--to incent ACOs to take risk by offering
the possibility of a greater financial reward--and proposed the two-
sided model would have a maximum sharing rate based on quality
performance of 60 percent, equally apportioned among the five
measurement domains.
As specified in section II.F. of this final rule, in the final rule
we have reduced the number of quality measures, and consequently are
finalizing a quality performance standard which includes 4 domains that
will be equally weighted for purposes of quality scoring. As discussed
elsewhere in this section of this final rule, we are modifying our
proposals to provide greater opportunity for ACOs to achieve shared
savings, for instance, by allowing first dollar sharing under the one-
sided model and raising the payment performance limits for both models.
We considered how to address the opposing views presented in the
comments on the sharing rate for the one-sided model, including
recommendations that providing a higher sharing rate would encourage
participation in the program, and recommendations that we maintain or
lower the sharing rate to ensure a sufficient incentive for ACOs to
participate in the two-sided model. Given our modifications to the
quality performance standard and financial models which will make it
easier for ACOs to share in a savings, we believe that maintaining the
proposed sharing rate for the one-sided model offers a fair balance
between commenters' suggestions that we provide greater opportunities
for ACOs to share in savings while also remaining protective of the
Trust Funds.
We appreciate commenters' support of the need to differentiate
financially between the two models by offering a higher sharing rate to
ACOs under the two-sided model. We continue to believe that risk-based
arrangements are more effective in driving behavior changes by
providers, and therefore we should ensure there are appropriate
incentives for ACOs to enter the program's two-sided model. We agree
with commenters' recommendations that support our proposal to offer
ACOs under the two-sided model a higher sharing rate than those under
the one-sided model, as a means of encouraging ACOs to accept downside
risk. Further, our proposal to differentiate the sharing rates for the
models by 10 percent aligns with commenters' preference for a
difference in sharing rates in the range of 5 to 25 percent. When
compared to the 50 percent sharing rate based on quality for the one-
sided model, we believe that a 60 percent sharing rate for the two-
sided model offers an appropriate additional incentive for ACOs to
accept downside risk.
Final Decision: We are finalizing our proposal under Sec. 425.604
and Sec. 425.606 that ACOs under the one-sided model can earn up to 50
percent of total savings based on quality performance and ACOs under
the two-sided model can earn up to 60 percent of total savings based on
quality performance.
(3) Additional Shared Savings Payments
In the proposed rule, we recognized the important role that FQHCs
and RHCs play as safety net providers and in improving access to
primary care for Medicare and Medicaid beneficiaries. Under the
proposed rule, FQHCs and RHCs were unable to participate
[[Page 67931]]
independently in this program by forming their own ACOs. As a result,
we believed that providing incentives to ACOs that include FQHCs and/or
RHCs as ACO participants was in the interest of the Shared Savings
Program as including these types of entities could promote care
coordination and the delivery of efficient, high-quality health care.
We proposed that ACOs could be eligible to receive higher sharing
rates, based on a sliding scale, for including FQHCs and RHCs as ACO
participants. Under the one-sided model we proposed up to a 2.5
percentage point increase in the sharing rate for ACOs that include
these entities as ACO participants. Under the two-sided model we
proposed up to a 5.0 percentage point increase in the sharing rate for
ACOs that include these entities as ACO participants. We proposed
establishing a sliding scale payment, outlined in the Table 7, based on
the number of Medicare FFS beneficiaries with one or more visit at an
ACO participant FQHC or RHC during the performance year.
Table 7--Sliding Scale Payment Based on Number of Beneficiary Visits at
an ACO Participant FQHC or RHC
------------------------------------------------------------------------
Percentage Percentage
Percentage of ACO assigned point increase point increase
beneficiaries with 1 or more visits to in shared in shared
an ACO participant FQHC/RHC during the savings rate savings rate
performance year (one-sided (two-sided
model) model)
------------------------------------------------------------------------
1-10 percent........................... 0.5 1.0
11-20 percent.......................... 1 2.0
21-30 percent.......................... 1.5 3.0
31-40 percent.......................... 2 4.0
41-50 percent.......................... 2.5 5.0
------------------------------------------------------------------------
We also proposed that ACOs specifically identify their FQHC/RHC
participant TINs in their initial and annual reporting of ACO
participant TINs, and disclose other provider identifiers as requested
to assure proper identification of these organizations for the purpose
of awarding the payment preference. Further, we proposed to define
FQHCs and RHCs, for the purpose of awarding this payment preference, as
these terms are defined in 42 CFR 405.2401(b) of our regulations. We
sought comment on alternate options for establishing a payment
preference with a sliding scale for ACOs that include FQHCs or RHCs as
ACO participants, including suggestions for the appropriate method to
measure FQHC/RHC involvement and the appropriate level of incentives.
Comment: While many commenters supported the concept of the
proposed incentive, others found the incentive inadequate to encourage
meaningful FQHC and RHC participation in ACOs. One commenter envisioned
that FQHCs and RHCs would be ``latched on'' to the ACO in an attempt to
achieve a greater share of savings. Commenters were also critical of
the incentive's focus on care provided to ACO beneficiaries at FQHCs
and RHCs when we proposed to assign beneficiaries to ACOs based on
their use of other primary care providers. As one commenter explained,
the incentive assumes an unlikely scenario where non-FQHC providers
will refer a patient to an FQHC for care. Others considered the
incentive, based on a one visit rule, ripe for gaming: ACOs might
schedule their beneficiaries to have one visit at an FQHC or RHC to
obtain the incentive, which could result in ``primary care
discontinuities.'' One commenter questioned whether the incentive was
in line with the letter and spirit of the Affordable Care Act.
Commenters provided various suggestions for how to revise the
structure of the incentive, such as the following:
Increasing the amount of the incentive, for instance to a
10 percent bonus under both models.
Including Method I CAHs in the incentive payment
structure.
Providing additional payments for including multiple
FQHCs.
Commenters also offered alternatives. For instance, one commenter
recommended that CMS create incentives for FQHCs and RHCs to
participate in ACOs, rather than to reward ACOs for including these
organizations.
Response: In this final rule, we are eliminating our proposal to
provide an incentive for ACOs to include FQHCs and/or RHCs as
participants. We proposed this incentive to address our inability to
determine a statutorily satisfactory way of assigning beneficiaries to
an ACO on the basis of services furnished by these entities. However,
given that we have determined an appropriate methodology for assigning
beneficiaries to ACOs on the basis of services furnished by FQHCs and
RHCs, therefore allowing FQHCs and RHCs to more fully participate in
the program, we believe the incentive is unnecessary and has the
potential to cause unintended consequences as articulated by
commenters.
Final Decision: The final rule will not contain a sliding scale-
based increase in the shared savings rate, up to 2.5 additional
percentage points under the one-sided model and up to 5 additional
percentage points under the two-sided model, for ACOs that include an
FQHC or RHC as an ACO participant.
In the proposed rule we also discussed our interest in encouraging
providers who serve a large portion of dual eligible beneficiaries to
participate in the Medicare Shared Savings Program. We explained that
Medicare beneficiaries who are also eligible for Medicaid--that is, are
``dually eligible'' for these programs--are among the most vulnerable
of Medicare beneficiaries. Dual eligible beneficiaries tend to have
higher medical costs than other FFS beneficiaries, and, as a result,
are expected to benefit even more than other beneficiaries from
improvements in the quality and efficiency of their care resulting from
the greater care coordination offered by an ACO.
We also stated in the proposed rule that section 1899(j) of the Act
provides that ``[t]he Secretary may give preference to ACOs who are
participating in similar arrangements with other payers.'' The statute
prescribes neither the kind of preference that the Secretary should
provide to such ACOs nor what other types of arrangements should be
considered ``similar'' for purposes of such a preference. We stated our
belief that the more patients an ACO sees for which it is eligible to
receive performance-based incentives, such as shared savings, the more
likely it is that the ACO will adopt
[[Page 67932]]
substantial behavior changes conducive to improved quality and cost
savings.
We sought comment on methods to provide preference to ACOs that
serve a large dual-eligible population or that enter into and maintain
similar arrangements with other payers. Specifically, we sought
suggestions to encourage accountability for dual-eligible beneficiaries
and participation in similar arrangements with other types of payers.
Comment: Comments described the health needs of dual eligible
beneficiaries and the potential challenges of managing this population.
Some commenters saw the need for CMS to ensure participation by
providers that care for dual eligible beneficiaries as part of the
larger issue of the need for CMS to support safety net providers and
ACOs more generally. Many commenters favored policies that financially
reward ACOs whose assigned populations include a larger proportion of
dual eligible beneficiaries. Commenters offered a variety of
suggestions on how to structure this payment preference, including the
following:
Higher shared savings rates for ACOs that serve a high
percentage of dual eligible beneficiaries, similar to the increased
sharing rate proposed for ACOs which included FQHCs and RHCs.
Commenters' suggestions for higher sharing rates typically ranged from
2.5 percentage points to 20 percent under the one-sided model and 5
percentage points to 25 percent under the two-sided model.
Additional incentives coupled with alternative payment
models for an ACO whose patient mix is comprised mostly of Medicaid
patients, and which care for large percentages for dual eligible
beneficiaries.
Exempt ACOs that treat a larger proportion of dual
eligible beneficiaries from the 2 percent net sharing rate.
Revised benchmarking methodology (for example, a
``separate savings target'') for ACOs that serve a large population of
dual eligible beneficiaries.
Several commenters raised concerns about creating incentives for ACOs
to care for dual eligible beneficiaries. One commenter noted that the
proposed assignment methodology, under which FQHCs would not be the
basis for assignment, would exclude many dual eligible beneficiaries
from ACOs. By virtue of this policy, the commenter perceived proposed
monitoring for avoidance of at-risk beneficiaries and the proposed
rule's emphasis on providing incentives for ACOs to include dual
eligible beneficiaries to be flawed. Another commenter, pointing to the
unique health care needs of dual eligible beneficiaries, cautioned that
ACOs should have the capacity and ability to serve these individuals;
suggesting that CMS condition any dual eligible incentive payment on an
ACO not only serving a large proportion of dual eligible beneficiaries,
but also having the appropriate infrastructure to coordinate care and
benefits for this population. One commenter opposed the use of
financial incentives to encourage ACOs to serve dual eligible
beneficiaries or to encourage providers serving duals to become ACOs,
based on the belief that such financial incentives in the early days of
the program may distort provider behavior in ways that are detrimental
to beneficiaries and costly to the program. To effectively serve this
population, this commenter indicated, for example, that we should
ensure that ACO providers are Medicaid participating providers, and
that an ACO serving many dual eligible beneficiaries has a relationship
with the State Medicaid agency in the State in which it operates. This
commenter further pointed out an effort by the Innovation Center in
Connecticut to develop an Integrated Care Organization to serve dual
eligibles in the State.
We received few comments on our statutory authority to give
preference to ACOs who are participating in similar arrangements with
other payers. One commenter recommended that CMS give preference to
ACOs that have contracts with private payers that include financial
accountability and quality performance incentives, and avoid
requirements that could have a chilling effect on the willingness of
private payers to invest in and partner with ACOs. This commenter
further recommended that the definition of ``similar arrangement'' be
consistent across the Shared Savings Program and the Pioneer ACO Model.
On a related issue, many commenters expressed their support, generally,
for the Innovation Center's Pioneer ACO Model. As a condition of
participation in the Pioneer Model, ACOs must commit to entering
outcomes-based contracts with other purchasers (private health plans,
State Medicaid agencies, and/or self-insured employers) such that the
majority of the ACO's total revenues (including from Medicare) will be
derived from such arrangements, by the end of the second performance
period in December 2013. One commenter requested clarification on the
extent to which private payers could participate in ACOs.
In addition to the payment incentives and preferences discussed in
the proposed rule, commenters recommended that CMS include a variety of
other incentives based on an ACO's other quality improvement
activities, and the composition of the ACO's participants or the
particular populations they serve. For example, commenters suggested we
include the following:
Incentives for early adopters of the accountable care
model.
