Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 67802-67990 [2011-27461]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Rules and Regulations]
[Pages 67802-67990]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27461]



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Vol. 76

Wednesday,

No. 212

November 2, 2011

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 425





Medicare Program; Medicare Shared Savings Program: Accountable Care 
Organizations; Final Rule

Federal Register / Vol. 76 , No. 212 / Wednesday, November 2, 2011 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 425

[CMS-1345-F]
RIN 0938-AQ22


Medicare Program; Medicare Shared Savings Program: Accountable 
Care Organizations

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule implements section 3022 of the Affordable Care 
Act which contains provisions relating to Medicare payments to 
providers of services and suppliers participating in Accountable Care 
Organizations (ACOs) under the Medicare Shared Savings Program. Under 
these provisions, providers of services and suppliers can continue to 
receive traditional Medicare fee-for-service (FFS) payments under Parts 
A and B, and be eligible for additional payments if they meet specified 
quality and savings requirements.

DATES: These regulations are effective on January 3, 2012.

FOR FURTHER INFORMATION CONTACT: Rebecca Weiss, (410) 786-8084, 
Facsimile: (410) 786-8005, Email address: aco@cms.hhs.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a table of contents.

I. Background
    A. Introduction and Overview of Value-Based Purchasing
    B. Statutory Basis for the Medicare Shared Savings Program
    C. Overview of the Medicare Shared Savings Program
    D. Public Comments Received on the Proposed Rule
    E. Reorganization of the Regulations Text
II. Provisions of the Proposed Rule, Summary of and Responses to 
Public Comments, and Provisions of the Final Rule
    A. Definitions
    B. Eligibility and Governance
    1. General Requirements
    a. Accountability for Beneficiaries
    b. Agreement Requirement
    c. Sufficient Number of Primary Care Providers and Beneficiaries
    d. Identification and Required Reporting on Participating ACO 
Professionals
    2. Eligible Participants
    3. Legal Structure and Governance
    a. Legal Entity
    b. Distribution of Shared Savings
    c. Governance
    d. Composition of the Governing Body
    4. Leadership and Management Structure
    5. Processes To Promote Evidence-Based Medicine, Patient 
Engagement, Reporting, Coordination of Care, and Demonstrating 
Patient-Centeredness
    a. Processes To Promote Evidence-Based Medicine
    b. Processes To Promote Patient Engagement
    c. Processes To Report on Quality and Cost Measures
    d. Processes To Promote Coordination of Care
    6. Overlap With Other CMS Shared Savings Initiatives
    a. Duplication in Participation in Medicare Shared Savings 
Programs
    b. Transition of the Physician Group Practice (PGP) 
Demonstration Sites Into the Shared Savings Program
    c. Overlap With the Center for Medicare & Medicaid Innovation 
(Innovation Center) Shared Savings Models
    C. Establishing the Agreement With the Secretary
    1. Options for Start Date of the Performance Year
    2. Timing and Process for Evaluating Shared Savings
    3. New Program Standards Established During the Agreement Period
    4. Managing Significant Changes to the ACO During the Agreement 
Period
    5. Coordination With Other Agencies
    a. Waivers of CMP, Anti-Kickback, and Physician Self-Referral 
Laws
    b. IRS Guidance Relating to Tax-Exempt Organization 
Participating in ACOs
    c. Antitrust Policy Statement
    d. Coordinating the Shared Savings Program Application With the 
Antitrust Agencies
    D. Provision of Aggregate and Beneficiary Identifiable Data
    1. Data Sharing
    2. Sharing Aggregate Data
    3. Identification of Historically Assigned Beneficiaries
    4. Sharing Beneficiary Identifiable Claims Data
    5. Giving Beneficiaries the Opportunity To Decline Data Sharing
    E. Assignment of Medicare Fee-for-Service Beneficiaries
    1. Definition of Primary Care Services
    a. Consideration of Physician Specialties in the Assignment 
Process
    b. Consideration of Services Furnished by Non-Physician 
Practitioners in the Assignment Process
    c. Assignment of Beneficiaries to ACOs That Include FQHCs and/or 
RHCs
    (1) Identification of Primary Care Services Rendered in FQHCs 
and RHCs
    (2) Identification of the Type of Practitioner Providing the 
Service in an FQHC/RHC
    (3) Identification of the Physician Specialty for Services in 
FQHCs and RHCs
    2. Prospective vs. Retrospective Beneficiary Assignment To 
Calculate Eligibility for Shared Savings
    3. Majority vs. Plurality Rule for Beneficiary Assignment
    F. Quality and Other Reporting Requirements
    1. Introduction
    2. Measures To Assess the Quality of Care Furnished by an ACO
    a. General
    b. Considerations in Selecting Measures
    c. Quality Measures for Use in Establishing Quality Performance 
Standards That ACOs Must Meet for Shared Savings
    3. Requirements for Quality Measures Data Submission by ACOs
    a. General
    b. GPRO Web Interface
    c. Certified EHR Technology
    4. Quality Performance Standards
    a. General
    b. Performance Scoring
    (1) Measure Domains and Measures Included in the Domains
    (2) Methodology for Calculating a Performance Score for Each 
Measure Within a Domain
    (3) Methodology for Calculating a Performance Score for Each 
Domain
    (4) The Quality Performance Standard Level
    5. Incorporation of Other Reporting Requirements Related to the 
PQRS and Electronic Health Records Technology Under Section 1848 of 
the Act
    6. Aligning ACO Quality Measures With Other Laws and Regulations
    G. Shared Savings and Losses
    1. Authority for and Selection of Shared Savings/Losses Model
    2. Shared Savings and Losses Determination
    a. Overview of Shared Savings and Losses Determination
    b. Establishing the Benchmark
    c. Adjusting the Benchmark and Actual Expenditures
    (1) Adjusting Benchmark and Performance Year Average Per Capita 
Expenditures for Beneficiary Characteristics
    (2) Technical Adjustments to the Benchmark and Performance Year 
Expenditures
    (a) Impact of IME and DSH
    (b) Geographic and Other Payment Adjustments
    (3) Trending Forward Prior Year's Experience To Obtain an 
Initial Benchmark
    (a) Growth Rate as a Benchmark Trending Factor
    (b) National Growth Rate as a Benchmark Trending Factor
    d. Updating the Benchmark During the Agreement Period
    e. Determining Shared Savings
    (1) Minimum Savings Rate
    (a) One-Sided Model
    (b) Two-Sided Model
    (2) Quality Performance Sharing Rate
    (3) Additional Shared Savings Payments
    (4) Net Sharing Rate
    (5) Performance Payment Limits
    f. Calculating Sharing in Losses
    (1) Minimum Loss Rate
    (2) Shared Loss Rate
    g. Limits on Shared Losses
    h. Ensuring ACO Repayment of Shared Losses
    i. Timing of Repayment

