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Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Rules and Regulations
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
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
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: aco@cms.hhs.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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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 ValueBased 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
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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
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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
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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
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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
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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 ValueBased 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 valuebased 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 threepart 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, valuebased 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).
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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
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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 downside 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
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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
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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.
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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
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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.
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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
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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 § 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.
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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
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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 (§ 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
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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 § 425.208
and § 425.210.
Further, as described in § 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
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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
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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.
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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 (§ 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 feefor-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 § 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
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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
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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 feefor-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
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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
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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
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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
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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
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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 § 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
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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
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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 (§ 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
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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.
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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
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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
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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.
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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
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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
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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 servicefavoring 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
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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
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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 hospitaldriven ACO’s. Comments further
suggested that at the very least, waiver
authority should be established to
enable the agency to waive hospitaloriented 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
§ 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
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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
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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 licenseexempt, 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, licenseexempt, 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
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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 outcomebased 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
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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
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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. (§ 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
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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
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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 § 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
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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
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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
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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 evidencebased 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
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stated that an ACO should not, for
example, have to include each solopractitioner 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
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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
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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 taxexempt 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
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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-ofinterest 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
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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. (§ 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 Medicareenrolled 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 nonMedicare 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
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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 nonparticipant 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
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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
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composition of tax-exempt or Statelicensed 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 costshifting 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
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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
§ 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 preexisting 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,
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provide a strong, independent voice,
and be part of ACO decision making.
Other commenters suggested requiring
even more consumer or communitybased 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
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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
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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
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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. (§ 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 threepart 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
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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 boardcertified 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 physiciandirected 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
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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 boardcertified 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
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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 parttime requirement, flexible time
requirement, or no time requirement.
One commenter suggested that the
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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 seniorlevel medical director who is a boardcertified 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
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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 physicianled 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
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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 patientfocused 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
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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.
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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,
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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 evidencedbased 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
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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 selfattestation 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.
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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 seniorlevel 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
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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. (§ 425.108, § 425.112, and
§ 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
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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 highrisk 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
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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 patientcenteredness 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 patientcenteredness 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 patientcenteredness 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: Evidencebased 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
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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. (§ 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
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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 ‘‘evidencebased medicine’’ to include best
practices regarding evidence-based
psychosocial interventions not generally
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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. (§ 425.112).
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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
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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 patientcenteredness 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.
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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
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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. (§ 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-ofservice (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
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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.
(§ 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 highrisk 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
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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
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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
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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. (§ 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
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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.
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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 ValueBased 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
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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
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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 wellaligned 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
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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 wellsuited 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,
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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
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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
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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
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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
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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 (§ 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
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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 (§ 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
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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.
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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 startup 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
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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
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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
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beneficiaries used to determine shared
savings are assigned to both (§ 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
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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.
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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 subregulatory 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
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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 onramp 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 3year 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 3year agreement.
Response: As discussed previously,
and based upon the review of public
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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
§ 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
§ 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
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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 runout 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
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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 3month claims run-out more appropriate.
Comment: Most of the comments
received on this proposal supported a 3month 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 runout 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 runout 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-
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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 § 425.602,
§ 425.604, and § 425.606 of using 3months 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
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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
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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 § 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
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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 § 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,
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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 § 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
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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
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‘‘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 § 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 interand 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 antikickback statute, and the physician selfreferral 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
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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.
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 taxexempt 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.
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.
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
https://www.cms.gov/
sharesavingsprogram/
b. IRS Guidance Relating to Tax-Exempt
Organizations Participating in ACOs
Nonprofit hospitals and other health
care organizations recognized by the IRS
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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-
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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 rereview 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,
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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
• 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.
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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• 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
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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-forservice 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
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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
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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
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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
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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 anticompetitive 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
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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 § 425.202.
However, we will continue to review
these policies and adjust them
accordingly as we gain more experience
with the Shared Savings Program.
