We are now working with over 20 ACOs in various stages of development.

We have been developing and managing physician driven enterprises since 1980 and find that, while the letters change from IPA to PHO to HMO to PPO, the foundation and building blocks to create a long term sustainable enterprise do not. We are currently working with 7 ACOs at various stages of evolution and have established ourselves as a well known builder and operator of Medicare Shared Savings Plans ( MSSP)as well as private ACOs reffered to as Accountable Health Organizations.

Our services have evolved around the goal of developing physician driven, community sponsored, patient centered strategies to move the pendulum back from the current domination by financial services companies who dictate care and create barriers to services, to a situation which uses reimbursement as a means to bind together the patient and the physician. Our success in this area encouraged us to fuse together consulting with data, management and administrative services to offer a steady hand to guide the effort. We always remember the goal is to improve the patient physician experience and outcome using clinically driven systems of care.

As we enter a post reform environment we knew that physicians would be forced to take sides. We are here to offer the option for physicians to choose their own side on behalf of the profession and on behalf of their patients.

Physician Executive Training

As with any great idea it starts with awareness and know how to plan and implement good decisions. Having good data is a first step as the outcome is measured on facts and experiences of the local and regional care marketplace. Building a shared vision within the primary and specialty care departments and aligning institutional services in such a way that makes the care more efficient is a challenge. First we must be able to develop some understandings, debate opinions and come to a common mutual respect for the various roles all must participate in to create the organized delivery system. Our team is compromised of everything from law to finance and as decisions are made and clinical integration is mapped out, the ACO committee must have the ability to convey both facts and enthusiasm for the vision shared among the core founders of the group.

Pendulum HealthCare Development Corporation’s job is to provide impartial and non judgmental facilitation towards goals and common understandings of strategy formation through the use of factual data to support awareness and knowledge of both risk and rewards of an ACO opportunity.

Feasibility and Readiness

As education and momentum begin to build, questions will crop up—what will this cost? Who will do what? What are the milestones? What if…?” And all these questions are discussed and facts and assumptions must be detailed into a plan.

Summarizing the prospective venture’s strengths and weaknesses must be done BEFORE the organization can become fully operational. ACO rules concerning requirements are broad yet strict in that the ACO must be able to manage both complex payment arrangements as well as report detailed data on utilization measured against guidelines.

Pendulum’s role is to be the project manager and make sure preliminary considerations including legal, medical management, financial and management issues are addressed in a market at a specific time.

Planning and Development

Planning has always been a difficult process because forecasting what future events may occur and projecting how revenue and expense may be altered by these events requires experienced staff and the ability to build contingency plans. We have been building these types of organizations since 1975 and have encountered many of the same types of issues over the years. We have developed Key Performance Indicators (KPI) for provider networks as well as accountable care-like organizations to help define and address these issues. We have access to Medicare paid claims data and health plan payment levels, databases of plans by state and by county, staffing ratio and salary databases to retain top talent, commercial claim databases to build a comparator group of guidelines, care management programs driven by evidence based CLINICAL data, and organized delivery system ratios. Combine this with a sum of 80 plus years of talent and experience supporting your ACO development and you see that the planning and development of your venture would be in capable hands.

Implementation and Management

Because of our success working with physician driven enterprises we have the capability to move quickly from planning to implementation by assembling a team of local and national talent to lead the initial launch and ACO application process. Several of us maintain close relationships with CMS staff and have participated in the startup of Medicare Advantage Plans. Both central office and regional office staff have input into supervision of ACOs and as rules change we remain ahead of the game.

In the implementation process we have been asked to joint venture with select ACO groups. This means we share the risk of achieving the bonus as well as state our willingness to share in the capital formation with our investors. This joint venture is an available option or a contract to simply manage the ACO venture based upon benchmarks.

All of this saves the Client from having to build the data warehouse, clinical profiling, bundled payment system, staffing and management systems and general state and federal reporting systems by having these variable costs knocked down into a predictable administration fixed fee.

Again, a fusion of technology capabilities and seasoned management experience is available to your provider organization to fast track the design, development and implementation of your Accountable Care Organization.