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    j. Withholding Performance Payments
    k. Determining First Year Performance for ACOs Beginning April 1 
or July 1, 2012
    (1) Interim Payment Calculation
    (2) First Year Reconciliation
    (3) Repayment Mechanism for ACOs Electing Interim Payment 
Calculations
    3. Impact on States
    H. Additional Program Requirements and Beneficiary Protections
    1. Background
    2. Beneficiary Protections
    a. Beneficiary Notification
    b. ACO Marketing Guidelines
    3. Program Monitoring
    a. General Methods Used to Monitor ACOs
    b. Monitoring Avoidance of At-Risk Beneficiaries
    (1) Definition of At-Risk Beneficiaries
    (2) Penalty for Avoidance of At-Risk Beneficiaries
    c. Compliance With Quality Performance Standards
    4. Program Integrity Requirements
    a. Compliance Plans
    b. Compliance With Program Requirements
    c. Conflicts of Interest
    d. Screening of ACO Applicants
    e. Prohibition on Certain Required Referrals and Cost Shifting
    f. Record Retention
    g. Beneficiary Inducements
    5. Terminating an ACO Agreement
    a. Reasons for Termination of an ACO's Agreement
    b. Corrective Action Plans
    6. Reconsideration Review Process
III. Collection of Information Requirements
IV. Regulatory Impact Analysis
    A. Introduction
    B. Statement of Need
    C. Overall Impact
    D. Anticipated Effects
    1. Effects on the Medicare Program
    a. Assumptions and Uncertainties
    b. Detailed Stochastic Modeling Results
    c. Further Considerations
    2. Impact on Beneficiaries
    3. Impact on Providers and Suppliers
    4. Impact on Small Entities
    E. Alternatives Considered
    F. Accounting Statement and Table
    G. Conclusion

Regulations Text

Acronyms

ACO Accountable Care Organization
AHRQ Agency for Healthcare Research and Quality
BAA Business Associate Agreements
BCBSMA Blue Cross Blue Shield of Massachusetts
BIPA Benefits Improvement and Protection Act
CAD Coronary Artery Disease
CAHPS Consumer Assessment of Health Providers and Systems
CAHs Critical Access Hospitals
CBIC Competitive Bidding Implementation Contractor
CBSA Core Based Statistical Area
CHCs Community Health Centers
CHIP Children's Health Insurance Program
CMP Civil Monetary Penalties
CMS Centers for Medicare & Medicaid Services
CNM Certified Nurse Midwife
CMS-HCC CMS Hierarchal Condition Category
COPD Chronic Obstructive Pulmonary Disease
CP Certified Psychologist
CSW Clinical Social Worker
CWF Common Working File
DHHS Department of Health and Human Services
DOB Date of Birth
DOJ Department of Justice
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DSH Disproportionate Share Hospital
DUA Data use Agreement
E&M Evaluation and Management
EHR Electronic Health Record
ESRD End Stage Renal Disease
eRx Electronic Prescribing Incentive Program
FFS Fee-for-service
FQHCs Federally Qualified Health Centers
FTC Federal Trade Commission
GAO Government Accountability Office
GPCI Geographic Practice Cost Index
GPRO Group Practice Reporting Option
HAC Hospital Acquired Conditions
HCAHPS Hospital Consumer Assessment of Health care Provider and 
Systems
HCC Hierarchal Condition Category
HCPCS Healthcare Common Procedure Coding System
HHAs Home Health Agencies
HICN Health Insurance Claim Number
HIPAA Heath Insurance Portability and Accountability Act of 1996
HIE Health Information Exchange
HIT Health Information Technology
HITECH Health Information Technology for Economic and Clinical 
Health
HMO Health Maintenance Organization
HRSA Health Resources and Services Administration
HVBP Hospital Value Based Purchasing
IME Indirect Medical Education
IOM Institute of Medicine
IPPS Inpatient Prospective Payment System
IQR Inpatient Quality Reporting
IRS Internal Revenue Service
LTCHs Long-Term Acute Care Hospitals
MA Medicare Advantage
MAPCP Multipayer Advanced Primary Care Practice
MedPAC Medicare Payment Advisory Commission
MHCQ Medicare Health Care Quality
MMA Medicare Prescription Drug, Improvement, and Modernization Act
MS-DRGs Medicare Severity-Adjusted Diagnosis Related Groups
MSP Minimum Savings Percentage
MSR Minimum Savings Rate
NCQA National Committee for Quality Assurance
NCCCN North Carolina Community Care Network
NP Nurse Practitioner
NPI National Provider Identifier
NQF National Quality Forum
OIG Office of Inspector General
OMB Office of Management and Budget
PA Physician Assistant
PACE Program of All Inclusive Care for the Elderly
PACFs Post-Acute Care Facilities
PCMH Patient Centered Medical Home
PFS Physician Fee Schedule
PGP Physician Group Practice
PHI Protected health information
POS Point of Service
PPO Preferred provider organization
PPS Prospective Payment System
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
PRA Paperwork Reduction Act
PSA Primary Service Areas
RFI Request for Information
RHCs Rural Health Clinics
RIA Regulatory Impact Analysis
SNFs Skilled Nursing Facilities
SSA Social Security Administration
SSN Social Security Number
TIN Taxpayer Identification Number

I. Background

A. Introduction and Overview of Value-Based Purchasing

    On March 23, 2010, the Patient Protection and Affordable Care Act 
(Pub. L. 111-148) was enacted, followed by enactment of the Health Care 
and Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30, 
2010, which amended certain provisions of Public Law 111-148. 
Collectively known as the Affordable Care Act, these public laws 
include a number of provisions designed to improve the quality of 
Medicare services, support innovation and the establishment of new 
payment models, better align Medicare payments with provider costs, 
strengthen program integrity within Medicare, and put Medicare on a 
firmer financial footing.
    Many provisions within the Affordable Care Act implement value-
based purchasing programs; section 3022 requires the Secretary to 
establish the Medicare Shared Savings Program (Shared Savings Program), 
intended to encourage the development of Accountable Care Organizations 
(ACOs) in Medicare. The Shared Savings Program is a key component of 
the Medicare delivery system reform initiatives included in the 
Affordable Care Act and is a new approach to the delivery of health 
care aimed at: (1) Better care for individuals; (2) better health for 
populations; and (3) lower growth in Medicare Parts A and B 
expenditures. We refer to this approach throughout this final rule as 
the three-part aim.
    Value-based purchasing is a concept that links payment directly to 
the quality of care provided and is a strategy that can help transform 
the current payment system by rewarding providers for delivering high 
quality, efficient clinical care. In the April 7, 2011 Federal Register 
(76 FR 19528), we published the Shared Savings Program proposed rule. 
In the proposed rule, we

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discussed our experience implementing value based purchasing concepts. 
In addition to improving quality, value-based purchasing initiatives 
seek to reduce growth in health care expenditures.
    We view value-based purchasing as an important step to revamping 
how care and services are paid for, moving increasingly toward 
rewarding better value, outcomes, and innovations instead of merely 
increased volume. For a complete discussion, including our goals in 
implementing value-based purchasing initiatives, please refer to 
section I.A. of the proposed rule (76 FR 19530).