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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-forservice 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 populationbased 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 selfmanage 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
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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
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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
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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
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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 (patientspecific) 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
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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
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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
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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
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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
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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 populationbased 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 claimbased data simply cannot be timely,
stating that by the time a claim for a
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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
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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 populationbased 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 populationbased 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
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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 beneficiaryidentifiable 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 beneficiaryidentifiable 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
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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 bidirectional 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.).
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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
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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
§ 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 freestanding 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
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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
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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 patientcentered 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
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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.
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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.
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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
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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 optout 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 § 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 § 425.704, to allow ACOs to
request beneficiary identifiable data on
a monthly basis.
Additionally, we are modifying this
proposal in § 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.
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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-forService 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
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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
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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 feefor-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-forservice 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
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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-forservice beneficiary in § 425.20, under
§ 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
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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
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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
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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 § 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
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‘‘primary care providers;’’ and (3)
assignment of beneficiaries in a stepwise 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
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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 longterm care hospitals (LTCHs). The
commenter noted that many LTCH
patients are seen by teams of specialists
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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 conditionspecific 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
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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
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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 stepwise 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
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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
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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 § 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
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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
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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 nonphysician 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
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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
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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
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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
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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 Medicareenrolled chiropractors from
participating in ACOs, or from sharing
in the savings that an ACO may realize
in part because of the quality and costeffective services they may be able to
provide.
Final Decision: Therefore, under
§ 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
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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
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discussion, all references to FQHCs
include both section 330 grantees and
so-called ‘‘look-alikes,’’ as defined
under § 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
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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
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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.
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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
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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.
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(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 crosswalk, 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).
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• 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
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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)
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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 § 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
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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
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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
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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.
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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.
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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
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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
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attribution, including potential ‘‘cherrypicking’’ 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 highrisk patients for a single encounter. The
commenter believed that omitting such
patients from retrospective assignment
for purposes of the shared savings
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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 optout 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
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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
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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
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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-forservice 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-ofperiod 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
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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,
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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
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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
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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 ‘‘optin’’ 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
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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
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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 nonprimary care physicians (the ‘‘specialtymanaged patient’’ factor), and those
permanently relocating away from the
ACO’s service area early in the contract
period, for example before the sixmonth 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
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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.
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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 § 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 § 425.402. In that methodology, we
are also finalizing our proposal to assign
beneficiaries to no more than one ACO.
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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
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(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 buyin 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 costeffective care for Medicare beneficiaries.
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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 nonadjacent 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
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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
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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
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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
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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
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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
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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
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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 § 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 outcomeoriented, 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
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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
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67871
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, evidencebased 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, evidencebased, 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 valuebased 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 evidencebased 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
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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
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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 EHRbased. 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
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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
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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
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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
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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 twostep 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,
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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
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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 preand 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 selfreported 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.
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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
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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. RiskStandardized, 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
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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
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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 posthospitalization 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
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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
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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).
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Response: We note that the AHRQ
PQIs for Ambulatory Care Sensitive
Condition admissions are wellestablished 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 rulemaking 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.
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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 carebased 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
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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
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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
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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
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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 highrisk 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
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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
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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.
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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 hospitalreported, 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
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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.
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 patientreported. 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 patientreported information.
Additionally, in response to other
comments requesting that we align
measures with those used in PQRS and
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.
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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
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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 followup 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
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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
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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. (https://www.ncbi.nlm.nih.
gov/books/NBK36406/) Another study
found that the presence of depression is
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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.
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
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.
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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.’’ (https://
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
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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.
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
4 American Diabetes Association. Standards of
Medical Care in Diabetes—2011. Available at
https://care.diabetesjournals.org/content/34/
Supplement_1/S11.full.
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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,
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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
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
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.
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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
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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.
(https://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
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(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): BetaBlocker 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,
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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
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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
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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
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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-today 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
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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
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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
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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 peerreviewed 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
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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
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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 evidencebased 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.
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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
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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
§ 425.20, of its agreement. This means
that while an ACO’s first ‘‘performance
year,’’ as defined in § 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 claimsand 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.