Collaborative ACO model from GoldStar Alliance for Health

Many smaller rural hospitals and physician staff are feeling they are not able to participate in the ACO process because they do not have enough Medicare Lives to qualify in their service are. Our solution is to expand the service area by partnering with additional physicians or hospitals to gather a greater number of eligible to be assigned.

Rather than spending months and years to develop an organizational structure Pendulum Health has already filed for a Limited Liability Company that your providers can buy into and own as the organizational structure for the ACO. Pendulum would operate the administration and data requirements for a fixed fee and a minority ownership in the LLC.

Private ACOs from GoldStar Alliance for Health.

Not ready for Medicare Shared Risk but want to get experience in managing a coordinated care enterprise. Many private payers are looking for new networks that would represent a high performance network for their patient populations and would pay for Private ACO a network management fee and a shared savings on a non-risk basis meaning more reimbursement for the providers.

Again this can be a single community of regional alliance of providers that can lead up to a Medicare ACO or, a Medicare Advantage licensed Health plan that is locally owned and operated.

Again Pendulum health would design, develop, implement and manage the private ACO in exchange for a management fee plus a minority equity position.


FOR IMMEDIATE RELEASE Monday, January 11, 2015

New hospitals and health care providers join successful, cutting-edge federal initiative that cuts costs and puts patients at the center of their care

Medicare Accountable Care Organization initiatives to improve how the health system cares for patients

Today, the Centers for Medicare & Medicaid Services (CMS) announced 121 new participants in Medicare Accountable Care Organization (ACO) initiatives designed to improve the care patients receive in the health care system and lower costs. With this announcement, ACOs now represent 49 states and the District of Columbia.

Americans will get better care and we will spend our health care dollars more wisely because these hospitals and providers have made a commitment to change how they do business and work with patients, HHS Secretary Sylvia M. Burwell said. “We are moving Medicare and the entire health care system toward paying providers based on the quality, rather than the quantity of care they give patients. The three new ACO initiatives being launched today mark an important step forward in this effort.”

ACOs were created to change the incentives for how medical care is paid for in the U.S., moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes.

Many Americans who have gotten ill or injured have experienced a situation where they have been shuttled from hospital to doctor’s office to doctor’s office, often enduring duplicative tests or receiving care that isn’t coordinated.

ACOs are groups of doctors and hospitals that join together to develop and execute a plan for a patient’s care and share information, putting the patient at the center of the health care delivery system. The ACOs are paid not based on how many tests or procedures are performed but by the success of the treatment administered.

ACOs are delivering better care, and they continue to show promising results on cost savings. In 2014, they had a combined total net program savings of $411 million for 333 Medicare Shared Savings Program (Shared Savings Program) ACOs and 20 Pioneer ACOs. Based on 2014 quality and financial performance results for Shared Savings Program ACOs who started the program in 2012, 2013, and 2014, those that reported in both 2013 and 2014 improved on 27 of the 33 quality measures, including patients’ ratings of clinicians’ communication, beneficiaries’ rating of their doctors, screening for tobacco use and cessation, screening for high blood pressure, and Electronic Health Record use. Shared Savings Program ACOs also outperformed group practices reporting quality on 18 out of 22 measures.

CMS also announced today that providers and hospitals have signed up to join new types of ACOs, which in addition to being paid for positive patient outcomes will also receive penalties for negative ones. With new participants in the Shared Savings Program (SSP), the Next Generation ACO Model, Pioneer ACO Model, and the Comprehensive ESRD Care Model, there will now be:

  • Nearly 8.9 million beneficiaries served
  • A total of 477 ACOs across SSP, Pioneer ACO Model, Next Generation ACO Model, and Comprehensive ESRD Care Model
  • 64 ACOs are in a risk-bearing track including SSP, Pioneer ACO Model, Next Generation ACO Model , and Comprehensive ESRD Care Model