Incentives for caring for particular populations, such as
rewarding ACOs that serve the uninsured, care for beneficiaries in
rural areas, or that have diverse patient populations.
Incentives for including the following providers and
suppliers:
++ Patient centered medical homes.
++ Teaching hospitals.
++ Ambulatory Surgery Centers.
++ Community health organizations including Community Mental Health
Centers.
++ Home health and hospice agencies.
++ Physicians practicing in rural areas.
Incentives for including health programs operated by the
Indian Health Service, tribes or tribal organizations, and urban Indian
organizations.
Incentives to encourage participation by small, rural, and
physician-led ACOs.
Incentives to ensure some primary care services are
delivered by NPs and PAs.
Incentives to move patients from the acute care setting to
appropriate post-acute or outpatient providers.
Incentives to reward participation in other quality
improvement initiatives, such as physician-led quality improvement
programs.
Incentives to use telehealth and remote patient monitoring
technologies in innovative modalities extending beyond what is
currently reimbursed under FFS Medicare.
Incentives for the development of primary care training in
new models of care.
Incentives for ACOs participating in clinical trials, to
encourage innovation in health care.
Response: We are finalizing our proposal, which does not give
preference to ACOs engaged in similar arrangements with other payers,
or provide additional incentives for ACOs which care for dual eligible
beneficiaries. Similarly, we do not intend to recognize other factors,
such as the ACO's other quality improvement activities, the composition
of the ACO's participants or the particular populations they serve.
CMS' goal is to promote complete integration of care
[[Page 67933]]
and align incentives whether care is provided under Medicare, Medicaid,
or both. ACOs are one valuable new option to assure greater
coordination of care for Medicare Parts A and B services for dual
eligible beneficiaries. Additionally, there are existing demonstrations
and emerging care models underway in the Innovation Center in
partnership with the Medicare-Medicaid Coordination Office which will
provide further opportunities for the integration of care and financing
across both Medicare and Medicaid, including long term services and
supports. For dually eligible individuals CMS intends to study the
effect of assignment of these individuals to ACOs in the Shared Savings
Program on Medicaid expenditures, and may use this information in the
development of future models for testing by the Innovation Center. We
believe that these demonstrations and models targeting the dual
eligible population will further address and create incentives for
providers to focus on serving their special needs.
Through the flexibility allowed in the governance requirements,
discussed in the Section II.B. of this final rule, we have left room
for ACOs to engage with private payers. In addition, we may revisit our
authority to award a preference to ACOs that participate in similar
arrangements with other payers as we gain more experience with such
arrangements through the Pioneer ACO Model.
We decline to incorporate incentives into this national program to
account for the variety of approaches that ACOs may choose for their
quality improvement activities outside the Shared Savings Program, as
well as their provider and supplier composition and patient mix. We
believe that the flexibility allowed in the distribution of shared
savings provides the opportunity for ACOs to reward ACO participants'
for engaging in other quality improvement initiatives.
We may revisit the issue of incentives related to ACO activities,
composition, and patient mix as we gain experience with the ACO model
through the Shared Savings Program and the Pioneer ACO Model.
Final Decision: The final rule will not contain additional
financial incentives, beyond those established for quality performance,
for the care of dual eligible beneficiaries or other factors related to
the composition of the ACO or its activities, nor will the final rule
include a preference for ACOs participating in similar arrangements
with other payers.
(4) Net Sharing Rate
Section 1899(d)(2) of the Act calls for us to share ``a percent (as
determined appropriate by the Secretary) of the difference between such
estimated average per capita Medicare expenditures in a year, adjusted
for beneficiary characteristics, under the ACO and such benchmark for
the ACO.'' Section 1899(i) of the Act permits the Secretary to consider
other payment models if she determines that they will ``improve the
quality and efficiency of items and services furnished under this
title'' and will not result in additional expenditures. Thus, in
considering the amount of savings ACOs under the one-sided model and
two-sided model would be eligible to receive, we considered several
options in addition to the methodology outlined in section 1899(d)(2)of
the Act.
The first option we considered is the one required under section
1899(d)(2) of the Act, which would permit the ACO to share on first
dollar savings once it achieves savings in excess of the MSR. This
option would maximize the reward that an ACO could realize. This amount
could provide critical financial support for ACOs that serve a smaller
population (for example, less than 10,000 assigned beneficiaries),
which may be physician only and/or predominantly care for underserved
populations, or ACOs whose beneficiaries rely upon safety net providers
for care or ACOs which serve rural areas. However, given the normal
variation in expenditures, we had concerns that sharing on first dollar
savings with ACOs under the one-sided model could result in sharing on
unearned savings rather than on savings achieved by the ACO for
redesigned care processes. We also explained that this concern was
mitigated under the two-sided model, where ACOs are assuming the risk
of losses due to normal year-to-year- variations in Medicare
beneficiaries' claims expenditures.
We considered another alternative which would limit the amount of
savings by requiring ACOs to exceed the MSR and then share with the ACO
only those savings in excess of the MSR. As discussed previously, one
challenge to appropriate sharing of savings under this program is that
observed savings can occur as a result of normal year-to-year
variations in Medicare beneficiaries' claims expenditures in addition
to the ACO's activities. This concern is heightened in the one-sided
model, because absent initial accountability for losses, ACOs have less
motivation to eliminate unnecessary expenses and may be more likely to
be rewarded as a result of methodological requirements. Sharing only in
savings which exceed the MSR is consistent with the design of the
original PGP demonstration and would reduce the probability that shared
savings are earned as a result of chance or lower pre-existing
expenditure trends due to existing efficiencies, and not newly enhanced
care coordination and/or redesigned delivery of care. Further, such a
requirement would encourage ACOs to strive to generate greater levels
of savings.
A third option we considered would be to require all ACOs to exceed
the MSR to be eligible for savings, but only to share savings in excess
of a certain threshold. ACOs meeting certain criteria could be exempted
from this provision and allowed to share in first dollar savings. This
option would balance the need to have assurance that savings are not a
result of random variation with the need to provide critical financial
support for under-funded ACOs, particularly ACOs that serve a smaller
population, safety net providers, or physician-only ACOs. Additionally,
we have experience with this model through the PGP demonstration.
For the one-sided model, we proposed the third option, that once an
ACO has surpassed its MSR, the ACO would share in savings beyond a
certain threshold. We further proposed that, unless exempted, ACOs that
exceed the MSR would be eligible to share in net savings above a 2
percent threshold, calculated as 2 percent of its benchmark (updated
according to statute). The sharing rate would be applied to net savings
above this 2 percent threshold in order to determine the shared savings
amount. We believed that this threshold would protect the program from
sharing unearned savings by helping to ensure that shared savings are
due to enhanced care coordination and quality of care on the part of
the ACO.
As previously discussed, many smaller physician-driven ACOs and
ACOs caring for underserved populations have the potential to improve
the quality and efficiency of care, but may be especially challenged in
accessing capital to meet their needs. We hope to encourage successful
participation by these ACOs in the Shared Savings Program.
Additionally, we acknowledge that providers/suppliers working in these
environments face additional challenges in coordinating care and
creating the infrastructure necessary to create a successful ACO, and
therefore may not be equipped to assume the risk of the two-sided model
right away (and be
[[Page 67934]]
eligible for greater reward). Accordingly, we proposed that ACOs that
met certain criteria outlined in the proposed rule (76 FR 19613) would
be exempt from the 2 percent net savings threshold and would instead
share on first dollar savings under the one-sided model.
For the two-sided model, we proposed that ACOs which generate
savings that exceed the MSR would be eligible to share in savings on a
first dollar basis. We indicated that a number of factors favored
allowing two-sided model ACOs to share on first dollar savings. First,
savings generated by ACOs assuming risk of losses are less likely to
result from random variation compared to savings generated by ACOs
under the one-sided model because these ACOs have a greater incentive
to make the types of changes that are necessary to achieve shared
savings and avoid shared losses. Second, sharing first dollar savings
with two-sided model ACOs would provide greater reward for ACOs that
choose to participate in the program's two-sided model as compared to
the one-sided model. Therefore, under the two-sided model, the final
sharing rate would be applied to an ACO's total savings against its
updated benchmark.
Comment: Overall, comments expressed concern over the proposal for
ACOs under the one-sided model, other than those exempted, to share
savings net a 2 percent threshold once they exceed the MSR. Many
commenters requested removal of the net 2 percent sharing rate. Most
recommended sharing on a first dollar basis for all ACOs. Commenters
provided a variety of rationales to support eliminating this
requirement, for example, that it unduly increases uncertainty that an
ACO will share in savings or could impede an ACO's ability to make the
kinds of up front and ongoing investments needed to better manage care.
Some suggested that adequate controls are already proposed to ensure
that shared savings are due to improved care coordination and quality
of care. Several commenters recommended first dollar sharing indicating
random variation in data can work in both directions: Setting higher
thresholds may protect CMS from random variation, but does not protect
against or recognize random variation that might affect providers
negatively.
Others suggested that first dollar sharing for all ACOs would
encourage increased participation in the program, for instance helping
ensure ACOs receive a return on investments. One commenter pointed out
a 2 percent net sharing requirement was not included in the PGP
demonstration. Another commenter questioned whether the 2 percent
savings threshold is authorized by the law.
Commenters suggested several alternatives to the proposed 2 percent
net savings threshold; most commonly, to allow first dollar sharing for
the entire agreement period, or as one commenter suggested, for a
portion of the agreement period. Another commenter suggested allowing
ACOs, not CMS, to share 100 percent of the first 2 percent of savings
earned, thereafter CMS and the ACO should receive their percentage
shares.
Response: We are persuaded by comments suggesting the elimination
of the 2 percent net sharing rate. Commenters made it clear that the
option we proposed would unlikely achieve the balance we sought between
a threshold low enough to ensure participation while protecting the
Trust Funds from paying ACOs for results based on random variation.
Commenters persuaded us that the 2 percent net sharing threshold could
deter participation. We believe sharing on a first dollar basis with
all ACOs will be important for encouraging participation and ensuring
ACOs receive capital to invest in achieving the program's goals and
achieve a return on investment. First dollar sharing, compared to
alternatives that would share on a lower threshold amount, appears the
most effective way to ensure ACOs receive needed capital. At this time,
we consider other program protections--in particular the minimum
savings rate--should be adequate to ensure shared savings result from
ACO performance rather than random variation. We will monitor this
issue, however, and could consider adjustments through future
rulemaking should they be found necessary.
We are revising our proposal to allow for sharing on first dollar
savings for ACOs under the one-sided model once savings meet or exceed
the MSR. We are finalizing our proposal to similarly allowing sharing
on a first dollar savings for ACOs under the two-sided model once
savings meet or exceed the MSR.
Comment: Commenters were generally supportive of the proposed
exemption from the 2 percent net sharing threshold for small ACOs,
particularly those in underserved and rural areas. A number of
commenters suggested expanding the exemption to other types of ACOs.
One, for example, recommended that the exemption include ACOs that
treat a large proportion of dual eligible beneficiaries.
However, several commenters expressed concerns about the proposed
exemption. One commenter explained that based on the proposed
assignment methodology, ACOs that include FQHCs and RHCs would have
difficulty meeting the threshold level to qualify for the exemption.
Another commenter suggested the exemption may not be sufficient to
encourage participation by ACOs in rural areas.
Response: Our elimination of the 2 percent net sharing rate negates
the need for an exemption from this requirement. Accordingly, we are
eliminating the proposed exemption from the 2 percent net sharing rate
as all ACOs that achieve savings in excess of their MSR will share in
savings on a first dollar basis.
Final Decision: We are revising our proposal under Sec. 425.604 to
allow for sharing on first dollar savings for ACOs under the one-sided
model once savings meet or exceed the MSR. We are finalizing our
proposal under Sec. 425.606 similarly allowing sharing on a first
dollar savings for ACOs under the two-sided model once savings meet or
exceed the MSR.