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TABLE 1—MEASURES FOR USE IN ESTABLISHING QUALITY PERFORMANCE STANDARDS THAT ACOS MUST MEET FOR
SHARED SAVINGS
Domain
NQF measure
#/measure
steward
Measure title
Method of
data
submission
Pay for performance phase in
R = Reporting
P = Performance
Year 1
Year 2
Year 3
AIM: Better Care for Individuals
1.
Patient/Caregiver Experience.
2.
Patient/Caregiver Experience.
Patient/Caregiver Experience.
Patient/Caregiver Experience.
Patient/Caregiver Experience.
Patient/Caregiver Experience.
Patient/Caregiver Experience.
Care Coordination/Patient
Safety.
Care Coordination/Patient
Safety.
3.
4.
5.
6.
7.
8.
9.
10.
Care Coordination/Patient
Safety.
11.
Care Coordination/Patient
Safety.
12.
Care Coordination/Patient
Safety.
13.
Care Coordination/Patient
Safety.
CAHPS: Getting Timely
Care, Appointments, and
Information.
CAHPS: How Well Your
Doctors Communicate.
CAHPS: Patients’ Rating of
Doctor.
CAHPS: Access to Specialists.
CAHPS: Health Promotion
and Education.
CAHPS: Shared Decision
Making.
CAHPS: Health Status/
Functional Status.
Risk-Standardized, All Condition Readmission*.
Ambulatory Sensitive Conditions Admissions: Chronic
Obstructive Pulmonary
Disease (AHRQ Prevention Quality Indicator
(PQI) #5).
Ambulatory Sensitive Conditions Admissions: Congestive Heart Failure
(AHRQ Prevention Quality
Indicator (PQI) #8).
Percent of PCPs who Successfully Qualify for an
EHR Incentive Program
Payment.
Medication Reconciliation:
Reconciliation After Discharge from an Inpatient
Facility.
Falls: Screening for Fall
Risk.
NQF #5,
AHRQ.
Survey ..........
R
P
P
NQF #5
AHRQ.
NQF #5
AHRQ.
NQF #5
AHRQ.
NQF #5
AHRQ.
NQF #5
AHRQ.
NQF #6
AHRQ.
NQF #TBD
CMS.
NQF #275
AHRQ.
Survey ..........
R
P
P
Survey ..........
R
P
P
Survey ..........
R
P
P
Survey ..........
R
P
P
Survey ..........
R
P
P
Survey ..........
R
R
R
Claims ..........
R
R
P
Claims ..........
R
P
P
NQF #277
AHRQ.
Claims ..........
R
P
P
CMS .............
EHR Incentive Program Reporting.
GPRO Web
Interface.
R
P
P
R
P
P
GPRO Web
Interface.
R
P
P
NQF #97
AMA–PCPI/
NCQA.
NQF #101
NCQA.
AIM: Better Health for Populations
Preventive Health ................
Influenza Immunization .......
15.
Preventive Health ................
Pneumococcal Vaccination
16.
Preventive Health ................
17.
Preventive Health ................
18.
Preventive Health ................
Adult Weight Screening and
Follow-up.
Tobacco Use Assessment
and Tobacco Cessation
Intervention.
Depression Screening .........
19.
Preventive Health ................
20.
Preventive Health ................
21.
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14.
Preventive Health ................
22.
At Risk Population—Diabetes.
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Colorectal Cancer Screening.
Mammography Screening ...
Proportion of Adults 18+
who had their Blood Pressure Measured within the
preceding 2 years.
Diabetes Composite (All or
Nothing Scoring): Hemoglobin A1c Control (< 8
percent).
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NQF #41
AMA–PCPI.
NQF #43
NCQA.
NQF #421
CMS.
NQF #28
AMA–PCPI.
GPRO Web
Interface.
GPRO Web
Interface.
GPRO Web
Interface.
GPRO Web
Interface.
R
P
P
R
P
P
R
P
P
R
P
P
NQF #418
CMS.
NQF #34
NCQA.
NQF #31
NCQA.
CMS .............
GPRO Web
Interface.
GPRO Web
Interface.
GPRO Web
Interface.
GPRO Web
Interface.