The Next Generation ACO Model is a new CMS Innovation Center initiative that builds upon experience from the Pioneer ACO Model and the Shared Savings Program. With 21 participating ACOs, the new model offers a new opportunity in accountable care—one that enables providers and beneficiaries greater opportunities to coordinate care and aims to attain the highest quality standards of care. Unlike other models, this model includes a prospectively (rather than retrospectively) set benchmark, allows beneficiaries to choose to be aligned to the ACO, and tests beneficiary incentives for seeking care at Next Generation providers, including increased availability of telehealth and care coordination services. The Next Generation Model participants will have the opportunity to take on higher levels of financial risk – up to 100 percent risk – than ACOs in current initiatives. While they are at greater financial risk they also have a greater opportunity to share in more of the Model’s savings through better care coordination and care management. In addition, the ACOs will receive their budgets prospectively, in advance of the performance year, to plan and manage care around these financial targets from the outset. The ACOs will also be able to select from flexible payment options, such as infrastructure payments that support ACO investments in care.

The Medicare Shared Savings Program welcomed 100 new ACOs and nearly 150 renewing ACOs on January 1, 2016. Since the start of the ACO program in early 2012, thousands of health care providers have signed on to participate. In 2016, approximately 15,000 more physicians will be participating in ACOs under the program. With the new group of ACOs, CMS will have 434 ACOs participating in the Shared Savings Program next year, serving more than 7.7 million beneficiaries. ACOs have demonstrated increased interest in performance-based risk arrangements, with 22 ACOs now opting for either Track 2 or Track 3 participation.

Thirty-nine Shared Savings Program ACOs will also participate in the ACO Investment Model (AIM). This model, which has a total of 41 participants, will provide pre-paid shared savings to encourage new ACOs to form in rural and underserved areas and to encourage current Shared Savings Program ACOs to transition to performance-based risk arrangement. The up-front payments distributed through the AIM support ACOs in improving infrastructure and redesigning care processes to provide beneficiaries with lower cost and higher quality health care. 

“Accountable Care Organizations are improving quality of care and spending dollars more wisely. These new initiatives place patients at the center of a coordinated care delivery system and give providers the tools to achieve better outcomes,” said Patrick Conway, Deputy Administrator for Innovation and Quality and Chief Medical Officer for CMS. These initiatives also advance the Administration’s goals, announced on January 26, 2015, to move 30 percent of traditional Medicare fee-for-service payments into alternative payment models that pay providers based on the quality rather than the quantity of care they provide patients by 2016 – and 50 percent by 2018. The Affordable Care Act provides tools, such as Medicare ACOs, to move our health care system toward one that rewards doctors based on the quality, not just the quantity, of care they give patients. Today’s announcement is part of the Administration’s broader strategy to improve the health care system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality. More than 4,600 payers, providers, employers, patients, states, consumer groups, consumers and other partners have registered to participate in the Health Care Payment Learning and Action Network, which was launched to help the entire health care system reach these goals.

For more information on the Next Generation ACO Model, including the list of provider participants, please visit the Next Generation ACO Model web page.

For the Shared Savings Program, visit the Medicare Shared Savings Program web page.

For more information on the AIM, please visit the ACO Investment Model web page. The Center for Medicare and Medicaid Innovation (CMS Innovation Center) https://innovation.cms.gov/index.html was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries. The CMS Innovation Center is committed to transforming Medicare, Medicaid and CHIP to help deliver better care, and smarter spending for Medicare, Medicaid and CHIP beneficiaries, and healthier populations.


Health Affairs November 2012

Health Affairs offers an updated bibliography of reliable research and surveys of the ACO industry

It’s too soon to fully gauge the effectiveness of ACOs or patient-centered medical homes, but no one can say that they aren’t off and running. Nine articles offer early insights on ACO and patient-centered medical home care delivery models, both of which have made significant headway in a relatively short period of time. ACOs, in particular, have seen considerable momentum—from a standing start just two years ago, to more than 300 ACOs now operating in forty-eight states.

The goal of both models is to more tightly coordinate care and improve the health of patients, but no one is sure whether either model will deliver major cost savings, especially right away. Articles include the following:

Accountable Care Organizations May Have Difficulty Avoiding the Failures of Integrated Care Networks of the 1990s, by Lawton Burns and Mark Pauly of the Wharton School of the University of Pennsylvania.

