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The long awaited proposed rule for the Medicare Shared Savings Program, Accountable Care Organization (ACO), has been issued. The Center for Medicare and Medicaid Services (CMS) is looking for input and you have 60 days to submit comments. Here are some important highlights of the rule:

1. The minimum number of patients required to form an ACO is 5,000.
2. Patients will be assigned to an ACO based on their primary care physician provider.
3. Assigned patients can seek services as FFS patients wherever they want. In several sections of this rule, CMS is adamant about patients having the freedom to seek services wherever they want. CMS does not want this to look or feel like "managed care."
4. An ACO must demonstrate sufficient numbers of Primary Care Providers.
5. An ACO must provide a guarantee of ability to repay any losses if required. This may include a letter of credit, escrow funds, etc.
6. The legal structure must have a beneficiary included on the board. In considering quality-of-care, there are several processes that must be demonstrated. Not successfully completing these quality processes could result in reduced sharing payments or even having the ACO removed from the program. This is one of the first times quality of care has affected the amount of payment. These processes include:
   • Processes to Promote Evidence-Based Medicine, Patient Engagement, Reporting and Coordination of Care
   • Patient Centeredness Criteria
   • Evaluation of Population Health Needs and Consideration of Diversity
7. There is a three-year commitment for contracting.
8. There is a one-sided model where the first two years have upside potential. The third year will have both up and downside potential. This model will have a reduced sharing percentage over the two-sided model.
9. There is a two-sided model designed to have both an up and down side potential from the first year and has a higher sharing percentage as a result of the ACO taking on more risk earlier.
10. Inclusion of FQHCs and RHCs could increase the sharing rate of an ACO. These types of clinics service many patients for primary care and should be brought into the system. There will be an increased reporting requirement for these types of clinics if they join an ACO.
11. CAHs have not been excluded, but CMS expects difficulty in their participation as an ACO. We may see them as contracted facilities within an ACO.
12. CMS is concerned that ACO advertising could easily mislead beneficiaries to believe they are not free to seek care wherever they want. Therefore, provisions within this proposed rule require an ACO to get any promotional material approved by CMS before its use.
13. The computation of savings will have lag time, which allows claims to be processed for any given year. CMS is seeking comments on the proper amount of lag time.
14. CMS has proposed to not remove add-on payments such as IME and DSH when computing the shared savings. They are concerned that some ACO's might refer to facilities (without these payments) to show payment savings to the program.
15. CMS expects between 75 and 150 applications for ACO status.
16. CMS estimates the first-year cost to an ACO to be $1.7 million to get started.
17. CMS estimates their savings to be about $510 million.
18. CMS estimates 1.5 to 4 million Medicare beneficiaries will align with a participating ACO during the first three years.
19. CMS wants ACOs be available January 2012. The ACO needs to be ready to start on a calendar year basis, but does not need to be available all year. CMS may grant an exception for the first year, allowing a July 1 entry date.

The proposed rule for the Medicare Shared Savings Program, Accountable Care Organization (ACO), is quite complex. You are encouraged to get a copy of the rule and review it for how CMS will implement ACOs. While this may not affect your facility in the near future, CMS is encouraging development of these organizations in the commercial market as well.