B. Statutory Basis for the Medicare Shared Savings Program

    Section 3022 of the Affordable Care Act amended Title XVIII of the 
Social Security Act (the Act) (42 U.S.C. 1395 et seq.) by adding new 
section 1899 to the Act to establish a Shared Savings Program that 
promotes accountability for a patient population, coordinates items and 
services under Parts A and B, and encourages investment in 
infrastructure and redesigned care processes for high quality and 
efficient service delivery. A detailed summary of the provisions within 
section 3022 of the Affordable Care Act is in section I.B. of the 
proposed rule (see 76 FR 19531).

C. Overview of the Medicare Shared Savings Program

    The intent of the Shared Savings Program is to promote 
accountability for a population of Medicare beneficiaries, improve the 
coordination of FFS items and services, encourage investment in 
infrastructure and redesigned care processes for high quality and 
efficient service delivery, and incent higher value care. As an 
incentive to ACOs that successfully meet quality and savings 
requirements, the Medicare Program can share a percentage of the 
achieved savings with the ACO. Under the Shared Savings Program, ACOs 
will only share in savings if they meet both the quality performance 
standards and generate shareable savings. In order to fulfill the 
intent of the Shared Savings Program as established by the Affordable 
Care Act, we stated in the proposed rule that we will focus on 
achieving the three-part aim consisting of: (1) Better care for 
individuals; (2) better health for populations; and (3) lower growth in 
expenditures.
    In developing the Shared Savings Program, and in response to 
stakeholder suggestions, we have worked very closely with agencies 
across the Federal government to develop policies to encourage 
participation and ensure a coordinated and aligned inter- and intra-
agency program implementation. The result of this effort is the release 
of several documents that potential participants are strongly 
encouraged to review. These documents are described in more detail in 
section II.C.5. of this final rule, and include: (1) A joint CMS and 
DHHS OIG interim final rule with comment period published elsewhere in 
this issue of the Federal Register entitled Medicare Program; Final 
Waivers in Connection With the Shared Savings Program; (2) IRS Notice 
2011-20 and other applicable IRS guidance viewable on www.irs.gov; and 
(3) a Statement of Antitrust Enforcement Policy Regarding Accountable 
Care Organizations Participating in the Shared Savings Program issued 
by the FTC and DOJ (collectively, the Antitrust Agencies).
    In this final rule we have made significant modifications to reduce 
burden and cost for participating ACOs. These modifications include: 
(1) Greater flexibility in eligibility to participate in the Shared 
Savings Program; (2) multiple start dates in 2012; (3) establishment of 
a longer agreement period for those starting in 2012; (4) greater 
flexibility in the governance and legal structure of an ACO; (5) 
simpler and more streamlined quality performance standards; (6) 
adjustments to the financial model to increase financial incentives to 
participate; (7) increased sharing caps; (8) no down-side risk and 
first-dollar sharing in Track 1; (9) removal of the 25 percent withhold 
of shared savings; (10) greater flexibility in timing for the 
evaluation of sharing savings (claims run-out reduced to 3 months); 
(11) greater flexibility in antitrust review; and (12) greater 
flexibility in timing for repayment of losses; and (13) additional 
options for participation of FQHCs and RHCs.

D. Public Comments Received on the Proposed Rule

    We received approximately 1,320 public comments on the April 7, 
2011 proposed rule (76 FR 19528). These public comments addressed 
issues on multiple topics and here, rather than throughout the 
regulation, we extend our great appreciation for the input. We received 
some comments that were outside the scope of the proposed rule and 
therefore not addressed in this final rule (for example, suggested 
changes to the physician fee schedule, or suggestions on other 
Affordable Care Act provisions). Summaries of the public comments that 
are within the scope of the proposals and our responses to those 
comments are set forth in the various sections of this final rule under 
the appropriate headings. In this final rule, we have organized the 
document by presenting our proposals, summarizing and responding to the 
public comment for the proposal(s), and describing our final policy.
    Comment: We received comments expressing support for the proposed 
design of the Shared Savings Program, as well as comments disagreeing 
with it. Those in disagreement generally found the proposed 
requirements to be too prescriptive and burdensome. Other commenters 
expressed their disagreement with a program they perceive as limiting 
access to necessary care.
    Response: We appreciate all the feedback we received. We have been 
encouraged by the level of engagement by stakeholders in this 
rulemaking process. We thank all of the commenters for helping us 
develop the Shared Savings Program. Where possible we have tried to 
reduce or eliminate prescriptive or burdensome requirements that could 
discourage participation in the Shared Savings Program. We have also 
been vigilant in protecting the rights and benefits of FFS 
beneficiaries under traditional Medicare to maintain the same access to 
care and freedom of choice that existed prior to the implementation of 
this program. These provisions can be found throughout this final rule.
    Comment: Two commenters encouraged CMS to make the PGP 
demonstration a national program. In contrast, a few commenters stated 
concern about insufficient testing of the Shared Savings Program as a 
demonstration program prior to this final rule. The commenters 
acknowledged the PGP demonstration as the precursor, but stated that 
our proposals deviated too far from the PGP demonstration. One 
commenter noted the PGP demonstration consisted of large health 
organizations that had access to $1.75 million in capital and while 
half of the participants shared in savings, none had a complete return 
on their investment. They suggested that CMS continue to create 
demonstration projects for shared savings initiatives and delay the 
implementation of the Shared Savings Program. One commenter suggested 
phasing in the program. Specifically, the commenter suggested that we 
start small and periodically assess the program's requirements to 
determine which policies promote success and which create barriers.
    Response: The Shared Savings Program adopts many of the program 
aspects of the PGP demonstration, but some adjustments were necessary 
in