Advancing Accountable Care: A Proposed Framework for Evaluating ACO Formation, Implementation, and Performance, by Elliott Fisher of the Center for Population Health at the Dartmouth Institute for Population Health and Clinical Practice and coauthors.

Advancing Accountable Care: Insights from the Brookings-Dartmouth ACO Pilot Sites, by Bridget Larson, formerly of the Dartmouth Institute for Health Policy and Clinical Practice, and coauthors.

Many Accountable Care Organizations Are Now Up and Running, If Not Off to the Races, by Harris Meyer, a freelance writer based in Yakima, Washington.

Small Primary Care Practices Have Four Very Large Hurdles to Overcome on the Way to Patient-Centered Medical Homes, by Paul Nutting of the University of Colorado Health Sciences Center and coauthors.

Results from a Patient-Centered Medical Home Pilot at UPMC Health Plan Hold Lessons for Broader Adoption of the Model, by Cynthia Napier Rosenberg, formerly of the UPMC Health Plan, and coauthors.

A Collaborative Accountable Care Model in Three Practices Showed Promising Early Results on Costs and Quality of Care, by Richard Salmon of Cigna HealthCare and coauthors.

How One Academic Health Center Is Finding Its Place As an Accountable Care Organization, by Alfred Tallia and Jenna Howard of the Robert Wood Johnson Medical School.

States Are Moving Forward with Reforms to Shift Primary Care into Patient-Centered Medical Homes, by Mary Takach of the National Academy for State Health Policy.


October 20th Federal News:

Medicare accountable care organizations addressed in CMS final rules

The Centers for Medicare and Medicaid Services (CMS) has expanded medical providers options to work in accountable care organizations (ACOs), to better coordinate patient care, and to deliver high quality, more cost-effective care. A final regulation and a notice is scheduled be published in the November 2 Federal Register.

The Patient Protection and Affordable Care Act (ACA) created ACOs, in which provider participation in an ACO is entirely voluntary. In addition, an interim final rule also to be published on November 2 provides waivers in connection with the Shared Savings Program.

ACOs are part of the traditional Medicare fee-for-service program in which beneficiaries may choose to obtain services from any provider. Whether an ACO is responsible for coordinating care for a beneficiary will be based on whether that person received most of their primary care services from the organization. A provider in an ACO may not require a beneficiary to obtain services from another provider or supplier in the same ACO.

The November 2 guidelines implement initiatives for bundled payments for care improvement and for comprehensive primary care that offer alternatives to coordinate and improve health care, as follows:

The Medicare Shared Savings Program will provide incentives for participating health care providers who agree to work together and become accountable for coordinating care for patients. Providers who band together through this model and who meet certain quality standards based upon, among other measures, patient outcomes and care coordination among the provider team, may share in savings they achieve for the Medicare program. The higher the quality of care providers deliver, the more shared savings the providers may keep.

The Advance Payment model will provide additional support to physician-owned and rural providers participating in the Medicare Shared Savings Program who also would benefit from additional start-up resources to build the necessary infrastructure, such as new staff or information technology systems. The advanced payments would be recovered from any future shared savings achieved by the ACO.

Medicare Shared Savings Program. Studies have shown that better care often costs less, because coordinated care helps to ensure that the patient receives the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors, CMS noted.

The final rule requires each provider in an ACO to notify the beneficiary that the beneficiarys claims data may be shared with the ACO at the ACOs request. This data sharing is intended to make it easier to coordinate the beneficiarys care. The provider must give the beneficiary the opportunity to decline the data sharing arrangements. For Medicare beneficiaries who choose not to decline the data sharing arrangement, the final rule limits data sharing to the purposes of the Shared Savings Program and requires compliance with applicable privacy rules and regulations, including the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

In the final rule, the list of medical providers and suppliers eligible to participate independently in the Shared Savings Program and to establish ACOs has been expanded to include certain critical access hospitals, federally qualified health centers, and rural health clinics.

