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The Highly Anticipated CMS Regulations Of ACOs – Whose Interest Will It Include?

by E. Dale Burrus, JD, LLM on November 17th, 2010

Centers for Medicare and Medicaid Services (CMS) will issue regulations related to Accountable Care Organizations (ACOs) in December according to CMS Administrator Donald Berwick. Under the Patient Protection and Affordable Care Act (PPACA), ACOs are integrated organizations of providers that accept responsibility for improving efficiency of care and improving the health status of a specific patient population. The PPACA does not define the exact manner in which the ACOs are to be created but has left the regulations of such to CMS. In anticipation of these regulations, organizations representing different segments of the health care community have proposed their own insights into how ACOs should be regulated. As one would expect, each organization’s input includes proposals beneficial to its individual interest.

The National Committee for Quality Assurance (NCQA) has submitted proposed ACO criteria for public commentary. NCQA is a private non-profit organization that monitors the quality of health care services provided by HMOs, managed care organizations and a wide range of health related programs and organizations. NCQA’s proposed standards are divided into seven categories that include program structure operations, access and availability, primary care, care management, care and coordination and transitions, patient rights and responsibilities, and performance reporting. NCQA’s stated position is that “it is possible and desirable to define evidence-based structure and process measures that can identify with reasonable accuracy which ACOs have the infrastructure necessary to achieve the triple aim” – of cost, quality, and patient care.

Another organization proposing regulations is Premier, an alliance of over 2,400 hospitals who work together “to improve the health of communities” by contracting for services and products, sharing clinical knowledge, and insuring their facilities. The Premier ACO Collaborative, which involves more than 80 hospitals, has proposed a variety of regulations for ACOs. These regulations include encouraging multiple ACOs in each market, fully recognizing hospital-based ACOs, allowing a variety of payment models, assigning beneficiaries to primary care physicians, allowing a higher savings share, allowing capitation models, protecting ACOs from antitrust enforcement, allowing hospitals more generous funding of practices, and allowing a role for children’s hospitals.

The American Medical Association (AMA) also has issued principles by which it believes ACOs should be created. AMA’s new principles emphasize that ACOs must be physician-led, place patients’ interest first, ensure voluntary physician and patient participation, and enable independent physicians to participate.

The American College of Cardiology (ACC) also has weighed in emphasizing the need for protection of smaller private practices, creation of the opportunity for physicians to lead ACOs, and the allowance of physician choice regarding participating in ACOs. Dr. Ralph G. Brindis, President of the ACC, notes that “[t]here is ample evidence to demonstrate that the additional education and training that specialists and sub-specialists receive translates into higher quality patient care and better outcomes.”

While CMS will take all of the various positions into consideration, there also is the difficulty of aligning the creations of ACOs with the prohibitions found in the antitrust laws and the fraud and abuse regulations. The CMS, the Federal Trade Commission (FTC), the Department of Health and Human Services (HHS), and the Office of Inspector General (OIG) convened a workshop to address the potential conflicts. Issues related to antitrust include the probability of creating per se unlawful price fixing (competitors agreements on price). The hope is that any agreements on price would be ancillary to legitimate pro-competitive cooperation. If formed appropriately and the formation is patient-centered, the organization should be sufficiently integrated. Moreover, the FTC is considering new safe harbors and an expedited review process for ACOs.

Creation of ACOs in which financial relationships are created among referring entities implicate the Stark Law, the Anti-Kickback Statute (AKS), and the Civil Money Penalty Law as compensation by ACOs to physicians through the distribution of shared savings and remuneration implicate AKS and Stark. The Affordable Care Act grants the HHS Secretary authority to waive these potential violations of the fraud and abuse laws. At the workshop, CMS and OIG also agreed that new exceptions and safe harbors need to be created. Panelists appeared to agree that CMS should not proscribe legal structures of ACOs as this would hamper innovation.

The complicated task of defining the manner in which ACOs are to be created may ultimately be over in December. There is no clear answer to what CMS ultimately will do. However, the question of whether every area of health care will be satisfied is undoubtedly no.

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From → Health Law