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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.
    Response: In the proposed rule, we not only outlined our proposals 
for implementing the Shared Savings Program, but also provided detailed 
information on other alternatives we had considered and we sought 
comment on both our proposed policies and the other alternatives. The 
public comments submitted in response to the proposed rule have 
provided us with additional information and background regarding not 
only our proposed policies, but also the alternatives we considered. In 
response to the public comments, we have made significant changes to a 
number of our proposed policies. Nevertheless, we believe the policies 
in this final rule remain consistent with the overall framework for the 
program initially laid out in the proposed rule. As a result, we do not 
believe that there is any benefit to publishing this rule as an interim 
final rule rather than a final rule. We also believe 60 days 
represented a sufficient amount of time for interested parties to 
submit their comments on the proposed rule. We received many detailed 
comments in response to the proposed rule within the 60-day comment 
period. We also note that a 60-day comment period is consistent with 
the requirements of section 1871(b)(1) of the Act and is the standard 
timeframe used for many of our proposed rules.
    Comment: Many commenters were concerned that the Shared Savings 
Program has similar characteristics to some forms of managed care where 
it is possible to achieve savings through inappropriate reductions in 
patient care. Some commenters, for example, asserted that the Shared 
Savings Program is a capitated model that is not in the best interest 
of patients. Other commenters, such as beneficiaries and beneficiary 
advocates, indicated that beneficiaries should retain their right to 
see any doctor of their choosing. We also received comments expressing 
concern that, as with some managed care approaches, the Shared Savings 
program essentially transfers the locus of responsibility for health 
care away from the patient, which is not as effective as more consumer-
driven approaches. Another commenter expressed concern that assignment 
of beneficiaries to an ACO participating in the Shared Savings Program 
indicates that the program is a new version of managed care. One 
commenter suggested using the current Medicare Advantage (MA) structure 
to serve as the foundation of the Shared Savings Program. The commenter 
argued that MA plans are better suited to take on risk and provide care 
that meets many of the goals of the Shared Savings Program, and 
allowing these entities to participate will enable the program to reach 
a larger population. Additionally, a commenter requested information on 
why CMS is creating new policies for compliance, marketing and 
ownership instead of using policies already in place by MA plans. A few 
commenters claimed other countries tried this model and failed.
    Response: It is important to note that the Shared Savings Program 
is not a managed care program. Medicare FFS beneficiaries retain all 
rights and benefits under traditional Medicare. Medicare FFS 
beneficiaries retain the right to see any physician of their choosing, 
and they do not enroll in the Shared Savings Program. Unlike managed 
care settings, the Shared Savings Program ``assignment'' methodology in 
no way implies a lock in or enrollment process. To the contrary, it is 
a process based exclusively on an assessment of where and from whom FFS 
beneficiaries have chosen to receive care during the course of each 
performance period. The program is also not a capitated model; 
providers and suppliers continue to bill and receive FFS payments 
rather than receiving lump sum payments based upon the number of 
assigned beneficiaries. The design of the Shared Savings Program places 
the patient at the center. It encourages physicians, through the 
eligibility requirements, to include their patients in decision making 
about their health care. While we frequently relied on our experience 
in other Medicare programs, including MA, to help develop program 
requirements for the Shared Savings Program, there are often times when 
the requirements deviate precisely because the intent of this program 
is not to recreate MA. Unlike MA, this program's design retains FFS 
flexibility and freedom of choice available under Medicare Parts A and 
B which necessitates different program requirements. Lastly, in order 
for an ACO to share in savings the ACO must meet quality standards and 
program requirements that we will be monitoring. We will monitor the 
ACO's compliance with these requirements, as described in section II.H. 
of this final rule, with a special focus on ACOs that attempt to avoid 
at-risk patients. The purpose of the Shared Savings Program is to 
achieve savings through improvements in the coordination and quality of 
care, and not through avoiding certain beneficiaries or placing limits 
on beneficiary access to needed care.

[[Page 67806]]

    Comment: One commenter suggested CMS provide funding to Regional 
Health Improvement Collaboratives to assist in educating Medicare 
beneficiaries about the program and to help enable the collection and 
reporting of data on patient experience. In addition, one commenter 
recommended the creation of a national surveillance database during 
ACOs implementation to guide osteoporosis prevention, intervention and 
treatment efforts. The commenter suggested that a national database 
would help reduce mortality and costs associated with preventable hip 
fractures due to osteoporosis.
    Response: Both are excellent suggestions. Unfortunately, we are not 
in a position to implement these recommendations for this program at 
this time. The comment suggesting funding for Regional Health 
Improvement Collaboratives is beyond the scope of the proposed rule. We 
note, however, that the Innovation Center is currently accepting 
innovative solutions aimed at improving care delivery at their Web 
site, Innovations.cms.gov.
    Comment: One commenter suggested CMS address the comments received 
from the November 17, 2010 RFI.
    Response: In the proposed rule, we summarized many of the comments 
we received in response to the RFI, and these comments informed many of 
the policy choices made in the proposed rule. In addition, the RFI 
comments are publicly available at regulations.gov. Accordingly, we 
will not be addressing the entirety of those comments in this final 
rule; however any RFI comments we determined pertinent to this final 
rule may appear.
    Comment: One commenter expressed concern over CMS' example of 
reducing unnecessary hospital visits as one way that ACOs could improve 
care. The commenter explained that the excess revenue created by 
additional ER visits helps to sustain other services provided by a 
hospital that may not bring in as much revenue. The commenter concluded 
the reduction in visits would eventually lead to the closure of many 
small rural hospitals. A similar comment stated that encouraging 
coordination and reducing fragmented care will reduce hospital 
reimbursements.
    Response: The focus of the Shared Savings Program is to provide 
coordinated care to Medicare FFS beneficiaries. The program aims to 
provide higher quality care across the continuum of care; this may 
include additional office visits, as opposed to ER visits, for patients 
who do not require emergency services. Cost shifting is of great 
concern to us both within the Shared Savings Program and outside of the 
program. We believe it is in the patient's best interest to receive 
care in the proper setting and to receive emergency services only in 
times of emergency. Incurring costs for unnecessary care, or care 
provided in an inappropriate care setting, can be harmful to 
beneficiaries and payers alike. For more information about cost 
shifting related to the Shared Savings Program refer to section II.H.4. 
of this final rule.

E. Reorganization of the Regulations Text

    We have revised the proposed regulations text to reflect the final 
policies adopted in this final rule. We have also made significant 
revisions to the structure and organization of the regulations text in 
order to correspond more closely with the organization of the preamble 
to this final rule and to make it easier to locate specific provisions 
within the regulations text.