Any Medicare enrolled provider or supplier in good standing may participate in an ACO, however they may not be used for purposes of assigning patients to the ACO, the rules asserted.

The ACA also requires each ACO to establish a governing body representing ACO providers of services and suppliers and Medicare beneficiaries. The final rule requires each ACO to be responsible for routine self-assessment, monitoring, and reporting of the care it delivers, and to use the information to continually improve the care delivered to their Medicare beneficiaries.

To be eligible to participate in the Shared Savings Program, an ACO must agree to accept responsibility for at least 5,000 Medicare fee-for-service beneficiaries. The final rule requires a prospective Medicare ACO to complete an application providing the information requested by CMS, including how the ACO plans to deliver high quality care and lower the growth of expenditures for the beneficiaries it serves. If the application is approved, the ACO must sign an agreement with CMS to participate in the Shared Savings Program for a period of at least three years. An ACO will not be automatically accepted into the Shared Savings Program, CMS emphasized.

Monitoring Performance. The final rule outlines CMS plans for monitoring ACOs to ensure their compliance with eligibility and program requirements. The monitoring plan includes analyzing claims and specific financial and quality data as well as the quarterly and annual aggregated reports, performing site visits, and performing beneficiary surveys. Monitoring also may include audits if necessary.

Under the final rule, CMS may terminate the agreement with an ACO under a number of circumstances, including failure to comply with eligibility and program requirements, avoidance of at-risk beneficiaries and failure to meet the quality performance standards.

Medicare will continue to pay individual providers and suppliers for specific items and services as it currently does under the fee-for-service payment systems. As required in the final rule, CMS will develop a benchmark for savings to be achieved by each ACO if the ACO is to receive shared savings or for ACOs that have elected to accept responsibility for losses. The amount of an ACOs shared savings or losses depends on its performance on quality standards.

The final rule establishes quality performance measures and a methodology for linking quality and financial performance, setting a high bar for ACOs on delivering coordinated and patient-centered care. The performance measures emphasize continuous improvement around the three-part aim of better care for individuals, better health for populations, and lower growth in expenditures, CMS explained. ACOs must have in place procedures and processes to promote evidence-based medicine, beneficiary engagement, and coordination of care. Furthermore, ACOs must report quality measures to CMS and give timely feedback to providers for continual improvement of care to beneficiaries. To assure program transparency, the final rule requires ACOs to publicly report certain aspects of their performance and operations and CMS to publicly report certain quality data.

Under the final rule, an ACO that meets the programs quality performance standards will be eligible to receive a share of the savings if its assigned beneficiary expenditures are below its own specific updated expenditure benchmark The final rule also would hold certain ACOs accountable for sharing losses by requiring ACOs to repay Medicare for a portion of losses (expenditures above its updated benchmark). To provide an entry point for organizations with varied levels of experience with and willingness to share losses, the final rule allows an ACO to choose one of two program tracks. The first track allows an ACO to operate on a shared savings only arrangement for the duration of their first agreement. The second track allows ACOs to share in savings and losses for the duration of the agreement, in return for a higher share of any savings it generates.

Under the ACA, the Shared Savings Program must be established no later than Jan. 1, 2012. The final rule establishes the program and states that CMS will start accepting applications from prospective ACOs shortly after Jan. 1, 2012.

The Medicare Shared Savings rule, which implements ACA Sec. 3022, is effective 60 days after publication in the Federal Register, on November 2. For more information, contact Rebecca Weiss, 410-786-8084, This email address is being protected from spambots. You need JavaScript enabled to view it.. For more information, visit http://www.ofr.gov/OFRUpload/OFRData/2011-27461_PI.pdf.

Advance Payment Model ACO. The November 2 notice on the Advance Payment ACO Model announces the testing of the Advance Payment Model for certain ACOs participating in the Medicare Shared Savings Program scheduled to begin in 2012, and provides information about the model and application process.

