ACOs: Federal and State Update

1. ACOs:Federal and State Update Danielle Drayer & Cara Zucker April 14, 2011

2. Outline • Overview • CMS’ NPRM for Medicare SSP • New York State’s ACO Demonstration Program • Federal Law vs. State Law

3. OVERVIEW

4. Brief Timeline • March 23, 2010 - Section 3022 of the Patient Protection and Affordable Care Act (ACA) authorized the creation of a Medicare Shared Savings Program (SSP) for ACOs • December 6, 2010 - New Jersey introduced ACO Demonstration Project legislation in both houses (S.2443/A.3636) • March 30, 2011 - New York passed legislation (Art. 29-E PHL) as part of the budget to create an ACO Demonstration Program • April 7, 2011 - CMS published a Notice of Proposed Rulemaking (NPRM) for the SSP • April 7, 2011 - CMS and OIG published an NPRM on waiver design in connection with the SSP • April 7, 2011 - FTC and DOJ issued a Proposed Statement on Antitrust Enforcement Policy related to the SSP • January 1, 2012 - The SSP is scheduled to begin

5. Program Estimates for the First Three Years • Start up investment and first year operating expenditures for ACOs is ~$1,755,251 • Between 75 and 150 ACOs will participate • Between 1.5 and 4 million Medicare fee-for-service beneficiaries will be assigned • Amount of shared savings ranges from $560 million - $1,130 million • Amount of penalties that may assessed ranges from $10 - $80 million

6. CMS’ NPRM for the SsP

7. Eligibility • Who can participate in the SSP? • Group practices • Networks of individual physician practices • Joint ventures between hospitals and physicians • Hospitals employing physicians • CAHs, FQHCs, and RHCs

8. Agreement Period • Three year agreement period for initial cohort (1/1/12 – 12/31/15) • ACOs would be subject to new program standards established during the agreement • Exceptions: eligibility requirements, calculation of shared savings, & beneficiary assignment • ACOs may not add participants • ACOs may subtract participants or add/subtract providers • ACOs required to notify CMS of significant structural changes

9. Legal Structure & Governance • Legal structure must allow ACO to: • receive and distribute shared savings • repay shared losses • establish, report, and ensure compliance with program requirements • Governing body must be comprised of: • at least 75% ACO participants • at least one affected Medicare FFS beneficiary • optional: community stakeholder organization

10. Program Integrity Requirements • Must have a compliance plan and a conflicts of interest policy • All agreements between or among an ACO and its participants and providers must require compliance with the ACO’s participation agreement with CMS

11. Leadership & Management • Operations managed by an executive under control of the governing body • Clinical oversight provided by senior level medical director • Physician directed quality assurance and process improvement committee • Information technology to collect and evaluate data and provide feedback to providers • Optional: alternative structures will not be automatically denied

12. Beneficiary Assignment • ACOs must have a sufficient number of primary care providers to serve at least 5,000 Medicare FFS beneficiaries • Beneficiaries will be assigned retrospectively based on the plurality of primary care services they receive from participating physicians

13. Beneficiary Notification • ACOs must post signs in facilities that they are participating in the SSP • Standardized information must be provided to all Medicare FFS beneficiaries about SSP • ACOs must inform beneficiaries of ability to request claims data and the beneficiaries’ right to opt out of data sharing • ACOs must inform beneficiaries of their right to access services outside the ACO

14. Patient Centeredness • Beneficiary access to health records • Patient involvement in ACO governance • Evaluate health needs of the assigned population, factoring in diversity • Identify high risk individuals and develop individualized care plans for targeted populations • Mechanism for care coordination and electronic exchange of information for patient transitions • Communicate clinical knowledge/evidence-based medicine to beneficiaries • Use CG-CAHPS survey to collect and report on beneficiaries’ experience of care • Measure clinical services performed by physicians across practices

15. Quality Measures • 65 quality measures spanning 5 domains: • Patient/caregiver experience • Care coordination • Patient safety • Preventive health • At-risk population/frail elderly health

16. Quality Reporting Requirements • Performance scores will be calculated using claims data, GPRO, and surveys

17. Public Reporting Requirements • Name and location • Primary contact • Organizational information, including ACO participants • Shared savings information • Performance payments or shared losses • Where savings are invested • Quality performance scores

18. Data Sharing • Limited beneficiary identifiable data will be made available upon request: • Name, DOB, sex, Health Insurance Claim Number • Data use agreement required to receive Medicare Parts A, B, & D claims data • No sharing of alcohol or substance abuse records without patient consent • Patients may opt out of data sharing • Aggregate data reports on financial and quality performance