(5) Performance Payment Limits
Section 1899(d)(2) of the Act requires the Secretary to ``establish
limits on the total amount of shared savings that may be paid to an ACO
* * *.'' Therefore, in the proposed rule we addressed the issue of the
maximum performance payment an ACO may receive in any given performance
year. In determining what would constitute an appropriate limit, we
stated that it should provide a significant opportunity for ACOs to
receive shared savings generated from quality improvements and better
coordination and management of Part A and B services, while avoiding
creating incentives for excessive reductions in utilization which could
be harmful to beneficiaries. Under the PGP demonstration, the limit was
set at 5 percent of the organization's Part A and Part B expenditure
target.
For purposes of the Shared Savings Program, we considered an option
to vary the performance payment limit by the readiness of the ACO to
take on greater responsibility and performance-based risk. ACOs seeking
to participate in the Shared Savings Program will vary with respect to
their readiness to function under a risk model due to their
organizational and systems capacity and structure. Accordingly, some
ACOs might more quickly be able to demonstrate quality improvements and
savings than will others. Applying differential payment limits based on
an ACO's readiness to take on performance-based risk could be another
means to encourage and reward successful ACO participation.
[[Page 67935]]
In light of our experience with the PGP demonstration, we
considered a limit of 5 percent of benchmark expenditures. We also
considered whether a higher limit, such as 10 percent or 15 percent,
would be appropriate to provide an even stronger incentive for ACOs to
develop the quality and efficiency improvements that could result in
greater shared savings. Depending on an ACO's composition, shared
savings payments under such higher limits could represent an even
larger portion of Medicare payments to ACO participants for care
furnished to assigned beneficiaries since the limit is a percentage of
the ACO's benchmark for Medicare Part A and B expenditures for assigned
beneficiaries, which reflects all care furnished to those
beneficiaries, regardless of whether it was provided in the ACO. For
example, an ACO that does not include a hospital would have the
opportunity to realize a relatively higher proportion of shared savings
as a percentage of its Medicare revenue by reducing Part A expenditures
for its assigned beneficiaries. However, opportunities to earn greater
savings could also raise questions about whether the quality of care is
improving, which is as important a goal as achieving savings in the
Shared Savings Program. In the proposed rule, we recognized that
providing an incentive for ACOs to invest to improve quality and
efficiency of care needs to be balanced against providing an overly
large incentive such that an ACO may be encouraged to generate savings
resulting from inappropriate limitations on necessary care. A higher
limit on total shared savings could provide such an incentive to limit
care. While all ACOs may have this incentive to some degree, ACOs
without Part A providers could have greater incentive to do so,
depending on where the limit is established.
A lower limit, such as the 5 percent limit under the PGP
demonstration, would reward ACOs for improving quality and efficiency
and potentially generate more savings for the Medicare program without
creating incentives to limit care that is appropriate and necessary. On
the other hand, a lower limit might be an insufficient incentive for
some potential ACOs to participate in the program. In contrast, a
higher percentage limit, such as 10 or 15 percent of an ACO's Part A
and B expenditure benchmark, would provide greater incentives for
organizations to participate in the program and to achieve the quality
and efficiency gains that are the goals of the Shared Savings Program.
Many health care researchers believe that the rate of unnecessary
health care is more than the approximate 10 percent which would be
implied by establishing a 5 percent limit on ACO shared savings. (Since
the maximum shared savings potentially realized by an ACO under the
proposed one-sided model was 52.5 percent, we noted that a 7.5 percent
limit on the ACO share would imply an expectation that overall savings
may be as high as approximately 14 percent; a 10 percent limit would
imply a savings expectation of approximately 19 percent.) On the other
hand, a higher limit might provide some incentive for ACO providers/
suppliers to reduce utilization inappropriately, which could
potentially be harmful to beneficiaries.
In the proposed rule, we acknowledged that the considerations in
favor of both a lower (for example, 5 percent) and a higher (for
example, 10 percent) limitation on shared savings with an ACO had
merit. Accordingly we proposed to establish the payment limit at 7.5
percent of an ACO's benchmark for the first 2 years of the agreement
under the one-sided model. Following suggestions by MedPAC, and in
order to encourage ACOs to assume performance-based risk and
participate in the two-sided model, we proposed, for the two-sided
model, to establish the payment limit at 10 percent of an ACO's
benchmark for those ACOs that either elect the two-sided model
initially for all 3 years or are transitioned from the one-sided model
during the third year of their agreement period. (Since the maximum
shared savings potentially realized by an ACO under the proposed two-
sided model was 65 percent, a 10 percent limit on the ACO share would
imply an expectation that overall savings may be as high as
approximately 15 percent). We solicited comment on these proposed
payment limits and on whether a higher limit--for example, 10 percent
for all ACOs--would be more appropriate in light of the considerations
discussed in the proposed rule and other considerations that commenters
might wish to raise. We also sought comments on whether differential
limits should be established based on an ACO's readiness, as discussed
previously, including the criteria we would apply and the methods by
which we would assess readiness and how differential limits should be
structured. We stated that we would consider this information and the
implications for a differential limit based on ACO readiness in future
rulemaking cycles.
We stated that, regardless of what limit was adopted in the final
rule, we planned to monitor beneficiary access to and utilization of
services, and the potential contribution of the performance limit to
any inappropriate reductions in services. Our final policies related to
monitoring and addressing ACO performance are discussed in section
II.H. of this final rule. Furthermore, we indicated that as we gain
more experience with the Shared Savings Program and are able to
evaluate how well the incentive structure under the Shared Savings
Program is operating to generate greater quality and efficiency without
inappropriately reducing utilization of services, we may undertake
additional rulemaking to revise the performance payment limits we
establish in this final rule.
Comment: One commenter suggested that limiting savings is
reasonable if losses are also limited, in line with our proposal. Many
commenters, however, opposed the proposed limits on shared savings for
both the one-sided and two-sided models stating that these policies
could limit the ACO's return on investment and therefore the
attractiveness of the program, particularly given the large startup and
operating costs ACOs are expected to face. One commenter cited a recent
New England Journal of Medicine editorial which suggested the ACO must
see a 20 percent gain in order to see a return on investment and noted
that the proposal limits gains to 7.5 percent. Others suggested the
limits could serve as a disincentive for ACOs to invest in
transformational improvements, questioning the use of limits if the
opportunity for shared savings is indeed a motivator for cost
management behavior. One commenter explained that CMS' rationale for
the limits, to prevent providers and suppliers from inappropriately
reducing utilization, is unfounded; suggesting that the proposed
quality performance standards and other proposed protections will
effectively prevent ACOs from attempting to improperly reduce
utilization of services. Another commenter suggested removal of the
limits would signal CMS' commitment to the success of the program.
Commenters indicated confusion about whether the limit applies only to
the savings paid to the ACO or to the total savings subject to sharing.
Commenters typically recommended eliminating the limits, to allow
ACOs to share in all savings they could achieve, suggesting this change
could result in increased interest and participation in the program,
particularly by smaller medical practices and oncologists. Other
[[Page 67936]]
commenters suggested raising the limits, for instance--
Raise the limit to 10 for the one-sided model;
Raise the limit by 5 percent for both the one-sided and
two-sided models;
Raise the limit to 15 or 25 percent; or
For the two-sided model, incrementally increase the limit
across the agreement period from 7.5 percent in year 1, to 10 percent
in year 2 and 15 percent in year 3 to incentivize formation of ACOs
willing to pursue this option.
Response: To clarify, the sharing limit applies to the savings paid
to the ACO, not to the total savings subject to sharing. We are,
however, persuaded by comments suggesting the importance of raising the
performance payment limits to encourage participation and to ensure
ACOs receive capital to invest in achieving the program's goals and
achieve a return on their investment. We believe retaining the
performance payment limits is necessary to comply with the statute and
important for ensuring against providing an overly large incentive that
may encourage an ACO to generate savings through inappropriate
limitations on necessary care. We believe that a modest increase in the
performance payment limits balances our concerns while increasing the
attractiveness of the program. Further, we believe it is important to
maintain a higher limit for ACOs accepting risk for losses, to incent
participation in the program's two-sided model. Accordingly, we are
modifying our proposal in order to provide a 10 percent payment limit
for ACOs under the one-sided model and a 15 percent payment limit to
ACOs under the two-sided model.
Final Decision: We are revising our proposal under Sec. 425.604
and Sec. 425.606 to raise the payment limit from 7.5 percent to 10
percent of an ACO's updated benchmark for ACOs under the one-sided
model and to raise the payment limit from 10 percent to 15 percent of
an ACO's updated benchmark for ACOs that elect the two-sided model.
f. Calculating Sharing in Losses
The proposed rule outlined the methodology for determining shared
losses. We proposed a shared losses methodology that mirrored the
shared savings methodology, comprised of: a formula for calculating
shared losses based on the final sharing rate (1 minus the final
sharing rate), use of a minimum loss rate (MLR) to protect against
losses resulting from random variation and a loss sharing limit to
provide a ceiling on the amount of losses an ACO would be required to
repay. We noted that under this approach, an ACO's share of losses
would vary depending on its quality score. Therefore, an ACO with a
higher quality score would owe a lower amount of losses compared to an
ACO with an equivalent amount of losses but a lower quality score. We
considered other approaches to calculating the amount of shared losses,
tracking the options considered for establishing the quality standard.
For instance, we considered using a threshold approach to measuring
quality performance for purposes of determining the amount of shared
savings and losses. Alternately we considered using a blend of these
two methods, whereby we would allow ACOs to increase their share of
savings with higher quality scores, but use a threshold approach when
calculating losses. We sought comment on these options.
Comment: We received few comments on our methodology for
calculating shared losses. One commenter explained that the elements of
the shared savings and losses models need not be symmetrical.
Response: We are finalizing our proposed methodology for
determining shared losses, mirroring the methodology for calculating
shared savings. Our final policy on each specific issue is described in
detail later in this final rule.
Final Decision: As proposed, the shared losses methodology under
Sec. 425.606 will mirror the shared savings methodology, comprised of:
a formula for calculating shared losses based on the final sharing
rate, use of a MLR to protect against losses resulting from random
variation and a loss sharing limit to provide a ceiling on the amount
of losses an ACO would be required to repay.
(1) Minimum Loss Rate
We proposed a minimum loss rate (MLR) for purposes of computing
shared losses when an ACO's actual expenditures exceed its benchmark.
We explained that, as with savings, losses must exceed some minimum
percentage around the benchmark in order to provide sufficient
confidence that the losses experienced during a given performance year
are not simply the result of random variation. We proposed the MLR
would be the equivalent of the MSR under the two-sided model: A flat 2
percent regardless of the size of the ACO's assigned population. ACOs
with excess expenditures below the MLR would not be responsible for
repaying Medicare. ACOs with expenditures exceeding the MLR would be
responsible for paying a share of excess expenditures calculated by
multiplying the amount of excess above the updated benchmark by one
minus the final sharing rate. Further we proposed that once the MLR was
exceeded, ACOs would be responsible for paying the percentage of excess
expenditures, on a first dollar basis, up to the proposed annual limit
on shared losses.
Comment: Several commenters urged CMS to apply an adjustment for
normal variation for losses, instead of requiring first dollar loss
sharing. Some commenters favored policies that would exempt some ACOs
from repaying losses, such as high quality performers. One commenter
favored increasing the MLR and implementing a sliding scale so that the
rate would correspond with the ACO's population size. Others favored
lowering the MLR (for example, to 1 percent, as proposed for the
Pioneer Model ACOs) or eliminating it altogether. One commenter
explained that reducing or eliminating the MSR and the MLR recognizes
that random variation works in both directions and over the course of
the agreement period would likely have a net neutral effect on ACO
revenues; further, this would be consistent with other inducements
being offered to ACOs willing to bear risk immediately. One commenter
appears to have confused the 2 percent MLR under the two-sided model
with the 2 percent net sharing requirement under the one-sided model.