Under the Advance Payment ACO Model, participating ACOs will receive three types of payments:

  • an upfront, fixed payment;
  • an upfront, variable payment based on the number of the ACOs historically-assigned beneficiaries; and
  • a monthly payment of varying amount depending on the size of the ACO and on the number of its historically-assigned beneficiaries.

The Advance Payment Model is designed to provide support to organizations whose ability to achieve the three-part aim would be improved with additional access to capital, including rural and physician-owned organizations. This particular ACO Model is open only to the following two types of ACOs participating in the Shared Savings Program:

  • those that do not include any inpatient facilities and have less than $50 million in total annual revenue; and
  • those in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals and have less than $80 million in total annual revenue.

Questions regarding the Advance Payment Model or the application process should be sent to This email address is being protected from spambots. You need JavaScript enabled to view it.. For more information, visit http://www.innovations.cms.gov/areas-of-focus/seamless-and-coordinated-caremodels/advance-payment/.

Shared Savings Waivers. Also to be published in the November 2 Federal Register is a joint CMS and Department of Health and Human Services (HHS) Office of Inspector General (OIG) interim final rule with comment period addressing waivers of certain fraud and abuse laws in connection with the Shared Savings Program.

This interim final rule establishes waivers of the application of the Physician Self-Referral Law, the Federal anti-kickback statute, and certain civil monetary penalties law provisions to specified arrangements involving ACOs in the Shared Savings Program, including ACOs participating in the Advance Payment Initiative.

The regulations are scheduled to be effective on November 2. Comments on the interim final rule must be received 60 days after the date of publication of the interim final rule in the Federal Register. Comments, which should include file code CMS-1439-IFC, should be sent electronically to http://www.innovations.cms.gov/areas-of-focus/seamless-and-coordinated-caremodels/advance-payment/. For more information, visit This email address is being protected from spambots. You need JavaScript enabled to view it.

Provider Contracting Environment: ACOs, Value Based Purchasing, Practice Acquisition & More

by William DeMarco, President and CEO, Pendulum HealthCare Development Corporation - a 2-part video. Visit our YouTube channel.

CMS announces three ACO initiatives

By Jessica Zigmond and Melanie Evans

Posted: May 17, 2011 - 11:45 am ET

Tags: Accountable Care Organizations, Center for Medicare and Medicaid Innovation, Donald Berwick, Medicare

Almost two months after issuing its proposed rule (PDF) on accountable care organizations, the CMS on Tuesday announced three initiatives (PDF) the agency says will provide more options and incentives for providers to participate in ACOs.

See an exclusive online commentary by CMS Administrator Dr. Donald Berwick here.

According to the CMS, the Center for Medicare and Medicaid Innovation is accepting applications for the Pioneer ACO Model (PDF), which will be available this summer for those organizations that have already started coordinating care for patients. The CMS expects the Pioneer ACO Model to save the Medicare program about $430 million over three years.

“The Pioneer Model is an opportunity for those organizations that have already adopted significant care-coordination processes to move further and faster into seamless, coordinated care by utilizing alternative payment mechanisms,” Dr. Richard Gilfillan, acting director of the innovation center, said in a news release.

The Innovation Center is also accepting public comments on whether it should offer an advance payment initiative, which would allow certain ACOs participating in the Medicare shared-savings program to access a portion of their savings in advance. The idea is to help providers make the necessary staffing and infrastructure investments for their ACO to be successful, according to the CMS, which will accept public comments until June 17.

And the agency said it will host free “accelerated development learning sessions” for providers who want to learn more about the necessary steps in becoming an ACO. The CMS said there will be four sessions in 2011, and that each one will center on a core competency for an ACO, including improving care delivery to improve quality and reduce costs; using health information technology and data resources; and building capacity to assume and manage financial risk.

Ten physician groups that previously tested accountable-care-style payments could be suitable Pioneer applicants, CMS Administrator Dr. Donald Berwick told reporters as the initiatives were announced. The 10 groups are finalizing contracts to extend the prior five-year test for two years, incorporating elements of proposed accountable care rules.