19. Expenditure Benchmark • Estimated for each ACO based on Parts A and B FFS expenditures • Updated annually during the agreement • IME and DSH payments may be removed to adjust the benchmark • Geographic variation may not be considered when adjusting the benchmark

20. Track 1 vs Track 2

21. Track 1 • Shared savings would be reconciled annually for the first two years using a one-sided shared savings approach • The ACO would not be held responsible for losses • Resembles gainsharing • Y3 ACOs on Track 1 would automatically be shifted to Track 2 and placed at risk for losses

22. Track 2 • Eligible for a higher savings rate • Must establish a method for repaying losses • 25% withhold would be applied annually to any earned performance payment • Minimum loss rate of 2% applied for computing shared losses

23. Minimum Savings Rate • ACOs can only share savings if they exceed MSR • Track 1 ACOs with less than 10,000 beneficiaries are exempt from MSR if: • Only group practice arrangements and/or networks of individual practices participate; or • ≥75% of beneficiaries reside in rural areas; or • ≥50% of beneficiaries are assigned based on accessing services from a CAH; or • ≥50% of beneficiaries had at least one encounter with a participating FQHC or RHC

24. Distribution of Shared Savings • Six month claims run out would be used to calculate benchmark and per capita expenditures • CMS would notify each ACO of any shared savings or shared losses and the amount owed or due • ACO must file written request to receive shared savings • ACO must pay CMS any losses owed within 30 days of notification

25. Monitoring and Termination • CMS may terminate agreement for cause • Prior to terminating an agreement: • Warning notice • Corrective action plan • Special monitoring plan • ACO can withdraw from program with 60 days notice • ACO is required to notify participants and providers of termination; beneficiaries must also be notified

26. Future Participation • Terminated ACOs may not rejoin until the beginning of a new agreement period • ACOs that rejoin may only do so on Track 2 • If termination was for cause, ACO must specify safeguards that have been put in place • ACOs that have experienced a net loss may not reapply

27. Waivers and Antitrust • Waivers • To ensure shared savings can be distributed CMS has proposed waivers of certain provisions of the physician self-referral law, anti-kickback statute, and civil monetary penalties • Antitrust Review • Proposed Statement applies to ACOs formed after March 23, 2010 and to collaborations that partner with the Innovation Center • Antitrust review will be under rule of reason analysis • Establishes safety zones for ACOs that have ≤ 30% market share in a particular primary service area • Optional review = > 30% - ≤ 50% market share • Mandatory review = > 50% market share

28. New York’s aco demonstration program

29. NY ACO Demonstration Program • Article 29-E of PHL authorizes the Commissioner of Health to establish a demonstration program to test ACOs as a delivery system • Does not authorize shared savings • Seven certificates of authority will be issued and none can be issued after December 31, 2015 • The Commissioner may limit, suspend, or terminate an ACO’s certificate if it fails to operate in accordance with the law

30. The Commissioner’s Regulatory Authority

31. NY ACO Demonstration Program • Interested ACOs must: • have a mechanism for shared governance • have the ability to negotiate, receive, and distribute payments • agree to be accountable for the quality, cost, and delivery of health care to their patients • The Commissioner may actively supervise ACOs to ensure they are properly operated

32. NY ACO Demonstration Program • The Commissioner may authorize third-party payers to participate • ACOs that enter into arrangements with third-party payers may establish alternative payment methodologies • ACOs are permitted to receive, pool, and distribute payments to participating providers • All financial arrangements are subject to regulation

33. NY ACO Demonstration Program • The State may provide state action immunity under antitrust law to both payers and providers • The Commissioner, through regulation, may establish safe harbors that exempt ACOs from statutes pertaining to corporate practice of medicine, fee-splitting, and physician self-referral • The Commissioner is also authorized to seek federal approvals and waivers to obtain financial participation

34. Federal law vs. state law

35. FEDERAL VS. STATE LAWNew Jersey (S.2443/A.3636) & New York (Art. 29-E PHL)

36. FEDERAL VS. STATE LAW New Jersey (S.2443/A.3636) & New York (Art. 29-E PHL)

37. Questions? Danielle Drayer Director, Managed Care & Associate Counsel (518) 431-7681 ddrayer@hanys.org Cara Zucker Policy Specialist, Managed Care (518) 431-7827 czucker@hanys.org