Response: We are finalizing our proposal to use a MLR in computing
an ACO's shared losses. We believe that comments reflect confusion
about the function of the MLR, which serves as a protection for ACOs.
An ACO is not accountable for losses if its expenditures are lower than
the MLR. This protects ACOs against being held accountable for losses
that result from random variation, as opposed to their performance. If
an ACO's actual expenditures are 2 percent or more above its updated
benchmark, the ACO would be responsible for paying excess expenditures
calculated by multiplying the amount of the excess above the updated
benchmark by one minus the final sharing rate, up to the limit on
shared losses. Once losses meet or exceed the MLR an ACO would be
required to repay losses on a first dollar basis. To clarify, the MLR
is distinct from, and unrelated to, the 2 percent net sharing threshold
proposed for the one-sided model, which would have precluded ACOs from
sharing savings on a first dollar basis.
The proposed 2 percent MLR appears to be an appropriate compromise
between commenters' suggestions.
[[Page 67937]]
Exempting ACOs from accountability for losses under the two-sided model
would negate the purpose of a risk-based payment arrangement.
Eliminating or reducing the MLR may deter participation by some ACOs in
the two-sided model, particularly those new to risk-bearing, in
addition to potentially holding ACOs accountable to losses resulting
from random variation.
Final Decision: We are finalizing our proposal under Sec. 425.606
to apply a MLR for the two-sided model. To be responsible for sharing
losses with the Medicare program, an ACO's average per capita Medicare
expenditures for the performance year must exceed its updated benchmark
costs for the year by at least 2 percent. Once losses meet or exceed
the MLR, an ACO would be responsible for paying the percentage of
excess expenditures, on a first dollar basis, up to the proposed annual
limit on shared losses.
(2) Shared Loss Rate
We proposed that ACOs with expenditures exceeding the MLR would be
responsible for paying excess expenditures calculated by multiplying
the amount of excess above the benchmark by one minus the final sharing
rate. In the proposed rule we defined the final sharing rate as the
quality performance sharing rate plus any percentage points for
including FQHCs and/or RHCs as ACO participants.
Comment: We received a few comments on the proposed shared loss
rate. One commenter suggested we allow ACOs the choice of a percentage
shared loss rate (as proposed) or a fixed dollar amount of risk.
Several commenters pointed out that under the proposed methodology for
calculating shared savings and losses, an ACO could be accountable for
a 100 percent share of losses (for example, if the ACO's quality
sharing rate is zero) which is asymmetrical with the shared savings
methodology. One commenter suggested that CMS ensure that the ACO's
financial risk equals its potential gains in shared savings.
Response: We are maintaining our proposal to calculate the shared
loss rate as one minus the final sharing rate. Given our elimination of
the incentive for an ACO to include FQHCs or RHCs as ACO participants,
the final sharing rate is based solely on quality performance.
Therefore, under the two-sided model an ACO could achieve a maximum
sharing rate of 60 percent based on quality performance. We believe
that commenters identified an important concern about the shared loss
rate, that an ACO could achieve a 100 percent shared loss rate, while
the maximum shared savings rate is set at 60 percent. We are concerned
that the prospect of a shared loss rate bounded at 100 percent could
significantly deter participation by ACOs in the two-sided model,
particularly ACOs that are new to the accountable care model and to
risk-bearing. On the other hand, we do not want to limit the shared
loss rate so much as to dampen the benefit of the program for Medicare
or to remove the incentive for ACOs to strive for high quality scores.
To balance these issues, we are modifying our proposal to cap the
shared loss rate at 60 percent, to align with the maximum shared
savings rate based on quality performance under the two-sided model.
Final Decision: As proposed, under Sec. 425.606, the shared loss
rate for an ACO that is required to share losses with the Medicare
program for expenditures over the updated benchmark will be determined
based on the inverse of its final sharing rate based on quality
performance (that is, 1 minus the shared savings rate). However, we are
modifying our original proposal to provide that an ACO's shared loss
rate will be subject to a cap of 60 percent consistent with the maximum
rate for sharing savings.
g. Limits on Shared Losses
We proposed an annual maximum shared loss limit measured as a
percentage of the benchmark to provide a greater incentive for
organizations to participate in the Shared Savings Program under the
two-sided model. We proposed to phase in the limit on shared losses
over a 3 year period, with limits of: 5 percent, 7.5 percent, and 10
percent, respectively across the first 3 years for Track 2 ACOs. We
further proposed that an ACO in Track 1 that has entered the third year
of its initial agreement period would be liable for an amount not to
exceed the percentage for the first year of the two-sided model, that
is, shared losses would not exceed 5 percent of its updated benchmark.
Comment: Several commenters agreed with the proposed limits on
shared losses, which one commenter indicated would provide an incentive
for ACOs to participate in the two-sided model. One commenter explained
that the limits on shared losses need not be symmetrical with the
shared savings limit. Several commenters suggested alternatives, such
as use of risk corridors and capped losses similar to the MA program,
or limiting shared losses to 5 percent of the benchmark in all 3 years.
Another commenter suggested using a per-beneficiary cap on losses. One
commenter requested that CMS provide actuarial data to justify the
proposed limits on shared losses.
Response: We are maintaining our proposal to phase in limits on
shared losses, measured as a percentage of the ACO's updated benchmark,
over the agreement period as follows: 5 percent, 7.5 percent, and 10
percent, respectively across the first 3 performance years for Track 2
ACOs. We believe the proposed limits achieve an appropriate balance
between providing ACOs with security about the limit of their
accountability for losses while encouraging ACOs to take increasing
responsibility for their costs and protecting the Medicare Trust Funds.
Otherwise, we believe commenters' concerns are addressed by
policies discussed in other parts of this finale rule. For instance,
because we will truncate an assigned beneficiary's total annual Parts A
and B FFS per capita expenditures at the 99th percentile as determined
for each benchmark year, we are adopting a de facto limit on the amount
of shared losses an ACO can incur for care furnished to a single
beneficiary.
Final Decision: We are finalizing our proposal under Sec. 425.606
that the amount of shared losses for which an eligible ACO is liable
may not exceed the following percentages of its updated benchmark: 5
percent in the first performance year of participation in a two-sided
model under the Shared Savings Program, 7.5 percent in the second
performance year, and 10 percent in the third performance year.
Further, because we have eliminated the requirement for ACOs under the
one-sided model to accept risk in their third performance year, we are
not finalizing the proposed provision regarding the limits on shared
losses for ACOs transitioning from the one-sided to two-sided model.
h. Ensuring ACO Repayment of Shared Losses
As we discussed in the proposed rule, ensuring that ACOs entering
the two-sided model will be capable of repaying us for costs that
exceed their benchmark is a critical program requirement. We described
examples of financial protection requirements for other entities with
which CMS does business.
We proposed a flat 25 percent withholding rate that would be
applied annually to any shared savings payment earned by the ACO. We
proposed that this withholding would serve as a component of the
repayment mechanism that ACOs would need to establish to ensure their
ability to repay Medicare for incurred losses. We
[[Page 67938]]
proposed that we would apply the withheld amount towards repayment of
an ACO's losses. However, we recognized that the 25 percent withholding
of shared savings may be inadequate to cover the total amount of shared
losses, particularly if an ACO participating in the two-sided model
experienced losses in its first year.
In order to more fully ensure that the Medicare program would be
repaid in the event that an ACO incurred losses, we proposed that an
ACO must demonstrate that it has established a self-executing method
for repaying losses to the Medicare program. A detailed discussion of
these methods is found in our April 7, 2011 proposed rule (76 FR
19622).
The intent of the proposal was to assure operational simplicity
without establishing eligibility requirements that might discourage
ACOs with limited risk-bearing experience from entering Track 2.
Further, this option offered greater flexibility to ACOs in
establishing their repayment mechanism compared to another option we
considered, requiring ACOs to use only one of these repayment
mechanisms. In that regard, we considered requiring ACOs to obtain a
letter of credit in an amount not less than the maximum potential
downside exposure for the ACO in any given performance year (for
example 5 percent of the benchmark in the first performance year for an
ACO entering Track 2, or for a Track 1 ACO entering its third
performance year of its initial agreement period).
In the proposed rule, after considering several options for
determining the adequacy of an ACO's recoupment mechanism, we proposed
that the repayment mechanism must be sufficient to ensure repayment of
potential losses equal to at least 1 percent of per capita expenditures
for assigned beneficiaries from the most recent year available. We
believed that requiring ACOs to demonstrate their ability to repay
losses at a level below the annual loss sharing limit was potentially
equally effective as requiring ACOs to demonstrate their ability to
repay the maximum amount of possible losses, but less onerous and also
accounted for the limited probability that an ACO would incur the
maximum possible losses.
Given the anticipated variation in ACO composition and regional
variations in cost, we indicated that we believed the sufficiency of
the ACO's repayment mechanism would need to be periodically reassessed
to ensure its adequacy.
We further proposed that we would determine the adequacy of an
ACO's repayment mechanism prior to its entrance into a period of
participation in the Shared Savings Program. We also proposed that an
ACO must demonstrate the adequacy of this repayment mechanism annually,
prior to the start of each performance year in which it accepts risk,
to ensure that it is adequate to cover the anticipated number of
assigned Medicare beneficiaries. Under the proposal, an ACO would have
been required to maintain this repayment mechanism, ensuring adequate
capitalization of funds in the case of some recoupment methods (such as
adequately funded escrow accounts or reinsurance coverage), for the
duration of the performance year and up until the time when we would
need to be reimbursed for any losses by the ACO. We proposed that we
would ensure that an ACO maintains an adequate repayment mechanism
through monitoring activities.
We further proposed that an ACO would be required, as part of its
application, to submit documentation of such a repayment mechanism for
approval by us. This documentation would include details supporting the
adequacy of the mechanism for repaying the ACO's maximum potential
downside risk exposure. An ACO applying for the two-sided model would
be required to submit this documentation as part of its initial
application. An ACO applying for the one-sided model would also be
required to submit this documentation as part of its initial Shared
Savings Program application because under the proposal these ACOs would
have been required to transition to the two-sided model in their third
performance year.
To the extent that an ACO's repayment mechanism does not enable us
to fully recoup the losses for a given performance year, we proposed to
carry forward unpaid losses into subsequent performance years (to be
recouped either against additional financial reserves, or by offsetting
shared savings earned by the ACO).
We invited comment on these proposals and on the other options that
we had considered.
Comment: A number of commenters expressed concern about the
proposed requirement that ACOs establish a self-executing repayment
mechanism to cover potential losses. While some of these commenters
acknowledged CMS' desire for assurances regarding an ACO's ability to
repay losses, they believed that the proposals were too burdensome and
would place the ACOs in a difficult financial position. One commenter
opposed requiring ACOs to establish a self-executing method for
repaying losses, particularly as it may be imposed on individual
providers that may lack a choice as to whether to join an ACO based on
their relationship with a hospital or health system. This commenter did
not believe such physicians should be required to pay for losses.
Another commenter suggested that ACO providers and suppliers should
bear financial risk proportional to the efficiency of their practice
(for example, psychiatrists would bear a lower level of risk). Another
commenter mentioned the burden a letter of credit would create for
providers and expressed distaste for the mandatory withhold. Several
commenters generally expressed doubt that the proposed requirement
would ensure that ACOs would be able to repay potential losses.
Others provided comments about the financial burden of the proposed
repayment mechanisms, particularly for smaller ACOs that may be unable
to meet the solvency requirements. They indicated that it would be very
difficult, if not impossible, for ACOs, which would typically include
low margin businesses, to be at risk for both the administrative costs
associated with forming and operating an ACO and also be subject to
underwriting losses. These commenters viewed the proposed 1 percent
repayment mechanism as an additional drain on ACOs participating in the
Shared Savings Program and therefore recommended that the requirement
be removed.
