Accountable Care Organization Proposed Rules and Related Guidance

Healthcare Reform: Proposed Rules and Guidance Released for Accountable Care Organizations

On March 31, 2011, several Federal agencies released proposed rules and other guidance regarding participation in the Medicare shared savings program (MSSP) through Accountable Care Organizations (ACOs).

Background

Under the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010, the Secretary of the Department of Health and Human Services (HHS) is required to establish a Medicare shared savings program that promotes accountability for care of Medicare beneficiaries, improves the coordination of Medicare fee-for-service items and services, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.

Groups of service providers and suppliers that may form an ACO include (i) physicians and other health care practitioners (ACO professionals) in a group practice, (ii) a network of individual practices, (iii) a partnership or joint venture arrangement between hospitals and ACO professionals, and (iv) a hospital employing ACO professionals. ACOs eligible to participate in the MSSP will manage and coordinate care for their assigned Medicare fee-for-service beneficiaries.

Healthcare service providers and suppliers participating in an ACO will continue to receive Medicare fee-for-service payments in the same manner as such payments would otherwise be made. In addition, an ACO that meets quality performance standards established by HHS and demonstrates that it has achieved savings against an appropriate benchmark of expected average per capita Medicare fee-for-service expenditures will be eligible to receive payments for Medicare shared savings (MSSP payments).

Following is a brief summary of the guidance and proposed rules that have been released by each of the Federal agencies.

The Centers for Medicare & Medicaid Services (CMS)

CMS has proposed the definitive rules relating to the operation of the MSSP and participation by ACOs. The notice of proposed rulemaking is available at: http://www.cms.gov/sharedsavingsprogram/

CMS and the Office of Inspector General of the U.S. Department of Health and Human Servces (OIG)

Participation in the MSSP through an ACO will create financial relationships among suppliers and providers which might not otherwise exist, and which might, absent exception, violate Federal fraud and abuse laws. CMS and the OIG jointly issued proposed guidance for the waiver of the application of the Federal Physician Self-Referral (Stark) Law and the Federal anti-kickback statute to certain relationships occurring by reason of participation in the MSSP through an ACO. The guidance is available at: http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1

The Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ)

The FTC and DOJ jointly issued a "Proposed Statement of Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program." The Proposed Statement is intended to address concerns that providers’ and suppliers’ participation in ACOs may contravene Federal antitrust laws. The Proposed Statement is available at http://www.ftc.gov/opp/aco/.

The Internal Revenue Service (IRS)

Recognizing that tax-exempt organizations (including many hospitals) will be participating in ACOs alongside for-profit providers and suppliers, the IRS is considering whether additional guidance is necessary regarding the participation by tax-exempt organizations in the MSSP through ACOs. Treasury Notice 2011-20 is available at: http://www.irs.gov/newsroom/article/0,,id=222814,00.html.