R
P
P
R
R
P
R
R
P
R
R
P
NQF #0729
MN Community
Measurement.
GPRO Web
Interface.
R
P
P
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TABLE 1—MEASURES FOR USE IN ESTABLISHING QUALITY PERFORMANCE STANDARDS THAT ACOS MUST MEET FOR
SHARED SAVINGS—Continued
Domain
NQF measure
#/measure
steward
Measure title
23.
At Risk Population—Diabetes.
Diabetes Composite (All or
Nothing Scoring): Low
Density Lipoprotein
(< 100).
24.
At Risk Population—Diabetes.
Diabetes Composite (All or
Nothing Scoring): Blood
Pressure < 140/90.
25.
At Risk Population—Diabetes.
Diabetes Composite (All or
Nothing Scoring): Tobacco Non Use.
26.
At Risk Population—Diabetes.
Diabetes Composite (All or
Nothing Scoring): Aspirin
Use.
27.
At Risk Population—Diabetes.
28.
At Risk Population—Hypertension.
At Risk Population—
Ischemic Vascular Disease.
Diabetes Mellitus: Hemoglobin A1c Poor Control
(> 9 percent).
Hypertension (HTN): Blood
Pressure Control.
Ischemic Vascular Disease
(IVD): Complete Lipid
Profile and LDL Control
< 100 mg/dl.
Ischemic Vascular Disease
(IVD): Use of Aspirin or
Another Antithrombotic.
Heart Failure: Beta-Blocker
Therapy for Left Ventricular Systolic Dysfunction
(LVSD).
Coronary Artery Disease
(CAD) Composite: All or
Nothing Scoring: Drug
Therapy for Lowering
LDL-Cholesterol.
29.
30.
31.
At Risk Population—
Ischemic Vascular Disease.
At Risk Population—Heart
Failure.
32.
At Risk Population—Coronary Artery Disease.
33.
At Risk Population—Coronary Artery Disease.
Coronary Artery Disease
(CAD) Composite: All or
Nothing Scoring:
Angiotensin-Converting
Enzyme (ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB) Therapy
for Patients with CAD and
Diabetes and/or Left Ventricular Systolic Dysfunction (LVSD).
Method of
data
submission
Pay for performance phase in
R = Reporting
P = Performance
Year 1
Year 2
Year 3
NQF #0729
MN Community
Measurement.
NQF #0729
MN Community
Measurement.
NQF #0729
MN Community
Measurement.
NQF #0729
MN Community
Measurement.
NQF #59
NCQA.
GPRO Web
Interface.
R
P
P
GPRO Web
Interface.
R
P
P
GPRO Web
Interface.
R
P
P
GPRO Web
Interface.
R
P
P
GPRO Web
Interface.
R
P
P
NQF #18
NCQA.
NQF #75
NCQA.
GPRO Web
Interface.
GPRO Web
Interface.
R
P
P
R
P
P
NQF #68
NCQA.
GPRO Web
Interface.
R
P
P
NQF #83
AMA–PCPI.
GPRO Web
Interface.
R
R
P
NQF #74
GPRO Web
CMS (comInterface.
posite)/
AMA–PCPI
(individual
component).
NQF #66
GPRO Web
CMS (comInterface.
posite)/
AMA–PCPI
(individual
component).
R
R
P
R
R
P
* 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.
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TABLE 2—ACO AGREEMENT PERIOD PAY FOR PERFORMANCE PHASE-IN SUMMARY
Performance
year 1
Performance
year 2
Performance
year 3
Pay for Performance ....................................................................................................................
Pay for Reporting .........................................................................................................................
0
33
25
8
32
1
Total ......................................................................................................................................
33
33
33
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Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Rules and Regulations
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 CMScertified 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
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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 claimsbased 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.
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67891
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 CMSspecified 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
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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
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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
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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
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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 claimsbased 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
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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
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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
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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
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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 welltested, and we intend to build upon this
experience for ACO use. Additionally,
the tool has migrated to a web interface,
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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
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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 EHRderived 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
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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.