II. Provisions of the Proposed Rule, Summary of and Responses to Public 
Comments, and the Provisions of the Final Rule

A. Definitions

    For purposes of the proposed rule, we defined three terms used 
throughout the discussion: Accountable care organization (ACO), ACO 
participant, and ACO provider/supplier. We encourage the reader to 
review these definitions in Sec.  425.20. We incorporated comments on 
these definitions into the discussion that follows.

B. Eligibility and Governance

1. General Requirements
a. Accountability for Beneficiaries
    Section 1899(b)(2)(A) of the Act requires participating ACOs to 
``be willing to become accountable for the quality, cost, and overall 
care of the Medicare fee-for-service beneficiaries assigned to it.'' To 
satisfy this requirement, we proposed that an ACO executive who has the 
authority to bind the ACO must certify to the best of his or her 
knowledge, information, and belief that the ACO participants are 
willing to become accountable for, and to report to us on, the quality, 
cost, and overall care of the Medicare FFS beneficiaries assigned to 
the ACO. We further proposed that this certification would be included 
as part of the ACO's application and participation agreement.
    Comment: A commenter suggested that providers should not be held 
liable for unmanageable patients and/or those patients that refuse 
treatment altogether. Other commenters recommended that we not hold an 
ACO accountable for those patients who choose to decline to have CMS 
share their claims data with the ACO. Another commenter suggested that 
CMS require ACOs to state specifically in their applications the 
processes used to assure that Medicare patients have access to 
relatively costly but medically necessary procedures, such as 
transplantation.
    Response: In order to retain beneficiary freedom of choice under 
traditional FFS Medicare, the basis for beneficiary assignment to ACOs 
is where, and from whom, they choose to receive a plurality of their 
primary care services during the performance year. ACOs must be willing 
to become accountable for total quality, cost, and overall care of 
these Medicare FFS beneficiaries. An ACO will not receive an assignment 
of those beneficiaries that choose not to receive care from ACO 
providers. Beneficiaries who choose to receive care from ACO providers, 
regardless of whether they are ``unmanageable'' or noncompliant with 
treatment recommendations may become part of the ACO's assigned 
population. Since patient-centeredness is an integral part of this 
program, we believe such beneficiaries represent an excellent 
opportunity for ACOs to create, implement, and improve upon patient-
centered processes that improve patient engagement. We note that 
avoidance of such beneficiaries, as described in more detail in section 
II.H.3. of this final rule, will result in termination of an ACO's 
participation agreement. Similarly, in the interest of beneficiary 
engagement and transparency, we believe it is important to provide 
beneficiaries with an opportunity to decline data sharing. As discussed 
in greater detail in section II.B.4. of this final rule, a process for 
beneficiaries to decline data sharing provides an opportunity for ACOs 
to explain to patients how access to their personal health information 
will help the ACO improve the quality of its care. We believe that 
requiring an ACO executive who has the authority to bind the ACO to 
certify to the best of his or her knowledge, information, and belief 
that the ACO participants are willing to become accountable for, and to 
report to us on, the quality, cost, and overall care of the Medicare 
FFS beneficiaries assigned to the ACO provides sufficient assurance 
that the ACO will be accountable for its assigned beneficiaries. By 
allowing ACOs to determine how they will satisfy this requirement, we 
will afford ACOs the flexibility needed to demonstrate their

[[Page 67807]]

commitment to beneficiary accountability in a manner which is most 
suited to their own ACO model.
    Final Decision: We are finalizing our policy regarding 
certification of accountability for beneficiaries described in (76 FR 
19544) as proposed without change (Sec.  425.100 and 425.204).
b. Agreement Requirement
    Section 1899(b)(2)(B) of the Act requires participating ACOs to 
``enter into an agreement with the Secretary to participate in the 
program for not less than a 3-year period * * *.'' For the first round 
of the Shared Savings Program, we proposed to limit participation 
agreements to a 3-year period. We sought comments on this proposal 
regarding the initial consideration of a longer agreement period.
    If the ACO is approved for participation, we proposed that an 
authorized executive--specifically, an executive who has the ability to 
bind the ACO must certify to the best of his or her knowledge, 
information, and belief that its ACO participants and its ACO 
providers/suppliers agree to the requirements set forth in the 
agreement between the ACO and us, and sign a participation agreement 
and submit the signed agreement to us. We proposed that the 
participation agreement would also include an acknowledgment that all 
contracts or arrangements between or among the ACO, ACO participants, 
ACO providers/suppliers, and other entities furnishing services related 
to ACO activities would require compliance with the ACO's obligations 
under the agreement. Additionally, we expressed our intention that all 
ACOs, ACO participants, and ACO providers/suppliers Shared Savings 
Program would be subject to the requirements of the agreement between 
the ACO and CMS and that all certifications submitted on behalf of the 
ACO in connection with the Shared Savings Program application, 
agreement, shared savings distribution or otherwise extend to all 
parties with obligations to which the particular certification applies.
    An authorized executive of the ACO would sign the participation 
agreement after its approval for participation. Finally, we proposed 
that the ACO would be responsible for providing a copy of the agreement 
to its ACO participants and ACO providers/suppliers. We solicited 
comment on this proposal, including any additional measures or 
alternative means that we should consider to fulfill this requirement.
    Comment: Commenters requested that CMS define the term authorized 
executive when stating that an authorized executive of the ACO must 
sign the participation agreement.
    Response: As we stated in the proposed rule, an authorized 
executive is an executive of the ACO who has the ability to bind the 
ACO to comply with all of the requirements for participation in the 
Shared Savings Program.
    Final Decision: We are finalizing this proposal regarding 
agreements as described previously under Sec.  425.208 and Sec.  
425.210.
    Further, as described in Sec.  425.200, the ACO's agreement period 
will be for not less than 3 years, consistent with statute, although 
some agreement periods may be longer than 3 years.
c. Sufficient Number of Primary Care Providers and Beneficiaries
    Section 1899(b)(2)(D) of the Act requires participating ACOs to 
``include primary care ACO professionals that are sufficient for the 
number of Medicare FFS beneficiaries assigned to the ACO * * *'' and 
that at a minimum, ``the ACO shall have at least 5,000 such 
beneficiaries assigned to it * * *.'' Physician patient panels can vary 
widely in the number of FFS Medicare beneficiaries served. In section 
II.E. of this final rule, we discuss our assignment methodology and how 
its use in the assignment of beneficiaries during the baseline years in 
order to establish a historical per capita cost benchmark against which 
the ACO's evaluation during each year of the agreement period would 
take place. In the proposed rule, we stated we believed it would be 
reasonable to assume that if by using this assignment algorithm the ACO 
demonstrates a sufficient number of beneficiaries to fulfill this 
eligibility requirement for purposes of establishing a benchmark, then 
the ACO would also demonstrate that it contains a sufficient number of 
primary care professionals to provide care to these beneficiaries. We 
stated we believed it was also reasonable to assume the ACO would 
continue to approximate this number of beneficiaries in each year of 
the agreement period. Thus, we proposed that for purposes of 
eligibility under section 1899(b)(2)(D) of the Act, an ACO would be 
determined to have a sufficient number of primary care ACO 
professionals to serve the number of Medicare beneficiaries assigned to 
it if the number of beneficiaries historically assigned over the 3-year 
benchmarking period using the ACO participant TINs exceeds the 5,000 
threshold for each year. We solicited comment on this proposal as well 
as any additional guidance to consider for meeting these requirements.
    We recognize that while an ACO could meet the requirements in 
section 1899(b)(2) of the Act when it applies to participate in the 
Shared Savings Program, circumstances may change during the course of 
the agreement period. We discussed the importance of maintaining at 
least 5,000 assigned beneficiaries with respect to both eligibility of 
the ACO to participate in the program and the statistical stability for 
purposes of calculating per capita expenditures and assessing quality 
performance. Therefore, we considered what action, if any, should be 
taken in the event the number of beneficiaries assigned to the ACO 
falls below 5,000 in a given performance year. Specifically, we 
considered whether an ACO's participation in the program should be 
terminated or its eligibility for shared savings be deferred if the 
number of beneficiaries drops below 5,000. We considered several 
options including immediate termination, termination following a CAP, 
scaling shared savings payments to reflect the population change, or 
taking no action against the ACO. After weighting all these options, we 
concluded that a reasonable compromise would balance the statutory 
requirements and program incentives, while still recognizing expected 
variations in an ACO's assigned population. Thus, if an ACO's assigned 
population falls below 5,000 during the course of the agreement period, 
we proposed to issue a warning and place the ACO on a corrective action 
plan (CAP). For the performance year for which we issued the warning to 
the ACO, we proposed that the ACO would remain eligible for shared 
savings. We further proposed termination of the ACO's participation 
agreement if the ACO failed to meet the eligibility criterion of having 
more than 5,000 beneficiaries by the completion of the next performance 
year. The ACO would not be eligible to share in savings for that year. 
We also reserved the right to review the status of the ACO while on the 
corrective action plan and terminate the agreement on the basis that 
the ACO no longer meets eligibility requirements. We requested comment 
on this proposal and on other potential options for addressing 
situations where the assigned beneficiary population falls below 5,000 
during the course of an agreement period.
    Comment: Commenters generally agreed that an ACO must have a strong 
primary care foundation with a sufficient number of providers to meet 
the needs of the population it serves. Additionally, commenters 
suggested

