Accountable Care Organizations

Accountable Care Organizations

The Affordable Care Act (“ACA”) embraced Accountable Care Organizations (“ACOs”) as a delivery system model that promotes coordination and integration. Viewed broadly, an ACO is an organizational structure for provider collaboration, care coordination and financial risk-sharing. To implement the ACO concept, CMS created the Medicare Shared Savings Program and the Center for Medicare and Medicaid Innovation (“CMMI”) launched the Pioneer ACO Model.

Medicare Shared Savings Program

In accordance with Section 3022 of the ACA, the U.S. Department of Health and Human Services (“HHS”) established the Medicare Shared Savings Program (“MSSP”). The MSSP incentivizes providers to improve care coordination, establish and adhere to evidence-based medicine guidelines, engage Medicare beneficiaries in their care and involve the larger community in re-designing health care delivery. Providers who form ACOs and participation in the MSSP are eligible to receive a portion of the “shared savings” they generate by improving care and reducing the cost. The Centers for Medicare and Medicaid Services (“CMS”) issued a final rule implementing the program in November 2011. At the same time, the Federal Trade Commission released a policy statement on antitrust enforcement regarding ACOs participating in the MSSP and the HHS Office of Inspector General and CMS, jointly, released an interim final rule establishing waivers of the physician self-referral law, the anti-kickback statute, and certain provisions of the civil monetary penalty law for activities conducted in connection with the MSSP. The IRS has also released guidance regarding the participation of tax-exempt health care providers in the MSSP.

Since the program’s inception, more 342 ACOs have enrolled in the MSSP, through four rounds of applications.  As of the most recent report from CMS, 338 MSSP ACOs remain active. CMS will accept applications for new MSSP ACOs in Summer 2014, and participation of these new ACOs in the MSSP will begin on January 1, 2015.

Pioneer ACO Model

The Pioneer ACO Model is distinct from the Shared Savings Program. Designed for health care organizations and providers who have experience in care coordination and risk-sharing, the Pioneer ACO Model is one of the programs developed by the CMMI to “test innovative payment and service delivery models.” The Pioneer ACO Model entails a shared savings and shared losses payment arrangement with higher levels of potential reward and risk than in the Shared Savings Program. ACOs that earn savings over the first two years will be eligible to move in the third year to a population-based payment model under which the ACO will receive a prospective per-beneficiary per-month payment. Pioneer ACOs are required to develop outcomes-based payment arrangements with payers other than Medicare by the end of the second year. On December 19, 2011, CMMI announced the selection of 32 organizations for participation in the Pioneer ACO model. The Pioneer ACO program began on January 1, 2012; however only 23 Pioneer ACOs are currently participating.

Information about the Pioneer ACO Model is available at: http://innovation.cms.gov/initiatives/Pioneer-ACO-Model/

As your organization considers pursuing an ACO, Ropes & Gray is here to help you with strategic and legal advice from an experienced team of attorneys with relevant backgrounds in all aspects of ACO formation.