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67895
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
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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’’
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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 onesided 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
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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 onesided 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,
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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
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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 doubleweighting 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
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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
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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
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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
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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
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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
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
67899
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
ACO performance level
Quality points (all
measures except EHR)
90+ percentile FFS/MA Rate or 90+ percent .......................................................................................
80+ percentile FFS/MA Rate or 80+ percent .......................................................................................
70+ percentile FFS/MA Rate or 70+ percent .......................................................................................
60+ percentile FFS/MA Rate or 60+ percent .......................................................................................
50+ percentile FFS/MA Rate or 50+ percent .......................................................................................
40+ percentile FFS/MA Rate or 40+ percent .......................................................................................
30+ percentile FFS/MA Rate or 30+ percent .......................................................................................
< 30 percentile FFS/MA Rate or < 30 percent ......................................................................................
2 points .......................
1.85 points ..................
1.7 points ....................
1.55 points ..................
1.4 points ....................
1.25 points ..................
1.10 point ....................
No points .....................
EHR measure
quality points
4 points.
3.7 points.
3.4 points.
3.1 points.
2.8 points.
2.5 points.
2.2 points.
No points.
TABLE 4—TOTAL POINTS FOR EACH DOMAIN WITHIN THE QUALITY PERFORMANCE STANDARD
Domain
Total individual
measures
(Table F1)
7
Care Coordination/Patient
Safety.
Preventative Health ................
At Risk Population ..................
6
8
12
Total ................................
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Patient/Caregiver Experience
33
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
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Total potential
points per
domain
Total measures for scoring purposes
1 measure with 6 survey module measures combined, plus
1 individual measure.
6 measures, plus the EHR measure double-weighted (4
points).
8 measures .............................................................................
7 measures, including 5 component diabetes composite
measure and 2 component CAD composite measure.
23 ............................................................................................
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.
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Domain weight
(percent)
4
25
14
25
16
14
25
25
48
100
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
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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
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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
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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 § 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: https://www.cms.gov/PQRI/
Downloads/EligibleProfessionals.pdf. In
addition, similar to traditional PQRS,
we indicated that an EP could not
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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.
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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
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67901
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
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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
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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: https://
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
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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
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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 § 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: https://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
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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
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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
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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.
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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 onesided 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
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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 onesided 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
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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 twosided 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 onesided 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
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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 twosided 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 twosided 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 twosided model to encourage ACOs to enter
the two-sided model, which we believe
has a greater potential than the onesided 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-forservice 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.
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Of those who recommended
alternative payment models,
commenters most commonly
recommended inclusion of the
following payment models in the
Shared Savings Program: blended feefor-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 permember 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-faceto-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
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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
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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
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to enter into a shared savings and risk
model in the first year; indicating the
importance of shared performancebased 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
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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 onesided model for additional performance
years or agreement periods.
• Exempt some ACOs from downside
risk, such as small, rural and physicianonly 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
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conditions would be under the onesided 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
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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 oneand 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 twosided 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 onesided 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
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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 twosided 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
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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 onesided 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 onesided 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 twosided 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 twosided 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
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for ACOs unable to accept risk at the
point of required transition to the twosided model: Termination by CMS,
voluntarily withdrawal, and completion
of the agreement period under the onesided 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 twosided 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 twosided 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 onesided 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
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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 twosided 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 wellmeaning 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
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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
§ 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
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
67909
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
Proposed
Final
Proposed
Transition to Two-Sided
Model.
Transition in third year
of first agreement period.
Not Applicable.
Option 1 reset at the
start of each agreement period.
Benchmark expenditures adjusted based
on CMS–HCC model.
Finalizing proposal.
Adjustments for health
status and demographic changes.
Option 1 reset at the
start of each agreement period.
Benchmark expenditures adjusted based
on CMS–HCC model.
First agreement period under
one-sided model. Subsequent agreement periods
under two-sided model.
Finalizing proposal ....................
Not Applicable ..............
Benchmark ...................
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Adjustments for IME
and DSH.
Include IME and DSH
payments.