A number of commenters expressed concern about reinsurance as a
repayment option. One commenter suggested that reinsurance would be
costly and would reduce or eliminate any net payment available to
reward the ACO providers/suppliers. This commenter believed that a
significant increase in the sharing percentage and the limit on shared
savings would be required to make reinsurance a viable repayment
approach. Other commenters asked that CMS clarify in the final rule the
mechanisms for ACOs to obtain reinsurance. A couple of commenters
encouraged CMS to specify a clear mechanism in the final rule for ACOs
to obtain reinsurance, such as CMS sponsorship of reinsurance pools for
ACO providers or including additional funds in the shared savings
payments to ACOs. One commenter suggested that we require ACOs to
obtain insurance only from highly rated, State regulated insurance
carriers.
Several commenters suggested eliminating the proposed requirement
for a repayment mechanism, given the proposed 25 percent withhold,
believing it was unnecessary to have both
[[Page 67939]]
requirements. On the other hand, as described later in this final rule,
a number of other commenters requesting elimination of the proposed 25
percent withhold cited the proposed repayment mechanism as providing
sufficient coverage to protect CMS against losses. For example, a
commenter indicated that CMS should monitor capital adequacy on an
annual basis and rely on the provisions in the proposed rule regarding
the requirement to adopt a self-executing repayment method, rather than
a withhold, to ensure that ACOs will be able to repay losses to the
program.
Some commenters suggested additional alternative approaches that
CMS could consider to address concerns about an ACO's ability to pay
for losses, for example:
Allow flexibility for an ACO to determine the magnitude of
financial risk it will experience and to determine the most appropriate
manner of repayment.
Allow ACOs to use existing financing mechanisms, used to
participate in two-sided models outside of Medicare, to ensure
repayment of shared losses under the Shared Savings Program.
Adjust the repayment method based on the ACO's prior year
performance in the Shared Savings Program, or its performance and
experience with other payers. One commenter suggested that CMS consider
waiving or reducing the repayment mechanism requirements for applicants
to the two-sided model, particularly those who have demonstrated
experience in managing risk through participation in a Medicaid, State,
or private ACO or other payment reforms. In this commenter's view, a
track record of managing risk under other programs should reduce CMS'
uncertainty regarding the financial viability of the ACO.
Adopt certain other approaches used by some managed care
companies.
An agreement to recoup losses from future Medicare revenue
payments should be required for on-going enterprises (those in
existence for 5 or more years of continuous operations). The commenter
suggesting this alternative further explained that the repayment term
for any losses should be set on a sliding scale of time in proportion
to the amount of debt as a percentage of assigned beneficiary per
capita expenditures for the most current year results available.
Several comments raised concerns about how ACOs would share losses
with their participants. One commenter indicated that liability for
losses creates significant operational issues for ACOs and raised
questions about how losses would be shared as follows:
If losses are incurred, how would the liability for
sharing those losses be shared?
Will physicians and other professionals have incentives to
participate if they know they may have out-of-pocket liability or would
be required to accept Medicare payments at less than traditional
Medicare payment rates?
May the financial obligation for losses be disparately
shouldered by ACO participants or ACO providers/suppliers and would
this implicate the fraud and abuse laws?
One commenter indicated that recoupment efforts should be directed
against the ACO and not its individual primary care physicians.
In addition, a few comments asked us to clarify specific points in
the proposal. For example, one commenter simply asked that CMS further
clarify the minimum capitalization requirement. Another asked whether
there was a minimum reserve requirement, and if so what the amount
would be. Another asked how we will evaluate if the proposed
methodology and minimum amount are sufficient. Another asked how an ACO
should calculate beneficiary assignment when preparing its initial
application in order to ensure that the amount of reserves is accurate.
In response to the proposal to carry forward losses into future
years, one commenter suggested that this provision should depend on the
success of the overall program. As an example, the commenter suggested
that if 50 percent or more of the ACOs entering the program under the
one-sided model in 2012 see savings in years 1 and 2, then CMS should
carry forward losses because there would be a likelihood of achieving
savings in a future year. In contrast, if 75 percent or more of ACOs
experience losses, then CMS should undertake a review of the entire
program to evaluate if there is a fatal design flaw. Further, the
commenter suggested that if an actuarial review finds that there are
significant deviations from initial assumptions, then CMS should
consider forgiving ACOs for any net losses that occurred during the
initial 3 year period. Another commenter requested that CMS use its
discretion to waive repayments in full or in part and to make other
arrangements to address unpaid losses (aside from carrying them forward
to the next year).
A few commenters expressed support for the proposed repayment
mechanism. Several commenters urged more stringent protections; for
instance, one commenter noted that the requirements that ensure an ACO
could meet its risk obligation appeared weak in comparison to those for
Medicare Advantage plans. Another commenter expressed concern that the
financial failure of ACOs could undermine the solvency of physician
practices, thereby limiting patient access to care in the ACO's
locality and urged additional protections to ensure both ACO solvency
and to safeguard beneficiaries, as opposed to just ensuring adequate
funds for CMS to recoup losses.
Several commenters expressed support for proposed policies to
ensure ACOs maintain an adequate repayment mechanism over time. For
example, one commenter recommended that CMS maintain the rule's strong
repayment proposals and further suggested that CMS should periodically
reevaluate the adequacy of the various repayment mechanisms during the
agreement period, believing that it is imperative for CMS to maintain
strong solvency protections to protect the Medicare program and
beneficiaries, and to counter efforts to shift cost risks to private
payers. Another commenter expressed support for a process whereby CMS
would, on an annual basis, verify that processes specified in the ACO's
application had been implemented and that other program requirements
had been satisfied.
Response: We continue to believe that it is a critical program
requirement to ensure that ACOs entering a two-sided model are capable
of repaying us for costs that exceed their benchmark. We agree with the
commenters' concern that it is desirable to protect consumers from
disruption of their care due to a financial failure of an ACO. We have
experience implementing protections to guard against the financial
failure of providers in other parts of the Medicare program. Our
proposals took into account our experiences with these other programs
and requirements. We further recognize that the Shared Savings Program
is a unique, new Medicare program and we want to address commenters'
concerns about the burdens of participating in this program to the
extent possible. However, in light of a number of other significant
changes to the original proposals for the program that we are making in
this final rule in order to reduce the burdens for participating ACOs,
we continue to believe our proposals to ensure that ACOs are able to
pay for any shared losses are reasonable.
In particular, a number of commenters objected to the repayment
proposals on the grounds that they were excessive in light of the
additional requirement of a
[[Page 67940]]
25 percent withhold from shared savings. As discussed in section
II.G.2. of this final rule we are not finalizing our proposal to
require a withhold of shared savings as a method for helping assure
that ACOs could repay any future shared losses.
Another significant change from the proposed rule which we have
included in this final rule (discussed in section II.G.1. of this final
rule) is that Track 1 of the program is now a one-sided only model
(that is, shared savings only) for the entire initial agreement period.
During the term of the initial agreement, only those ACOs that
voluntarily choose to participate in the Shared Savings Program in the
two-sided model under Track 2 will be subject to the repayment rules.
We would expect that during the initial stages of the program, these
Track 2 ACOs would more likely be larger and/or more experienced ACOs,
and thus have the experience, expertise, and/or resources to meet the
repayment requirements.
After review of the comments, we are finalizing our proposal to
allow ACOs flexibility to specify their preferred method for repaying
potential losses, and how it would apply to the ACO participants and
ACO providers/suppliers. We continue to believe our proposal provides
significant flexibility for ACOs to identify the repayment method that
is most appropriate for their organizations. As a result, our policy as
proposed, already affords ACOs, particularly smaller ACOs, the choice
of the alternative that would be least burdensome for them. For
example, larger ACOs that include hospital systems may be able to repay
losses from their reserves, whereas, smaller ACOs may prefer to pay for
shared losses through reductions to their future FFS payments. Under
the approach we are finalizing, during the application process and
annually, each ACO participating in Track 2 will be required to
demonstrate that it has established a repayment mechanism. As part of
this, individual ACOs must specify how the liability for sharing losses
would be shared among ACO participants and/or ACO providers/suppliers.
We will determine the adequacy of an ACO's repayment mechanism prior to
the start of each performance year under the two-sided model.
In this final rule, we are also finalizing our proposal that the
minimum amount of the reserves required for an ACO is sufficient to
ensure repayment of potential losses equal to at least 1 percent of per
capita Medicare FFS Parts A and B expenditures for its assigned
beneficiaries. Further, we are clarifying that this amount should be
based either on expenditures for the most recent available performance
year or benchmark year. We continue to believe this is a reasonable
amount that reflects our desire to balance possible financial burden on
ACOs with our need for a reasonable assurance that any shared losses
could be paid. For example, Track 2 ACOs could be responsible for
losses up to a maximum of 5 percent of its benchmark in performance
year 1, 7.5 percent in performance year 2, and 10 percent in
performance year 3. We believe requiring a reserve of 1 percent is
reasonable relative to this level of liability.
We decline to finalize the proposed policy to carry forward losses
into future program years (as suggested by one commenter). We believe
the final rule includes sufficient protection against ACOs which fail
to repay their losses, including the requirement for an ACO to
establish a repayment mechanism, and program protections which would
allow CMS to terminate an ACO for not fully repaying its losses with
the opportunity for the ACO to enter into a corrective action plan to
address this failure to meet program requirements.
In addition, as requested by a commenter, we will continue to
monitor the program as it is implemented to determine whether program
adjustments are needed.
Further, because we will allow ACOs to participate in a shared
savings only model for their first agreement period, we are revising
our proposal to require only ACOs entering the program's two-sided
model (Track 2) or requesting an interim payment under the one-sided
model (Track 1) to demonstrate an adequate repayment mechanism.
We are not adopting the comments that suggested a government
sponsored reinsurance option, such as CMS-sponsored reinsurance pools
for ACOs. ACOs that might want to pursue reinsurance as a repayment
mechanism should contact insurers in their individual States to further
explore this option.
We are also not adopting other comments that encouraged us to adopt
approaches employed by other payers, or to adjust the repayment method
based on prior year performance in the Shared Savings Program or
performance and experience with private payers. At this time we do not
believe such approaches would be feasible since, for example, we would
not have readily available information or evaluation criteria about
such performance. As explained previously, we believe the 1 percent
reserve requirement provides a reasonable balance between minimizing
the financial burdens on ACOs, while providing an assurance to the
Medicare program that any shared losses will be repaid.
We will further clarify operational questions about the repayment
requirement through the application process and other program
instructions. Finally, we note that the commenters' concerns that the
division of liability for losses among ACO participants and ACO
providers/suppliers may implicate certain fraud and abuse laws, except
to the extent that those laws are waived.
Final Decision: In this final rule we are retaining our proposed
policies under Sec. 425.204 concerning the repayment mechanism to
ensure ACO repayment of shared losses. We are finalizing our proposal
to allow ACOs flexibility to specify their preferred method for
repaying potential losses, and how that would apply to ACO participants
and ACO providers/suppliers. During the application process and
annually, each ACO under the two-sided model will be required to
demonstrate that it has established a repayment mechanism. One-sided
model ACOs requesting interim payment must make a similar demonstration
at the time of application. We will determine the adequacy of an ACO's
repayment mechanism prior to the start of each year under the two-sided
model. We are also finalizing our proposal that the repayment mechanism
must be sufficient to ensure repayment of potential losses equal to at
least 1 percent of total per capita Medicare Parts A and B fee-for-
service expenditures for assigned beneficiaries based either on
expenditures for the most recent performance year or expenditures used
to establish the benchmark. To the extent that an ACO's repayment
mechanism does not enable CMS to fully recoup the losses for a given
performance year, CMS will not carry forward unpaid losses into
subsequent performance years and agreement periods.
i. Timing of Repayment
We proposed that an ACO must make payment in full to CMS of any
shared losses within 30 days of receipt of notification of the shared
losses.