Berwick said the new initiatives were not an admission Medicare's proposed accountable care rules would be unworkable for major providers. Major physician associations have rejected proposals in letters to Berwick and some have said they won't participate without changes. Berwick said plans announced today were underway prior to the proposed rule, which was released in late March.

“The criticism is comment,” he said. “We're welcoming that. We're in a comment period. We had a proposed rule out there we're getting terrific feedback. Now we're understanding a lot about what's going on and we're going go to meld that input into a better final rule,” he said.

“I see these as complementary” he said. “This program from the Innovation Center is going really to help the early comers get started sooner its gong t help novices learn faster and its going to help those who need a little bit of assistance to capitalize the effort get that capital.”

Berwick said the effort to launch accountable care organizations is on schedule.

Berwick said officials would take a hard look at comments on quality measures and minimum savings required in order for providers to earn financial incentives. Providers have criticized the proposals as costly and difficult to achieve.

“This is a voluntary program, so we know that we have to create incentives and requirements that are attractive to potential participants,” said Jonathan Blum, the deputy administrator and director of the Center for Medicare. “But as Dr. Berwick laid out we also have to balance other considerations, beneficiaries and the trust fund.”

UPDATE


Federal News:

Federal agencies issue proposals for health reform’s accountable care organizations

The Centers for Medicare & Medicaid Services (CMS), the Department of Health & Human Services’ Office of Inspector General (OIG), the Federal Trade Commission (FTC), and the Department of Justice (DOJ), and the Internal Revenue Service (IRS) on March 31 separately and in a coordinated effort issued guidance addressing varied legal issues regarding Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (Shared Savings Program). The documents were made available on March 31. The agencies will accept public comment on their respective documents through May 31, 2011. The guidance is scheduled to be published in the Federal Register and in the Internal Revenue Bulletin in early April.

The CMS’s proposed rule would establish ACOs under the Shared Savings Program in the Medicare fee-for-service program. The new program will be established on January 1, 2012. ACOs, established under the Patient Protection and Affordable Care Act (ACA), create incentives for health care providers to work together to treat an individual patient across care settings–including doctor’s offices, hospitals, and long term care facilities. The Medicare Shared Savings Program will reward ACOs that lower health care costs while meeting performance standards on quality of care and putting patients first. CMS emphasizes that patient and provider participation in an ACO is purely voluntary.

CMS also announced it will hold a series of open-door forums and listening sessions during the proposed rule comment period to help the public understand what the CMS is proposing to do and to ensure that the public understands how to participate in the formal comment process. In addition to improving the health of the population, ACOs are projected to save as much as $960 million over three years for the Medicare program.

Under the Medicare Shared Savings Plan, ACOs that save money by getting beneficiaries the right care at the right time–for example, by improving access to primary care so that patients can avoid a trip to the emergency room–can share in those savings with Medicare. ACOs that do not meet quality standards cannot share in program savings, and over time, those that do not generate savings can be held accountable.

To share in any savings obtained, ACOs would need to meet quality standards in the following five key areas:

  • Patient/caregiver care experiences
  • Care coordination
  • Patient safety
  • Preventive health
  • At-risk population/frail elderly health.

In addition to performance standards for these measures, the CMS is proposing scoring methodology, including measures to prevent providers in ACOs from being penalized for treating patients with more complex conditions. The proposed rules also include strong protections to ensure that ACOs do not limit patients’ care choices.

To ensure that providers and suppliers have clear and practical guidance to form ACOs without running afoul of the fraud and abuse, antitrust, and tax laws, the CMS worked with the HHS OIG, the FTC, and the DOJ, and the IRS to complement the CMS-proposed rule with the following documents: a joint CMS and OIG notice and request for public comments on potential waivers of certain fraud and abuse laws in connection with the Medicare Shared Savings Program; a joint FTC and DOJ proposed antitrust policy statement; and an IRS notice requesting comments regarding the need for additional tax guidance for tax-exempt organizations, including tax-exempt hospitals, participating in the Medicare Shared Savings Program.