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Historical benchmark expenditures adjusted based on
CMS–HCC model. Performance year: Newly assigned
beneficiaries adjusted using
CMS–HCC model; continuously assigned beneficiaries
(using demographic factors
alone unless CMS–HCC risk
scores result in a lower risk
score). Updated benchmark
adjusted relative to the risk
profile of the performance
year.
IME and DSH excluded from
benchmark and performance
expenditures.
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Final
Include IME and DSH
payments.
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Historical benchmark expenditures adjusted based on
CMS–HCC model. Performance year: Newly assigned
beneficiaries adjusted using
CMS–HCC model; continuously assigned beneficiaries
(using demographic factors
alone unless CMS–HCC risk
scores result in a lower risk
score). Updated benchmark
adjusted relative to the risk
profile of the performance
year.
IME and DSH excluded from
benchmark and performance
expenditures.
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TABLE 5—SHARED SAVINGS PROGRAM OVERVIEW—Continued
One-sided model
Two-sided model
Issue
Proposed
Final
Proposed
Payments outside Part
A and B claims excluded from benchmark and performance year expenditures;
Exclude GME, PQRS,
eRx, and EHR incentive payments for eligible professionals,
and EHR incentive
payments for hospitals.
Include other adjustment based in Part A
and B claims such as
geographic payment
adjustments and
HVBP payments.
Up to 52.5 percent
based on the maximum quality score
plus incentives for
FQHC/RHC participation.
Up to 50 percent based
on quality performance.
Up to 2.5 percentage
points for inclusion of
FQHCs and RHCs.
2.0 percent to 3.9 percent depending on
number of assigned
beneficiaries.
2.0 percent ...................
Finalize proposal ......................
Exclude GME, PQRS,
eRx, and EHR incentive payments for eligible professionals,
and EHR incentive
payments for hospitals.
Include other adjustment based in Part A
and B claims such as
geographic payment
adjustments and
HVBP payments.
Up to 65 percent based
on the maximum
quality score plus incentives for FQHC/
RHC participation.
Finalize proposal.
Up to 60 percent based
on quality performance.
Up to 5 percentage
points for inclusion of
FQHCs and RHCs.
Flat 2 percent ...............
Finalizing proposal.
Other adjustments ........
Maximum Sharing Rate
Quality Sharing Rate ....
Participation Incentives
Minimum Savings Rate
Minimum Loss Rate .....
Performance Payment
Limit.
Performance payment
withhold.
Shared Savings ............
Shared Loss Rate ........
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Loss Sharing Limit ........
Up to 50 percent based on the
maximum quality score.
Finalizing proposal ....................
No additional incentives ...........
Finalizing proposal based on
number of assigned beneficiaries.
Finalize proposal.
Up to 60 percent based on the
maximum quality score.
No additional incentives.
Finalizing proposal: Flat 2 percent.
2.0 percent ...................
Finalizing proposal.
7.5 percent ...................
Shared losses removed from
Track 1.
10 percent .................................
10 percent ....................
15 percent.
25 percent ....................
No withhold ...............................
25 percent ....................
No withhold.
Sharing above 2 percent threshold once
MSR is exceeded.
One minus final sharing
rate.
First dollar sharing once MSR
is met or exceeded.
First dollar sharing
once MSR is exceeded.
One minus final sharing
rate.
First dollar sharing once MSR
is met or exceeded.
5 percent in first risk
bearing year (year 3).
Shared losses removed from
Track 1.
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
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18:03 Nov 01, 2011
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Shared losses removed from
Track 1.
Limit on the amount of
losses to be 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.
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,
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One minus final sharing rate
applied to first dollar losses
once minimum loss rate is
met or exceeded; shared
loss rate not to exceed 60
percent.
Finalizing proposal.
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
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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 perbeneficiary 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-forservice 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 3year 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.
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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… 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 twosided 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
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67911
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
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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
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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 perbeneficiary 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
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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 highquality, 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
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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 feefor-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 geographicadjusted 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
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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 perbeneficiary 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.
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67913
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
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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
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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
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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
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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-forservice 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
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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
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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.