Comment: Commenters requested that we consider extending this
deadline, for example to 60 or 90 or 120 days, stating this would be a
more reasonable timeframe given capital restraints on some ACOs.
Several commenters suggested offering ACOs the option of paying losses
in installments.
[[Page 67941]]
Response: In developing the proposed rule, we considered repayment
within 30 days to be a timeframe which would benefit ACOs because
shared losses would be considered overpayments and under sections
1815(d) and 1833(j) of the Act would begin to accrue interest if not
paid within 30 days of the ACO's notification of losses. We appreciate
commenters' concerns about the burden that a 30 day requirement could
pose to ACOs. We agree that ACOs, composed of many independent
participants, may need additional time to gather the amount owed.
Accordingly, to address these concerns, we will use our authority under
section 1899(f) to waive the requirement under sections 1815(d) and
1833(j) that repayment be made within 30 days, and to extend the
deadline for repayment and the date on which interest on shared losses
owed by an ACO will start to accrue until 91 days after the ACO
receives notification of shared losses. Thus, in order to avoid
interest ACOs must make payment in full to CMS within 90 days of
receipt of notification of shared losses. Given that commenters'
suggestions for extending the repayment deadline ranged from 60 to 120
days, we consider 90 days an appropriate timeframe for ACOs to make the
arrangements necessary to repay shared losses.
Final Decision: We are revising our proposed policies under Sec.
425.606(h) concerning timing of repayment of losses. If an ACO incurs
shared losses, the ACO must make payment in full to CMS within 90 days
of receipt of notification.
j. Withholding Performance Payments
Over the course of its participation in the Shared Savings Program,
an ACO may earn shared savings in some years and incur losses in other
years. In the proposed rule, we considered the issue of whether the
full amount of shared savings payments should be paid in the year in
which they accrue, or whether some portion should be withheld to offset
potential future losses. For example, under the PGP demonstration, a
flat 25 percent withhold applied to annual earned performance payments
to guard against losses in future years as well as to provide an
incentive for PGPs to continue in the demonstration since the withhold
was only released at the end of the demonstration period or when the
PGPs were rebased. Under the two-sided model, we proposed that an ACO
could use a withhold of its earned shared savings payment as one option
for demonstrating an adequate repayment mechanism in the event it
incurs shareable losses. We explained that the requirement that ACOs be
willing to commit to completing a multiyear agreement to participate in
the Shared Savings Program is necessary to ensure that the program
achieves its long-term goal of redesigning health care processes, and
our proposal to withhold performance payment was designed to reinforce
that requirement. Since we wanted to encourage ACOs to participate for
the entire term of their agreements, protect the Medicare program
against losses, and ensure ACOs have an adequate repayment mechanism in
the event they incur losses, we proposed that a flat 25 percent
withholding rate would be applied annually to any earned performance
payment. Under the two-sided model, we proposed that an ACO may
withhold an additional portion of its earned performance payment as a
way to demonstrate an adequate repayment mechanism in the event it
should incur shareable losses. Furthermore, we proposed that at the end
of each agreement period, positive balances would be returned to the
ACO. However, if the ACO does not complete its agreement period, the
ACO would forfeit any savings withheld.
Comment: Nearly all commenters opposed the proposed 25 percent
withhold, suggesting that given the anticipated slow return on
investment and potentially high startup and operating costs, it would
adversely affect participation or pose financial hardship on ACOs by
restricting necessary capital. As one commenter explained, the withhold
may hinder ACO investment and reinvestment in infrastructure and
program activities that may lead to further improvements in care and
care delivery processes. Some commenters suggested the proposed
withhold poses a barrier to participation by smaller, rural, safety
net, and physician-only ACOs. One commenter considered the need for
capital support to be potentially crucial to participation by safety
net providers given the proposed withhold. Other commenters suggested
that the withhold appears to penalize only the best-performing ACOs
while having no impact on poor performing ACOs.
Other commenters questioned the ability of the proposed policy to
achieve its aim of protecting CMS against losses and indicated that
other proposed protections, such as a self executing repayment
mechanism sufficient to cover 1 percent of total per capita
expenditures, are more than adequate. Several commenters suggested the
withhold is inappropriate for organizations accustomed to managing
risk. Others questioned the need for the withhold under the one-sided
model, and noted in particular, that the proposed 2 percent net sharing
rate may be sufficient to cover CMS' risk of not recovering losses when
ACOs transition to the two-sided model. One commenter suggested CMS
consider requiring ACOs to have reserves similar to under an insurance
model to participate, rather than holding back earned savings.
Several commenters addressed the use of the withhold as a means to
encourage full-term participation. One commenter noted this proposal
creates a sense that CMS does not trust its provider partners. One
commenter stated forfeiture of the withhold for failure to complete the
3 year agreement unfairly punishes ACOs that must withdraw from the
program, for example ACOs whose population falls below the required
5,000 beneficiaries.
Commenters typically suggested eliminating the withhold entirely,
suggesting it is redundant or unnecessary in light of other proposed
requirements (such that ACOs demonstrate an adequate repayment
mechanism at the time of application). Several commenters suggested
that, at a minimum, the amount of the withhold be reduced, recommending
that it not exceed 10 percent of shared savings. In some cases,
commenters recommended a temporary reduction in the amount withheld.
Several recommended allowing ACOs a choice between a withhold and
demonstrating adequate financial reserves to repay losses. Several
commenters suggested CMS pay interest on the withheld amount, or
clarify in the final rule its intent to pay interest on this amount.
Another commenter urged CMS to ensure alignment between the withhold of
payment under the Shared Savings Program and the mechanism for
repayment under the Innovation Center's potential Advance Payment
initiative.
Several commenters suggested alternative policies for linking the
withhold to ACO performance. For example, one commenter favored an
alternative to the proposed method for calculating shared savings
whereby CMS would also use a multi-year metric of savings. This
commenter suggested CMS would withhold a portion of annual savings
(similar to the proposed 25 percent withhold) and award a net
performance payment at the end of the agreement period based on the
multi-year metric. This approach could address concerns expressed by
several commenters that ACOs may have a financial disincentive to
perform high cost procedures or order laboratory tests involving
substantial upfront costs, which over time result in improved
[[Page 67942]]
health outcomes or savings (such as bariatric surgery or lab tests that
lead to better treatment decisions).
Response: We are persuaded by comments recommending elimination of
the 25 percent withhold. While we continue to believe that strong
mechanisms for repayment of potential losses are necessary, we have
concluded that the withhold may be an ineffective mechanism for
ensuring repayment of potential losses. As commenters point out, an
entity that generates savings in the first or second year is also
likely to generate savings in the third year. Therefore, the withhold
could serve as a penalty for successful ACOs while doing little to
protect the Trust Fund against underperforming ACOs. Further, we agree
with the commenters that suggested that other aspects of the program
may be sufficient to ensure ACOs repay losses. In particular, we are
finalizing the requirement for ACOs to establish a self-executing
repayment mechanism, under which ACOs could elect an annual withhold on
savings as part of their repayment mechanism. Commenters also noted the
potential unintended consequences of using the withhold to encourage
ACOs to complete their agreement periods. We are especially concerned
that the forfeiture requirement could punish ACOs terminated from the
program for circumstances beyond their control. Lastly, we are
concerned that the withhold could pose a financial hardship for ACOs by
forestalling payment of funds that could support operational costs, and
thus, the policy could be a potential barrier to the formation of ACOs.
A smaller withhold, as suggested by some commenters, would not
effectively address the aforementioned concerns. Even a smaller
withhold could penalize high-performing ACOs or those terminated from
the program for legitimate reasons beyond their control and pose a
barrier to participation. Further, while we appreciate commenters'
concerns about the need for a multi-year measure of savings, to be
implemented through a withhold of savings, we decline to implement this
approach. We believe that other program requirements offer ACOs
sufficient incentive to provide high quality, cost-effective and
patient-centered care, while the program's monitoring provisions will
enable us to detect ACOs' avoidance of necessary services.
Final Decision: We are revising our proposal to eliminate the 25
percent withhold and the related proposed provision concerning
forfeiture of the 25 percent withhold in the event of early termination
from the program.
k. Determining First Year Performance for ACOs Beginning April 1 or
July 1, 2012
As discussed in Section II.C. of this final rule, we will offer
start dates on April 1, 2012 (agreement period of 3 years and 9
months), and July 1, 2012 (agreement period of 3 years and 6 months)
for those ACOs that apply and are approved to participate in the Shared
Savings Program during 2012. This section describes the methodology for
determining shared savings and losses for the first performance year
for April 1 and July 1 starters defined as 21 and 18 months
respectively. This methodology will consist of an optional interim
payment calculation based on the ACO's first 12 months of participation
and a final reconciliation occurring at the end of the ACO's first
performance year. Such first year reconciliation, taking into account
the 12 months covered by the interim payment period as well as the
remaining 6 or 9 months of 2013, will allow us to determine the overall
savings or losses for the ACO's first performance year.
As we have previously discussed, commenters expressed support for
policies allowing for a shorter turnaround period for feedback on
quality metrics and shared savings reconciliation. In particular,
commenters stressed the importance of shared savings for establishing
return on investment, and supporting ongoing operations and likewise
achievement of program goals. We agree with commenters about the
importance of timely availability of funds.
In this final rule, we are adopting a policy that will enable ACOs
with start dates of April 1 and July 1, 2012 to opt for an interim
payment calculation as part of their application to participate in the
Shared Savings Program. However, ACOs opting for interim payment under
either the Track 1 one-sided or Track 2 two-sided model will need to
assure CMS of their ability to repay monies determined to be owed upon
final first year reconciliation. For ACOs under the two-sided model,
their demonstration of an adequate repayment mechanism as part of their
entrance into a shared loss arrangement will be sufficient also to
assure return of an overpayment of shared savings under the interim
payment calculation. ACOs under the one-sided model would, likewise,
need to demonstrate an adequate repayment mechanism. We will,
therefore, require ACOs entering Track 1 with start dates of April 1 or
July 1, 2012, that opt to receive interim payment calculation to
demonstrate an adequate repayment mechanism as under Track 2 to repay
any overpayment of shared savings. This requirement will not apply to
Track 1 ACOs with start dates of April 1 or July 1, 2012, that do not
elect interim payment calculation.
(1) Interim Payment Calculation
In the interim payment calculation, we will determine shared
savings and losses based on the ACO's first 12 months of program
participation. Quality performance will be assessed as described in
section II.F of this final rule. Quality performance for the interim
payment calculation will be based on GPRO quality data reported for
calendar year 2012. (Claims-based and CAHPS measures will be calculated
for informational purposes for 2012.) We believe that quality data
based on CY 2012 is an appropriate measure of ACO's quality performance
for determining interim payment because ACOs beginning April 1 and July
1 will have submitted GPRO data for CY 2012 as part of demonstrating
their eligibility for the 2012 PQRS incentive.
The same methodology for determining shared savings and losses, as
specified in section II.G. of the final rule will apply to this interim
payment period. More specifically, we will apply the methodology as
stated elsewhere in section II.E. of this final rule for assigning
beneficiaries and in section II.G. of this final rule for determining
shared savings and losses (including calculating and risk adjusting
expenditures, establishing the MSR and MLR, and determining shared
savings or losses) based on the ACO's first 12 months of performance
with the exception of calculating the update to the benchmark. For
purposes of interim payment calculation, the historical benchmark will
be updated (and adjusted for changes in beneficiary risk as described
below) for the period which includes the ACO's first 12 months of
participation.
Depending on the results of the interim payment calculation, the
ACO may receive a shared savings payment or, in the case of ACOs under
the two-sided model, be liable for shared losses. ACOs will be notified
of shared savings or losses. Unless stated otherwise, program
requirements which apply in the course of a performance year apply to
the interim payment period.
