The Patient Protection and Affordable Care Act (PPACA) intends to implement a system to monitor the quality and efficiency of health care providers. Last March, the Centers for Medicare & Medicaid Services (CMS) released proposed regulations to guide doctors, hospitals, and other health care providers as they attempt to form accountable care organizations (ACOs) under health care reform. These rules included certain provisions designed to encourage rural participation, and CMS recently provided clarification for these rural providers.
Under the general regulations, for ACOs to receive shared savings, they are required to meet a minimum savings rate (MSR). The MSR is the required percentage that ACO expenditures fall below certain standards. In the one-sided model, the MSR ranges from 2.0 percent to 3.9 percent, with variations due to the number of beneficiaries the ACO has assigned. Once the ACO meets the MSR threshold, it is eligible to share in the savings above the MSR amount. Therefore, the ACO is not eligible for “first dollar”savings. Under the one-sided model, ACOs can receive no more than 52.5 percent of their savings (50% for quality performance and up to 2.5% for including a federally qualified health center (FQHC) or rural health clinic (RHC) as a participant in the ACO).
Recognizing the need to encourage the formation of smaller ACOs in underserved rural populations, the Medicare Shared Savings Program proposed an exemption under the one-sided model from the two percent (2%) savings threshold for ACOs with less than 10,000 beneficiaries. These ACOs would be eligible to share in the first dollar savings provided they comport with the performance standards, generate savings, and meet one of the following criteria:
- Be comprised of ACO professionals in group practice arrangements or networks of individual practices;
- 75% or more of the ACO’s beneficiaries reside in counties outside a Metropolitan Statistical Area (a geographical region with a relatively high population density at its core and close economic ties throughout the area) for the most recent year for which data is available;
- 50% or more of the ACO’s beneficiaries were assigned to the ACO because a critical access hospital (CAH) provided primary care services while billing under the optional method (Method II); or
- 50% or more of the ACO’s beneficiaries had at least one encounter with an ACO participant FQHC and/or RHC in the most recent year for which data is available.
All ACOs in the two-sided model that satisfy the requisite performance standards and generate savings in excess of the minimum threshold would also be eligible to share in savings on a first dollar basis.
The new regulations would also provide for an incentive to smaller ACOs by using a lower confidence interval. ACOs with at least 5,000 beneficiaries would have a minimum savings rate based on a 90% confidence interval. ACOs with 50,000 beneficiaries would have a minimum savings rate based on a 99% confidence interval.
FQHCs and RHCs may not form their own ACOs under current regulations. These entities may join an ACO as an ACO participant, however, along with other organizations. Therefore, these proposed rules offer incentives to ACOs that choose to include FQHCs and RHCs in their mix.
Additional information about the Shared Savings Program can be found HERE.