[[Page 67808]]

that there must be strong collaboration among multidisciplinary team 
members to ensure care coordination and patient centered care.
    Some commenters recommended that ACOs should be required to 
demonstrate sufficiency in the number, type, and location of providers 
available to provide care to the beneficiaries. Other commenters noted 
that the proposed rule did not mention any requirement that the ACO 
demonstrate sufficiency in the number, type and location of all 
providers available to provide multi-disciplinary care to the 
beneficiaries.
    Some commenters recommended that the minimum threshold of 
beneficiaries be increased to as high as 20,000 beneficiaries to reduce 
uncertainties in achieving program goals while other commenters 
believed that the 5,000 beneficiary threshold will preclude smaller and 
rural entities from participating in the Shared Savings Program as 
forfeiture of any shared savings and termination in the year following 
the corrective action plan would be too financially risky when the 
initial start up costs are taken into account.
    One commenter suggested that rather than maintain a strict 5,000 
beneficiary threshold requirement, we should provide leeway to ACOs to 
allow for a 10 percent variation from the beneficiary minimum 
threshold.
    Response: Congress established the 5,000 beneficiary requirement 
under section 1899(b)(2)(D) of the Act. A minimum threshold is 
important with respect to both the eligibility of the ACO to 
participate in the program and to the statistical stability for 
purposes of calculating per capita expenditures and assessing quality 
performance as described in section II.D. of this final rule. However, 
the expanded assignment methodology discussed in section II.E. of this 
final rule should allow more beneficiaries to be assigned to those ACOs 
that might have initially been ``too close'' to the threshold, 
increasing the ability for smaller ACOs to participate. We do not 
believe this warrants an increase in the threshold number of assigned 
beneficiaries as that could prohibit the formation of ACOs in both 
smaller and rural health care markets, and possibly considered contrary 
to statutory intent. Additionally, the expanded assignment methodology 
discussed in section II.E. of this final rule should allow the 
assignment of more beneficiaries which should make the additional 
flexibility offered by allowing for a 10 percent variation in the 
assigned population unnecessary.
    We do not believe that we should be prescriptive in setting any 
requirements for the number, type, and location of the providers/
suppliers that are included as ACO participants. Unlike managed care 
models that lock in beneficiaries to a network of providers, 
beneficiaries assigned to an ACO may receive care from providers and 
suppliers both inside and outside the ACO. ACOs represent a new model 
for the care of FFS beneficiaries and for practitioners to focus on 
coordination of care efforts. During the initial implementation of the 
Shared Savings Program, we believe that potential ACOs should have the 
flexibility to create an organization and design their models in a 
manner they believe will achieve the three-part aim without instituting 
specific requirements.
    Final Decision: We are finalizing our proposals without change 
(Sec.  425.110).
d. Identification and Required Reporting on Participating ACO 
Professionals
    Section 1899(b)(2)(E) of the Act requires ACOs to ``provide the 
Secretary with such information regarding ACO professionals 
participating in the ACO as the Secretary determines necessary to 
support the assignment of Medicare fee-for-service beneficiaries to an 
ACO, the implementation of quality and other reporting requirements * * 
*, and the determination of payments for shared savings * * *.'' As 
discussed in this section of the final rule, we are defining an ACO 
operationally as a legal entity that is comprised of a group of ACO 
participants as defined in Sec.  425.20.
    Based on our experience, we recognized that the TIN level data 
alone would not be entirely sufficient for a number of purposes in the 
Shared Savings Program. In particular, National Provider Identifier 
(NPI) data would be useful to assess the quality of care furnished by 
an ACO. For example, NPI information would be necessary to determine 
the percentage of registered HITECH physicians and other practitioners 
in the ACO (discussed in section II.F. of this final rule). NPI data 
would also be helpful in our monitoring of ACO activities (which we 
discuss in section II.H. of this final rule). Therefore, we proposed to 
require that organizations applying to be an ACO must provide not only 
their TINs but also a list of associated NPIs for all ACO 
professionals, including a list that separately identifies physicians 
that provide primary care.
    We proposed that the ACO maintain, update, and annually report to 
us the TINs of its ACO participants and the NPIs associated with the 
ACO providers/suppliers. We believe that requiring this information 
offers the level of transparency needed to implement the Shared Savings 
Program. We welcomed comments on our proposal to require reporting of 
TINs along with information about the NPIs associated with the ACO.
    Additionally, as we discussed in the proposed rule, the first step 
in developing a method for identifying an ACO, ACO participants, and 
ACO providers/suppliers is to establish a clear operational method of 
identifying an ACO that correctly associates its health care 
professionals and providers with the ACO. The operational 
identification is critical for implementation of the program and for 
determining, for example, benchmarking, assignment of beneficiaries, 
and other functions. Section 1899(a)(1)(A) of the Act defines ACOs as 
``groups of providers of services and suppliers'' who work together to 
manage and coordinate care for Medicare FFS beneficiaries. More 
specifically, the Act refers to group practice arrangements, networks 
of individual practices of ACO professionals, partnerships or joint 
venture arrangements between hospitals and ACO professionals, hospitals 
employing ACO professionals, or other combinations that the Secretary 
determines appropriate.
    We proposed to identify an ACO operationally as a collection of 
Medicare enrolled TINs, defined as ACO participants. More specifically, 
we proposed an ACO would be identified operationally as a set of one or 
more ACO participants currently practicing as a ``group practice 
arrangement'' or in a ``network'' such as where ``hospitals are 
employing ACO professionals'' or where there are ``partnerships or 
joint ventures of hospitals and ACO professionals'' as stated under 
section 1899(b)(1)(A) through (E) of the Act. For example, Shared 
Savings Programs TIN would identify a single group practice that 
participates in the Shared Savings Program. The set of TINs of the 
practices would identify a network of independent practices that forms 
an ACO. We proposed to require that organizations applying to be an ACO 
provide their ACO participant Medicare enrolled TINs and NPIs. We can 
systematically link each TIN or NPI to an individual physician 
specialty code.
    We also proposed that ACO participants on whom beneficiary 
assignment is based, would be exclusive to one ACO agreement in the 
Shared Savings Program. Under our proposal, this exclusivity would only 
apply to ACO participants who bill Medicare for the services rendered 
by primary care