(2) First Year Reconciliation
For ACOs beginning April 1 or July 1, 2012, the reconciliation for
the first performance year will occur after the completion of the ACO's
first performance year, defined as 21 months
[[Page 67943]]
for April 1 starters and 18 months for July 1 starters; that is at the
conclusion of CY 2013. First year reconciliation will account for the
entire 18 or 21 month period. Our assignment methodology and
calculations of the updated benchmark and performance year expenditures
will take into account the overlap between the ACO's first 12 months of
performance and CY 2013. To simplify the summation of performance year
expenditures and the updated benchmark for the two overlapping
timeframes, we will state figures for first year reconciliation in the
aggregate, rather than on a per capita basis. Quality performance for
first year reconciliation will be based on complete and accurate
reporting, for all required quality measures, for CY 2013.
The following steps outline the methodology for adjusting the ACO's
interim payment determination to account only for the 6 or 9 months
included in CY 2012 and summing it with the ACO's CY 2013 performance:
Assignment: First performance year expenditures will be
summed over beneficiaries assigned in two overlapping 12 month
assignment windows. The first window will be the beneficiaries assigned
for the first 12 months used for interim payment calculation. The
second window will be beneficiaries assigned for CY 2013.
Aggregate expenditures for the first performance year: We
will sum aggregate interim payment expenditure dollars to account for
the ACO's first 6 or 9 months during CY 2012 for beneficiaries assigned
for the interim payment calculation with aggregate dollars calculated
for CY 2013 for beneficiaries assigned for CY 2013.
Risk adjustment: Risk adjustment for beneficiaries
assigned in CY2013 will be performed as it would be for a normal
calendar performance year, based on a comparison of risk scores for
continuously assigned and newly assigned beneficiaries to BY3 risk
scores. We will identify beneficiaries from the CY 2013 assignment
window as either continuously assigned or newly assigned relative to
the previous calendar year. We will base risk adjustment for the 6 or 9
months of performance year one (PY1) that lie within CY 2012 on the
same adjustment factor identified for purposes of the interim payment
calculation. Respective risk adjustment factors will be used to adjust
updated benchmark dollars to the performance year risk level.
Updating the benchmark: We will establish an updated
benchmark for the first performance year stated in aggregate dollars.
Based on the assigned beneficiary population for the ACO's first 12
months of performance we will calculate the ACO's interim updated
benchmark for the average fraction of expenditures incurred in the
latter 6 or 9 months of CY 2012, and restate it in terms of aggregate
expenditures. We will add to that an updated aggregate benchmark
representing CY 2013.
Determining shared savings/losses: We will determine the
savings percentage for the entire 18 or 21 month performance year by
comparing summed expenditures to summed updated benchmark dollars. We
will compare this percentage to the ACO's MSR or MLR as stated in terms
of a percentage. For ACOs under the one-sided model, we will compare
the PY1 savings percentage to an MSR obtained from Table 6 by counting
all beneficiaries who have been assigned in at least one of the two
assignment windows for PY1. For ACOs under the two-sided model, we will
compare the PY1 savings percentage to a flat 2 percent MSR or MLR.
The reconciled amount of the shared savings or losses owed to or by
the ACO for the performance year will be net of any interim payments of
shared savings or losses. CMS may determine that it owes the ACO
additional shared savings payments or received an overpayment of shared
losses from the ACO. Conversely, following the first year
reconciliation, CMS may determine the ACO has been overpaid for shared
savings or owes additional shared losses. In either of these cases, the
ACO would owe CMS the difference. ACOs will be notified of shared
savings or losses, or other monies determined to be owed upon first
year reconciliation. Unless stated otherwise, program requirements
which apply in the course of a performance year apply to the ACO's
first year reconciliation.
(3) Repayment Mechanism for ACOs Electing Interim Payment Calculation
An interim payment system therefore raises a concern about the
ability of an ACO to repay CMS in the event that first year
reconciliation results in a payment due to CMS. As described
previously, ACOs under the program's two-sided model must demonstrate
that they have a self-executing mechanism for repaying losses equal to
at least 1 percent of the ACO's Medicare fee-for-service Parts A and B
total per capita expenditures for its assigned beneficiaries based
either on expenditures for the most recent performance year or
expenditures used to establish the benchmark. However, as discussed in
this section, the repayment mechanism would generally apply only to
ACOs under the two-sided model.
We believe this same repayment mechanism is also sufficient to
ensure that ACOs in the one- and two-sided models that opt for interim
payments can repay CMS in the event that the ACO owes CMS money after
first year reconciliation. ACOs must indicate in their application
whether they are requesting an interim payment calculation. Therefore,
similar to the requirements for two-sided model ACOs in this final
rule, we will require those ACOs that choose to request an interim
payment during their first performance year, regardless of Track, to
demonstrate as part of their application that they have an adequate
repayment mechanism in place.
Another issue raised by interim payments is the deadline for paying
shared losses, as well as the deadline for refunding other monies
determined to be owed by the ACO after first year reconciliation. As
described previously in this final rule, ACOs under the program's two-
sided model will be required to repay losses within 90 days of receipt
of notification of losses. Therefore, to align the interim payment
policy with our policy regarding payment of shared losses, we will
require that any monies determined to be owed by the ACO after first
year reconciliation must be repaid by the ACO, in full, within 90 days
of receipt of notification.
Final Decision: We are adopting a policy under Sec. 425.608 that
will enable ACOs with start dates of April 1 and July 1, 2012 to opt
for an interim payment calculation, to determine shared savings and
losses, at the end of their first 12 months of program participation.
Unless stated otherwise, the same methodology for determining shared
savings and losses that applies under Sec. Sec. 425.604 and 425.606
will apply to this interim payment calculation. For ACOs with start
dates of April 1 or July 1, 2012, reconciliation for the first
performance year will occur after the completion of the ACO's first
performance year, defined as 21 months for April 1 starters and 18
months for July 1 starters. ACOs must indicate in their application
whether they are requesting an interim payment calculation. ACOs that
opt for interim payment during their first performance year must
demonstrate as part of their application that they have an adequate
repayment mechanism in place, consistent with the requirements for two-
sided model ACOs in this final rule. ACOs that generate shared losses
under the interim payment calculation must repay such losses within 90
days of notification of losses. Further, any monies determined to be
owed by an
[[Page 67944]]
ACO after first year reconciliation, whether as a result of additional
shared losses or an overpayment of shared savings, must be repaid to
CMS, in full, within 90 days of receipt of notification.
3. Impact on States
In the proposed rule, we emphasized that, under our proposal for a
two-sided model under the Shared Savings Program, the Medicare program
would retain the insurance risk and responsibility for paying claims
for the services furnished to Medicare beneficiaries, and that the
agreement to share risk against the benchmark would be solely between
the Medicare program and the ACO. We did not intend that any of our
proposals concerning the Shared Savings Program would render States
responsible for bearing any costs resulting from the operation of this
program. However, we noted that each State has its own insurance and
risk oversight programs and that some States may regulate risk bearing
entities, such as the ACOs participating in the two-sided model under
the Shared Savings Program. Accordingly, we sought comment on whether
any of our proposals for the two-sided model in particular, or the
Shared Savings Program in general, would trigger the application of any
State insurance laws, the adequacy of those provisions that we have set
forth, and the ways that we can work with ACOs and States to minimize
the burden of any additional regulation.
Comment: A few commenters expressed concern that the two-sided
model could trigger some State insurance laws, or that States could
decide to subject ACOs under the program's two-sided model to State
licensure requirements (for example, requiring the ACO to obtain an HMO
license). In particular, a few commenters expressed concern about
potential overlap between State insurance requirements and the proposed
requirements to demonstrate an adequate repayment mechanism (including
establishing lines of credit, recoupment of losses from future FFS
payments, and obtaining reinsurance sufficient to account for 1 percent
of per capita expenditures for the assigned beneficiaries).
A few other commenters were concerned that State laws may serve as
a barrier to ACO formation due to the added expense of compliance with
State regulation of ACOs. Several commenters requested clarification on
or recommended Federal protection from these State laws, for instance
by Federal preemption of State insurance laws, a safe harbor or
otherwise discouraging assertion of authority by State insurance
agencies over ACOs that participate in the Shared Savings Program. One
commenter suggested CMS promote a uniform national privacy requirement
to preempt potentially conflicting State laws, particularly surrounding
quality, data use, information sharing, and privacy protections.
One commenter wanted CMS to ensure that States will ``not require
ACOs to obtain an HMO license * * * to meet financial and repayment
requirements''. On the other hand, several commenters explained that
State licensed organizations that accept insurance risk must comply
with strict financial solvency criteria, and were supportive of State
regulation of ACOs. Another commenter suggested that ACOs that assume
risk for losses and/or perform other health plan functions that are
regulated at the State level (for example, subject to State financial
and consumer protection standards) should have to meet the same
standards required of health plans. These standards include financial
requirements (for example, capital, reserve and solvency requirements);
network requirements (for example, ensuring access to adequate numbers
and types of providers); filing, reporting and disclosure requirements;
and quality improvement requirements, including accreditation standards
and other consumer protection standards. The commenter expressed a
concern that if ACOs are not subject to the same standards as heath
plans, then consumers receiving care from an ACO may have less access
to care, receive care of lesser quality, be faced with increased costs,
and/or be more vulnerable to discontinuation of coverage if unforeseen
events occur, such as a flu pandemic or similar disaster impacting the
health care system. One commenter suggested that the proposed 25
percent withhold and repayment mechanism may not be necessary for ACOs
complying with State financial solvency requirements, but should be
required for ACOs that are not licensed to assume both professional and
institutional risk by the State in which they operate.
Several commenters asked that CMS address whether Federal laws
would preempt State laws that might conflict with the intent of the
regulation. One commenter stated that without such preemption there
could be barriers to clinical integration. One commenter suggested that
CMS provide a list of States that either currently recognize or
authorize ACOs under their State laws, or have pending legislation to
recognize ACOs.
One commenter expressed concern that this regulation would override
State and local protocols concerning ambulance transportation. The
commenter was concerned that ambulances would be required to deliver
patients to ACO participants instead of the closest or most appropriate
facility.
Another commenter recommended that ACOs be exempt from State
malpractice laws so that the burden of malpractice insurance and
litigation costs are not added to the already significant cost of
forming and maintaining an ACO. This commenter did not believe such
protections for ACOs would preclude patients from pursuing claims for
malpractice against ACO participants or from seeking discovery directly
from such participants under existing State laws.
Another commenter urged medical liability protections for
physicians complying with ACO guidelines, such as criteria for
utilizing diagnostic imaging. The commenter recommended the following
approaches:
Deem an ACO and/or ACO-participating physician to be an
employee of the Public Health Service for purposes of any civil action
that may arise from ACO-related services. The commenter stated that
this approach would require patients alleging malpractice to pursue
their claim under the Federal Tort Claims Act.
Allow physicians to introduce the relevant ACO guidelines
into evidence as an affirmative defense to any medical liability claim.
Establish a standard of proof of clear and convincing
evidence for any medical liability lawsuit in which a physician
utilized ACO guidelines.
Another commenter suggested that CMS structure the program to be
flexible enough to facilitate State and local initiatives.
Finally, a commenter, reported that its State department of
insurance indicated that the proposed rule does not implicate any State
insurance laws.
Response: In the proposed rule we did not make a proposal regarding
these State-level issues but instead, we sought comment on whether any
of our proposals for the two-sided model in particular, or the Shared
Savings Program in general, would trigger the application of any State
insurance laws, the adequacy of those provisions that we have set
forth, and the ways that we can work with ACOs and States to minimize
the burden of any additional regulation.
We do not believe it would be appropriate to subject ACOs to the
same standards as health plans as a way to
[[Page 67945]]
ensure that beneficiaries receiving care from an ACO do not have less
access to care or receive care of lesser quality. ACOs that will be
participating in the Shared Savings Program are very different from
health plans. Further, these regulations, which are based on Federal
law, would not preempt State insurance laws that govern providers
within individual States, nor would they override State and local
protocols concerning ambulance transportation. In addition, we are not
adopting the comments related to the application of the malpractice
laws, including the recommendation that ACOs be exempt from State
malpractice laws.