The law requires each ACO to include health care providers, suppliers, and Medicare beneficiaries on its governing board. The ACO must take responsibility for at least 5,000 beneficiaries for a period of three years, also suggested in the law. Beneficiaries would not enroll in a specific ACO. Instead the proposed rule calls for Medicare to take a retrospective look at the beneficiary’s use of services to determine whether a particular ACO should be credited with improving care and reducing expenditures.

Under the proposed rule, Medicare would continue to pay individual health care providers and suppliers for specific items and services as it currently does under the Medicare fee-for-service program payment systems. CMS would also develop a benchmark for each ACO against which ACO performance is measured to assess whether it qualifies to receive shared savings, or to be held accountable for losses. CMS also is proposing to establish a minimum sharing rate that would account for normal variations in health care spending, so that the ACO would be entitled to shared savings only when savings exceeded the minimum sharing rate. The amount of shared savings depends on whether an ACO meets or exceeds quality performance standards. The proposed rule would provide for additional shared savings for ACOs that include beneficiaries who receive services from a federally qualified health center or rural health clinic during the performance year.

CMS is proposing to implement both a one-sided risk model (sharing of savings only for the first two years and sharing of savings and losses in the third year), and a two-sided risk model (sharing of savings and losses for all three years), allowing the ACO to opt for either model. This will help organizations that are less experienced with risk models, such as some physician-driven organizations or smaller ACOs,. They can gain experience with population management before transitioning to a risk-based model, and there is also an opportunity for more experienced ACOs that are ready to share in losses to enter a sharing arrangement that provides a greater share of savings, but at the risk of repaying Medicare a portion of any losses.

Providers participating in an ACO would be required to notify the beneficiary that they are participating in an ACO, and that the provider will be eligible for additional Medicare payments for improving the quality of care the beneficiary receives while reducing overall costs or may be financially responsible to Medicare for failing to provide efficient, cost-effective care. The beneficiary may then choose to receive services from the provider or seek care from another provider that is not part of the ACO.

Additionally, providers would be required to notify the beneficiary that the beneficiary’s claims data may be shared with the ACO for care coordination. However, the provider may not require a beneficiary to obtain services from another provider or supplier in the same ACO. The provider must give the beneficiary the opportunity to opt-out of those data sharing arrangements. For Medicare beneficiaries who choose not to opt-out of the data sharing arrangements, the proposed rule would limit data sharing to the purposes of the Shared Savings Program and would require compliance with applicable privacy rules and regulations, including the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Antitrust Guidance For Providers In ACOs. Under the proposed Antitrust Policy Statement, the FTC and DOJ are proposing to establish different levels of antitrust scrutiny depending on the specific ACO arrangement. For example, create an antitrust “safety zone” for certain ACOs, those that use the same governance and leadership structure and the same clinical and administrtive processes in the commercial market as it uses to qualify for and participate in the Shared Savings Program, and establish expedited antitrust reviews for others. The agencies understand that the collaborations among competitors that will occur through the formation of ACOs may raise concerns about competition. Consequently, the FTC and DOJ policy statement would coordinate competition analysis with CMS’s review of ACO applications to ensure the newly formed organizations do not lead to reduced competition and higher prices for consumers. For more details, visit http://www.ftc.gov/opp/aco/.

Public comment on the proposed Policy Statement may be sumitted electronically to the FTC and DOJ at https://ftcpublic.commentworks.com/ftc/acoenforcementpolicy/.

Tax Treatment Of ACOs. In Notice 2011-20 the IRS says it is considering the applicability of the provisions of the Internal Revenue Code governing tax-exempt organizations to hospitals or other health care organizations that are recognized as tax-exempt organizations participating in the Medicare Shared Savings Program through an ACO.

Consequently, the IRS is soliciting comments as to whether existing guidance relating to the Internal Revenue Code provisions governing tax-exempt organizations is sufficient for those tax-exempt organizations planning to participate in the Medicare Shared Savings Program through an ACO and, if not, what additional guidance is needed. The IRS also is soliciting comments concerning whether guidance is needed regarding the tax implications for tax-exempt organizations participating in activities unrelated to the Medicare Shared Saving Program, including shared savings arrangements with commercial health insurance payers, through ACOs.