[[Page 67809]]

physicians (defined as physicians with a designation of internal 
medicine, geriatric medicine, family practice and general practice, as 
discussed later in this final rule).
    However, we acknowledged the importance of competition in the 
marketplace to improving quality of care, protecting access to care for 
Medicare beneficiaries, and preventing fraud and abuse. Therefore, 
under our proposal, ACO participants upon which beneficiary assignment 
was not dependent (for example, acute care hospitals, surgical and 
medical specialties, RHCs, and FQHCs) would be required to agree to 
participate in the Medicare ACO for the term of the agreement, but 
would not be restricted to participation in a single ACO.
    Comment: Several commenters recommended that CMS maintain the list 
of TINs and NPIs. Additionally, some commenters recommended that CMS 
allow ACOs to verify any data reported in association with the ACO 
prior to these data being made public.
    Response: Section 1899(b)(2)(E) of the Act requires ACOs to 
``provide the Secretary with such information regarding ACO 
professionals participating in the ACO as the Secretary determines 
necessary to support the assignment of Medicare fee-for-service 
beneficiaries to an ACO, the implementation of quality and other 
reporting requirements * * *, and the determination of payments for 
shared savings * * *.'' As discussed previously, we will need both the 
TINs of all ACO participants and the NPIs associated with ACO 
providers/suppliers in order to assign beneficiaries to ACOs 
appropriately and accurately. Because section 1899(b)(2)(E) of the Act 
requires ACOs to provide us with the information we determine is 
necessary to support assignment, we believe it is consistent with this 
statutory requirement to require that ACOs maintain, update, and 
annually report to us those TINs and NPIs that are participants of 
their respective ACO. Since ACOs will be maintaining, updating, and 
annually reporting these TINs and NPIs to us, they will have ultimate 
review capabilities and it will not be necessary for us to provide them 
an additional opportunity to verify the names of ACO participants and 
ACO providers/suppliers before making this information available to the 
public. We note that, in order to ensure the accurate identification of 
any ACO, its participants, and its providers/suppliers, we may request 
additional information (for example, CMS Certification Numbers, mailing 
addresses, etc.) in the application process. We will identify any such 
additional information in the application materials.
    Comment: One commenter stated that our assessment of billing 
practices was incorrect because ``beginning on May 23, 2008, all health 
care providers, including those enrolled in the Medicare and Medicaid 
program, are required by the NPI Final Rule published on January 23, 
2004, to submit claims using their NPI'' but also notes that physicians 
participating in the Medicare program must enroll using their NPI and 
if they are billing through a group practice reassign their benefits to 
the group practice.
    Response: It is true that individuals and group practices must 
enroll in the Medicare program under unique NPIs. It is also true that 
NPIs (whether for an individual practitioner or a group practice for 
reassigned benefits) must be included on bills to the Medicare program. 
However, bills to the Medicare program must also include the TIN of the 
billing practitioner or group practice. As we stated in the proposed 
rule, not all physicians and practitioners have Medicare enrolled TINs. 
In the case of individual practitioners, however, their SSN may be 
their TIN. While providers are required to have an NPI for 
identification and to include the NPI in billing, billing is always 
through a TIN, whether that is an EIN or a SSN. We successfully 
employed TINs in the PGP demonstration for purposes of identifying the 
participating organizations, and the rules cited by the commenters did 
not pose any obstacle to doing so. We believe that we can operationally 
proceed on the same basis under the Shared Savings Program.
    Comment: Some commenters supported the proposal to use TINs as an 
organizing concept for ACOs. These commenters observed, for example, 
that this policy was consistent with the beginning of the PGP 
demonstration, under which the assignment of Medicare beneficiaries 
would start with the TIN of the organization providing the plurality of 
the visits with further assignment to a primary care provider. However, 
a number of other commenters requested that we reevaluate the proposal 
to employ TINs for identification of ACOs and assignment purposes. Some 
of these commenters suggested that the use of NPIs would recognize the 
realities of diverse systems, provide greater flexibility, and allow 
systems to designate those portions of the system which can most 
appropriately constitute an ACO. Other commenters similarly endorsed 
the use of NPIs as providing greater flexibility and more precision in 
identifying ACOs and assigning beneficiaries. One observed that using 
NPIs would also allow CMS and ACOs to track saving and quality 
improvements achieved by individual practitioners, as well as afford 
greater flexibility for systems to expand an ACO gradually to 
incorporate practitioners and components of the system.
    Response: We are finalizing our proposal to define the ACO 
operationally by its Medicare enrolled ACO participants' TINs. Using 
TINs provides a direct link between the beneficiary and the 
practitioner(s) providing the services for purposes of beneficiary 
assignment. Using TINs also makes it possible for us to take advantage 
of infrastructure and methodologies already developed for group-level 
reporting and evaluation. We believe this option affords us the most 
flexibility and statistical stability for monitoring and evaluating 
quality and outcomes for the population of beneficiaries assigned to 
the ACO. In contrast, adopting NPIs would create much greater 
operational complexity because individual NPIs move much more 
frequently between different organizations and practices. TINs are much 
more stable, and thus provide much greater precision in identifying 
ACOs. Furthermore, identifying through TINs avoids the necessity of 
making the NPIs upon which assignment is based exclusive to one ACO, 
thus allowing these NPIs (although not TINs) to participate in more 
than one ACO.
    Comment: Several commenters requested clarification about the use 
of TINs in identifying ACOs and assigning beneficiaries. Some inquired 
about the establishment of parameters of an ACO across a large health 
system with diverse and sometimes geographically remote components. 
Some of these commenters noted that large systems often employ a single 
TIN, so that the use of TINs for identification purposes would require 
inclusion of all the members of the system in a single ACO, even if 
these members are geographically remote from each other and otherwise 
diverse. One observed: ``Such remote entities may have a limited 
opportunity to participate in care coordination, and may in fact be 
better suited to participate in another more local ACO.'' A large 
clinic similarly observed that ``the use of TINs could pose a problem 
for large health systems.'' The owner of outpatient rehabilitation 
clinics in several States inquired how it would choose a single ACO in 
which to participate in order to serve the needs of patients in 
multiple States. Another asked whether it is permissible for some 
members of a

