CMS Request for Information Reinforces Belief That Many Approaches to ACOs Will Be Allowed

18 November 2010 Publication
Authors: Michael L. Blau C. Frederick Geilfuss II Maria E. Gonzalez Knavel Denise R. Rodriguez Chris E. Rossman Lawrence W. Vernaglia Judith A. Waltz

Legal News Alert: Health Care

On November 10, 2010, CMS published a request for information (RIF) regarding accountable care organizations (ACOs) and the Medicare Shared Savings Program (SSP). Comments are due no later than 5 p.m. Eastern, December 3, 2010.

The Patient Protection and Affordable Care Act (PPACA) encourages providers to form ACOs to participate in the Medicare program under Section 3021 or 3022 of PPACA. ACOs will test new reimbursement methods intended to create incentives for providers to improve quality and reduce costs of health care.

Under the SSP, an ACO that meets criteria yet to be promulgated may receive payments for shared savings if the ACO achieves quality performance and cost-savings requirements established by the Secretary of the U.S. Department of Health & Human Services (DHHS).

Section 3021 of PPACA also established the Center for Medicare and Medicaid Innovation (CMI) within CMS, which is authorized to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care. CMS is considering testing innovative payment and delivery system models that complement the SSP in the CMI. CMS states that both the SSP and the CMI are seeking to advance ACO structures that are organized as patient-centered and foster participation of physicians and other clinicians who are in solo or small practices.

CMS, the Office of Inspector General (OIG) of the DHHS, and the FTC have already solicited comments from the public. The three agencies hosted an important public workshop on October 5, 2010, to discuss the application and enforcement of the antitrust laws, physician self-referral prohibition, federal Anti-Kickback Statute, and Civil Monetary Penalty law to ACO structures. Transcripts of this workshop are available at:

Many of the questions asked by the RIF follow up on issues discussed on the October 5 workshop. CMS, in the RIF, asked for the following additional information:

1. What policies or standards should CMS consider adopting to ensure that groups of solo and small-practice providers have the opportunity to participate actively in the SSP and the ACO models tested by CMI?

2. Many small practices may have limited access to capital or other resources to fund efforts from which "shared savings" could be generated. What payment models, financing mechanisms, or other systems might CMS consider, either for the SSP or as models under CMI, to address this issue?

3. In addition to payment models, what other mechanisms could be created to provide access to capital?

4. CMS stated that the process of attributing beneficiaries to an ACO is important to ensure that expenditures, as well as any savings achieved by the ACO, are appropriately calculated and that quality performance is accurately measured. CMS also stated that having a seamless attribution process will help ACOs focus their efforts to deliver better care and promote better health.

5. CMS noted that some commenters argued it is necessary to attribute beneficiaries before the start of a performance period, so the ACO can target care-coordination strategies to those beneficiaries whose cost and quality information will be used to assess the ACO’s performance. Others argue the attribution should occur at the end of the performance period to ensure the ACO is held accountable for care provided to beneficiaries who are aligned to it based upon services they receive from the ACO during the performance period. How should CMS balance these two points of view in developing the patient attribution models for the SSP and ACO models tested by CMI?

6. How should CMS assess beneficiary and caregiver experience of care as part of its assessment of ACO performance?

7. PPACA requires CMS to develop patient-centeredness criteria for assessment of ACOs participating in the SSP. What aspects of patient centeredness are particularly important for CMS to consider and how should CMS evaluate them?

8. In order for an ACO to share in savings under the SSP, it must meet a quality performance standard determined by the Secretary. What quality measures should the Secretary use to determine performance in the SSP?

9. What additional payment models should CMS consider in addition to the model involving fee-for-service payments plus shared savings laid out in 42 U.S.C. § 1899(d) (PPACA Section 3022(d)? The Secretary has significant discretion under PPACA to use other payment models for the SSP.

10. What are the relative advantages and disadvantages of any such alternative payment models?


A key issue stressed in the RFI is CMS’ requirement that an ACO must be patient-centered and include a substantial role for physicians, including physicians not employed by a hospital. Many hospitals and health systems have been taking the lead in examining and forming ACOs. While hospital and health system involvement is often helpful or essential to provide necessary management skills, financial requirements, infrastructure, and other organizational requirements, hospital and system involvement should be ancillary to the primary purpose of creating a patient-centered organization where the physicians (and other appropriately licensed caregivers) are responsible for clinical decisions, care-giver organization and protocols, and patient care.

Many different approaches to ACOs will evolve. The October 5 workshop highlighted the disparate approaches currently being pursued. For example, a medical home has many of the characteristics that CMS is seeking. A physician-hospital organization can be modified to become an ACO. An integrated delivery system also can become an ACO. A key infrastructure requirement of every ACO will be access to patient-care data. This access may be provided by an already existing electronic health record (EHR) system. However, one commenter in the October 5 workshop who represented a large ACO stated that they did not use an EHR; rather, used a commercial-based Web product for disease and patient management.

Once the proposed regulations on ACOs and SSP are published, more clarity regarding ACO requirements will exist. However, all indications are that the regulations will permit a variety of approaches to achieving ACO goals.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Chris E. Rossman
Detroit, Michigan

Michael L. Blau
Boston, Massachusetts

C. Frederick Geilfuss II
Milwaukee, Wisconsin

Maria E. Gonzalez Knavel
Milwaukee, Wisconsin

Denise Rios Rodriguez
Los Angeles, California

Lawrence W. Vernaglia
Boston, Massachusetts

Judith A. Waltz
San Francisco, California

Jeffrey R. Bates
Los Angeles, California

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