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• 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
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beneficiary health status, and socioeconomic 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
§ 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-forservice 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
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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
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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
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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
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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 highrisk 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
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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.
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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.
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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
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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 § 425.602 to risk
adjust an ACO’s historical benchmark
expenditures using the CMS–HCC
model. We are modifying our proposal
under § 425.604 and § 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.
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(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 claimsbased 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
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67919
‘‘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
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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
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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.
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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 § 425.602, § 425.604,
and § 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
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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
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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
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67921
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
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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 costefficient 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 § 425.602, § 425.604,
and § 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
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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
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beneficiaries, such as EHR incentive
payments to hospitals and payments
under the Hospital Inpatient ValueBased 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-
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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
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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
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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 § 425.602, § 425.604,
and § 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.
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(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 perbeneficiary 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.
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(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
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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 perbeneficiary 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
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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 § 425.602 to trend
forward the most recent 3 years of perbeneficiary 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
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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
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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
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67925
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 § 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-forservice 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
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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
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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
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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 categoryspecific 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 § 425.602 to update the
benchmark by the projected absolute
amount of growth in national per capita
expenditures for Parts A and B services
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under the original Medicare fee-forservice 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.
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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-forservice 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
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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
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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 upfront 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
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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 linearlyinterpolated 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
of
assigned
beneficiaries)
(percent)
Number of beneficiaries
5,000–5,999 .............................................................................................................................................................
6,000–6,999 .............................................................................................................................................................
7,000–7,999 .............................................................................................................................................................
8,000–8,999 .............................................................................................................................................................
9,000–9,999 .............................................................................................................................................................
10,000–14,999 .........................................................................................................................................................
15,000–19,999 .........................................................................................................................................................
20,000–49,999 .........................................................................................................................................................
50,000–59,999 .........................................................................................................................................................
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60,000 + ...................................................................................................................................................................
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
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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
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3.9
3.6
3.4
3.2
3.1
3.0
2.7
2.5
2.2
MSR (high
end of
assigned
beneficiaries)
(percent)
3.6
3.4
3.2
3.1
3.0
2.7
2.5
2.2
2.0
2.0
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
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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
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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 onesided 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 § 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
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67929
with the lowest applicable MSR under
the one-sided model, we proposed to
adopt a fixed 2 percent MSR for
organizations operating under the twosided 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 twosided 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 § 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
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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 twosided 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 onesided model and 66 to 95 percent (most
commonly 80 percent) under the twosided 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
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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 onesided 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
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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 onesided 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 § 425.604 and § 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
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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
67931
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 of ACO assigned beneficiaries with 1 or more visits to an ACO participant FQHC/RHC during the
performance year
Percentage
point increase
in shared
savings rate
(one-sided
model)
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1–10 percent ..........................................................................................................................................................
11–20 percent ........................................................................................................................................................
21–30 percent ........................................................................................................................................................
31–40 percent ........................................................................................................................................................
41–50 percent ........................................................................................................................................................
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,
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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.
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0.5
1
1.5
2
2.5
Percentage
point increase
in shared
savings rate
(two-sided
model)
1.0
2.0
3.0
4.0
5.0
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
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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 dualeligible 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
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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
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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
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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.
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(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 onesided 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-toyear 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
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67933
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
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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
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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
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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 § 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 § 425.606
similarly allowing sharing on a first
dollar savings for ACOs under the twosided 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 performancebased 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.
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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
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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
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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 twosided 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
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commenters suggested raising the limits,
for instance—
• Raise the limit to 10 for the onesided 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 twosided model.
Final Decision: We are revising our
proposal under § 425.604 and § 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
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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
§ 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
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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 onesided 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.
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Exempting ACOs from accountability
for losses under the two-sided model
would negate the purpose of a riskbased 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 § 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 twosided 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
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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
§ 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 perbeneficiary cap on losses. One
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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 § 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 onesided 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 twosided model.
h. Ensuring ACO Repayment of Shared
Losses
As we discussed in the proposed rule,
ensuring that ACOs entering the twosided 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
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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