[[Page 67810]]

group practice to participate in the Shared Savings Program while 
others do not, adding their ``strong belief'' that participation in an 
ACO of some but not all providers in a group ``must be allowed.'' 
Another asked ``how CMS will account for the alignment of the 
beneficiary, signed up/enrolled with the PCP if the NP or PA saw the 
patient and billed using their individual NPI (which is linked to the 
``PCP' physician's Tax ID), but the credit is not being assigned to the 
PCP physician because s/he isn't billing for the services. This could 
create a big gap and problem in the allocation process.'' Another 
commenter asked how the program would handle the situation in which a 
healthcare system has multiple TINs.
    Response: We proposed to define an ACO operationally as a 
collection of Medicare enrolled TINs (that is, ACO participants). 
Therefore, in cases in which a healthcare system has multiple TINs, the 
collection of the system's TINs precisely identifies the ACO which 
consists of that health system. We understand the commenters' interest 
in the greater flexibility of, for example, including only parts of a 
large system with one TIN in an ACO. However, some level of exclusivity 
is necessary in order for the assignment process to function correctly, 
and especially to ensure the accurate assignment of beneficiaries to 
one and only one ACO. Use of TINs rather than NPIs provides the 
greatest degree of flexibility consistent with this requirement. 
Therefore, we are unable to allow, for example, a large health system 
with one TIN to include only parts of the system in an ACO. Systems 
that extend over several States can similarly choose more than one ACO 
for parts of their system only if they have multiple TINs. In order for 
a beneficiary to be assigned to an ACO in which his or her primary care 
physician is participating, the physician would have to bill for 
primary care services furnished to the beneficiary under a TIN included 
in that ACO.
    Comment: Many commenters objected to the exclusivity of primary 
care physicians on the grounds that that such exclusivity could be 
disruptive of their current practice patterns, which may involve the 
assignment of patients to a number of ACOs. Some objected that the 
proposed lock in was unfair.
    Another commenter complained that we did not sufficiently address 
the reasons for the lock in. Some commenters suggested methods to avoid 
the potential confusions that could occur in assigning beneficiary 
without our proposed lock in. For example, one commenter observed 
potential avoidance of this problem by creating incentives (for 
example, no deductibles and reduced co-insurance for primary care 
physician services) for patients to prospectively identify a primary 
care physician in an ACO. The commenter maintained that patients need 
to be accountable as well as the participating physicians and 
providers. Furthermore, the commenter contended that identification of 
a primary care physician does not have to limit patient choice in any 
way, but simply provides an alternative method for identifying the 
population of patients for which the ACO is responsible while getting 
more engaged patients to think about having a usual source of care. 
Alternatively, the commenter recommended that CMS should prospectively 
allow patients to choose their own Medicare ACO. This would relieve CMS 
from the proposed and flawed beneficiary attribution method that 
currently limits primary care physicians to participate in only one 
Medicare ACO.
    Several other commenters opposed the lock in but suggested that, if 
we retain it, the final rule should--
     Permit primary care physicians to elect consideration as 
specialists without taking into account their evaluation and management 
services for the purpose of aligning beneficiaries with an ACO;
     Permit specialists to elect to be treated as primary care 
physicians whose evaluation and management services will be considered 
for beneficiary alignment; and
     Permit primary care physicians to participate in ACOs on 
an individual basis, rather than through their group practice entities 
or employers.
    In either case, the final rule should encourage providers to work 
collaboratively to achieve savings and enhance care by allowing ACOs to 
arrange for medical services using contracted providers.
    Another commenter requested that we revisit this requirement and 
provide additional flexibility so that primary care providers could 
join more than one ACO or switch ACOs on an annual basis. Commenters 
suggested alternative assignment strategies that would allow 
participation in more than one ACO such as default assignment to 
practitioners who are only in one ACO or having practitioners assign 
patients to a particular ACO based on patient needs. Some commenters 
also argued for adopting a policy of voluntary beneficiary enrollment 
in an ACO, arguing in part that this policy would allow us to abandon 
the proposal restricting primary care physicians to participation in 
one ACO, which we proposed to prevent uncertainty in the assignment 
process. Other commenters specifically requested that rural physicians 
and ambulance providers be able to participate in multiple ACOs.
    Response: We regret that some of the language in the preamble about 
the exclusivity of ACO participants (defined by the Medicare-enrolled 
billing TIN) created unnecessary confusion about the proposal.