At this time, we are not able to provide a list of States that
currently recognize or authorize ACOs under their State laws, or have
pending legislation to recognize ACOs. We believe it would be best for
those interested in the Shared Savings Program to obtain such
information directly from their individual State insurance agency.
Final Decision: We would emphasize that under the Shared Savings
Program, the Medicare program retains the insurance risk and
responsibility for paying claims for the services furnished to Medicare
beneficiaries, and that the agreement to share potential losses against
the benchmark would be solely between the Medicare program and the ACO.
We will further consider these issues in future rulemaking should we
become aware of any unexpected program issues that render States
responsible for bearing any costs resulting from the operation of this
program.
H. Additional Program Requirements and Beneficiary Protections
1. Background
Section 1899 of the Act (b)(2)(H) of the Act requires ACOs to
demonstrate that they meet patient-centeredness criteria specified by
the Secretary. We believe that one important aspect of patient
centeredness is patient engagement and transparency. Therefore, we
discuss in this section certain requirements for ACOs that we believe
will protect beneficiaries by ensuring patient engagement and
transparency, including requirements related to beneficiary
notification and outreach, marketing, and public reporting.
Section 1899 of the Act sets forth a number of requirements for
ACOs. In addition, section 1899(a)(1)(A) of the Act authorizes the
Secretary to specify additional criteria that ACOs must satisfy in
order to be eligible to participate in the Shared Savings Program. In
this section, we discuss how ACOs will be monitored with respect to
program requirements and what actions will be taken against ACOs that
are not in compliance with the requirements of the Shared Savings
Program.
Programs that include incentives to reduce costs for care may
result in unintended consequences such as avoidance of at-risk
patients, ``stinting'' on care, fraud and abuse, overutilization,
deliberate delay in claims submission, and other such activities. We
must ensure that beneficiaries continue to receive high quality and
appropriate care, and that providers do not put beneficiaries or the
Trust Fund at risk. In this section we also discuss our program
integrity requirements, which we believe will help to deter
inappropriate conduct by ACOs, while protecting the Trust Fund and the
integrity of the Shared Savings Program and the Medicare program as a
whole.
2. Beneficiary Protections
a. Beneficiary Notification
As we discussed in the proposed rule, the statute does not mandate
that ACOs should provide information to beneficiaries about the Shared
Savings Program. Such information could include whether the
beneficiaries are receiving services from an ACO participant or ACO
provider/supplier, or whether the beneficiaries' expenditure and
quality data may be used to determine the ACO's eligibility to receive
a shared savings payment. However, we believe the Shared Savings
Program lays the foundation for a beneficiary-centered delivery system
that should create a strong relationship between beneficiaries and care
providers based, in large part, on patient engagement in the new care
system. Such engagement would be more difficult if beneficiaries are
not aware of the new delivery system available through ACOs, or the
possibility of their being data used to assess the ACO's performance.
In short, we believe transparency must be a central feature of the
Shared Savings Program.
In the proposed rule, we stated that we intended to develop
educational materials and other forms of outreach, to provide
beneficiaries with timely, accurate, clear, and understandable
information about the Shared Savings Program. Additionally, we
indicated that we would update the annual Medicare & You Handbook to
contain information about the Shared Savings Program and ACOs.
In the proposed rule, we proposed specifically to require ACO
participants to post signs in their facilities indicating their ACO
provider's/supplier's participation in the Shared Savings Program and
to make available standardized written information developed by CMS to
the Medicare FFS beneficiaries whom they serve. ACO participants would
be required to provide standardized written notices of both their ACO
provider's/supplier's participation in the Shared Savings Program and
the potential for CMS to share beneficiary identifiable data with the
ACO.
Likewise, we discussed whether beneficiaries should be made aware
when an ACO participant does not renew its agreement at the end of the
agreement period, or an ACO's participation agreement has been
terminated. Thus, we proposed that ACOs be required to provide
beneficiaries notice in a timely manner if the ACO participant or ACO
provider/supplier will no longer be participating in the Shared Savings
Program. We proposed the notice should include the effective date of
the termination of the ACO agreement.
For a complete discussion of these notification proposals and
rationale, please refer to the proposed rule published April 7, 2011
(76 FR 19567).
Comment: Many commenters supported our proposal to require ACO
participants to notify FFS patients at the point of care that their ACO
provider/supplier is participating in this Shared Savings Program. Some
suggested CMS collaborate with stakeholders to educate beneficiaries
about ACOs and the program and to seek stakeholder input on the
materials CMS intends to provide, given the complexities of the
program. Some suggested ensuring that language is culturally and
linguistically appropriate and addresses low health literacy levels.
Others suggested notices should include a detailed explanation of the
expectations for patient engagement under the Medicare Shared Savings
Program, and the ability of patients to receive care outside the ACO if
they wish. Others suggested that ACOs be required to obtain the
signature of the beneficiary in order to provide a mechanism for
monitoring compliance with this requirement.
Commenters varied in their opinion of whether notification of the
program should come from the ACO or CMS. One commenter suggested first
contact should be from practitioners as trusted partners in the
beneficiary's care, rather than from CMS. Other commenters suggested
that CMS should ``bear the financial responsibility for such a
[[Page 67946]]
program'' and that ``since the Medicare program has created a strong
relationship with its beneficiaries, it is more appropriate that the
Medicare program take all responsibility for notifying beneficiaries of
the benefits and opportunities of receiving care through an ACO.'' Some
suggested that CMS send a letter to a participating PCP's active
Medicare patients on an annual basis notifying them of the potential
use of their data to assess ACO performance, and that all
communications to beneficiaries should be written in ``plain English''.
Conversely, some commenters strongly objected to the proposed
notification requirements for ACOs, suggesting that signs, even if
developed by CMS, would not be able to convey the complexities of the
program and would be ``confusing and annoying'' to beneficiaries as
well as ``onerous and burdensome'' to ACOs. A health care public policy
center criticized the sign proposal as ``costly, of unproven value, and
duplicative given the requirement to provide written information, and
therefore contributing to the problem of unnecessary administrative and
financial burdens on ACOs.''
Response: We agree with those commenters who advocated that we
retain a notification policy in this final rule. We believe that our
proposal to inform beneficiaries at the point of care was tested and
successfully employed in the PGP demonstration, and did not prove to be
``annoying'' or ``confusing'' to beneficiaries. Although we appreciate
one commenter's concerns that the sign proposal might be costly, of
unproven value, and duplicative, we believe that posting signs will
serve the purpose of calling the attention of beneficiaries to the
existence of the ACO and the choice of the ACO participant and its ACO
providers/suppliers to participate in it, ultimately resulting in
increased transparency and the opportunity for improving beneficiary
engagement in this care delivery model. We believe that it is useful
and important for every fee-for-service beneficiary to know they are
receiving services from participants in such a program, even those
beneficiaries whose data will not ultimately be used to assess the
ACO's performance. This is because ACOs are intended to develop special
methods for coordinating care and improving quality that should affect
the care of every beneficiary and improve the engagement of the
beneficiary as a consumer of health care, whether that beneficiary is
ultimately ``assigned'' to the ACO or not. The presence of signs and
written materials will provide a useful initial notification for every
beneficiary and that could encourage beneficiaries to raise questions
and engage in discussions with the physicians and other providers about
the ACO and its potential effects on their care and to become a more
active consumer and partner in the care delivered. Nor should posting
signs be inappropriately burdensome, since CMS will develop appropriate
language and there will be a limited number of locations in each ACO in
which the signs will need to be posted. Finally, we believe that the
notice should appropriately come from the ACO participant and its
associated ACO providers/suppliers because this is the first and most
immediate point of contact with the beneficiary. Therefore, we believe
that it is appropriate to finalize the requirement that the ACO agree
to post signs in the facilities of ACO participants indicating the ACO
provider's/supplier's participation in the Shared Savings Program and
make available standardized written notices to Medicare FFS
beneficiaries whom they serve.
We agree with the recommendation from commenters suggesting we
ensure the use of ``plain writing'', and we would note that President
Obama signed the Plain Writing Act of 2010 on October 13, 2010, which
is intended to promote clear Government communication that the public
can understand and use.'' We will incorporate the requirements of the
Plain Writing Act in all CMS communications and standardized language
regarding the Shared Savings Program. We will also clarify that
beneficiary communications, such as notifications of provider
participation in an ACO in the Shared Savings Program, must meet the
applicable marketing guidelines described later in this section.
Final Decision: We are finalizing our proposal to require ACO
participants to post signs in their facilities indicating their
associated ACO provider's/supplier's participation in the Shared
Savings Program and to make available standardized written notices
developed by CMS to Medicare FFS beneficiaries whom they serve. All
standardized written information provided by CMS will be in compliance
with the Plain Writing Act of 2010. We are clarifying that the
standardized written notices must be furnished in settings in which
fee-for-service beneficiaries are receiving primary care services.
Additionally, as we noted in the proposed rule, under a
retrospective assignment methodology it would not have been possible
for ACOs to notify beneficiaries of the ACO's participation in advance
of the period in which the beneficiary may seek services from an ACO
participant or ACO provider/supplier. We believe the revised policy of
preliminary prospective assignment with retrospective reconciliation
that we are establishing in section II.E. of this final rule gives ACOs
the information necessary to provide advance notice, if the ACO so
chooses, to some beneficiaries who have previously received services
from ACO providers/suppliers and who are likely to continue to do so.
Specifically, we are revising our policy such that ACOs may choose to
provide notification of their participation to the beneficiaries who
appear on the preliminary prospective assignment list and quarterly
assignment lists (described in section II.D. of this final rule).
Finally, to minimize beneficiary confusion and reduce burden on
ACOs and its ACO providers/suppliers, we are modifying our rule such
that in instances where either an ACO does not renew its agreement at
the end of the agreement period, or an ACO's participation agreement is
terminated, ACOs will not be required to provide beneficiaries notice
that the ACO, its ACO participants and its ACO providers/suppliers will
no longer be participating in the Shared Savings Program. Similarly,
ACO participants and ACO providers/suppliers that terminate their
participation in an ACO will not be required to provide such notice to
beneficiaries. All beneficiary notification and signage are included in
the definition of ``marketing materials and activities'' and must
comply with applicable marketing requirements described later in this
section.
b. ACO Marketing Guidelines
We realize that care coordination is an important component of the
Shared Savings Program; however, the potential for shared savings may
be an incentive for ACOs, ACO participants, its ACO providers/
suppliers, or other individuals or entities performing functions or
services related to ACO's activities to engage in marketing behavior
that may confuse or mislead beneficiaries about the Shared Savings
Program or their Medicare rights.
As an aspect of patient centeredness, we stated in the proposed
rule we believe it is appropriate and consistent with the purpose and
intent of the statute to limit and monitor the use of beneficiary
communications specifically related to the ACO operations or functions
as well as ACO marketing activities and materials to ensure that such
communications and marketing by ACOs are used only for appropriate
purposes, such as notification that a beneficiary's health care
provider is
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participating in the ACO, issuance of any CMS required notices, or
notification of provider or ACO terminations. We therefore proposed a
definition of ACO marketing materials and activities and proposed that
CMS approve materials or activities, or any revisions to previously
approved materials in advance of their use. We proposed that failure to
comply with marketing requirements could result in a CAP or
termination, at our discretion. For a complete discussion of these
notification proposals and rationale, please refer to (76 FR 19642).
Comment: Several beneficiary advocacy organizations submitted
comments strongly supporting our proposed marketing guidelines. They
shared our concern that beneficiaries could be misled into thinking
that an ACO is similar to a managed care organization and that they
must receive services some or all services from the ACO participants
and associated ACO providers/suppliers. These commenters also raised
concerns that beneficiaries could be targeted by aggressive marketers
seeking to take unfair advantage of them. Additionally, some commenters
offered specific suggestions for strengthening our guidelines such as--