I. INTRODUCTION

On March 31, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released the much anticipated proposed rule (the “Proposed Rule”) which provides guidance regarding the formation and operation of Accountable Care Organizations (“ACOs”). Specifically, the Proposed Rule implements Sections 3022 and 10307 of the Affordable Care Act (the “Act”) which required the Secretary of Health and Human Services (the “Secretary”) to establish the Medicare Shared Saving Program (“MSSP”), intended to encourage the development of ACOs. The MSSP is a program which: (i) promotes accountability for a defined patient population and coordinates the delivery of items and services under Medicare Parts A and B; (ii) encourages investment in infrastructure; and (iii) redesigns care processes for high quality and efficient service delivery.

Under the provisions outlined in the Proposed Rule, providers and suppliers that participate in the MSSP can continue to receive traditional Medicare fee-for service (“Medicare FFS”) payments under Parts A and B, and also be eligible for additional payments based on meeting specified quality and saving requirements.

TABLE OF CONTENTS

I. Introduction...1

II. Eligibility and Formation...3

A. Eligible ACO Participants ...3

B. Reporting Requirements for ACO Professionals...5

C. Structure/Governance...5

1. Introduction....5

2. Legal Entity...5

3. Governance and Governing Body ...7

4. Leadership and Management Structure ...8

III. Contracting and Application Process ...9

A. Application Process...9

B. Agreement Length and Start Dates ...11

C. Agreement Requirements ...11

IV. Assigning Medicare Beneficiaries..12

A. Operational Identification...13

B. Definition of Primary Care Services...14

C. Prospective vs. Retrospective Beneficiary Assignment...14

D. Majority vs. Plurality Rule ...15

E. Beneficiary Information and Notification ...16

V. Patient Focused Care ...16

VI. Performance And Quality Measurements...19

A. Performance Standards...19

B. Reporting Tools ...20

C. Timing of Implementation of Quality and Performance Measures ...20

D. Performance Scoring Option (CMS Preferred Option)...21

E. Minimum Quality Threshold Option ...22

F. Additional Incentives Based on Reporting Requirements ...22

G. Public Reporting ...23

VII. Reimbursement Models and Shared Savings...24

A. Reimbursement Overview ...24

B. Benchmarks ...25

C. Minimum Savings Rate...25

D. Net Sharing Rate...26

E. Timing of Payments ...26

F. Additional Shared Savings ...27

G. Savings Ceilings ...27

H. Withholding ...27

I. Losses Under Track 2 “Two-Sided” Model ...27

J. Conclusion...28

VIII. Privacy and Data Collection ...28

IX. Coordination With Other Agencies: ...29

A. Federal Law Waivers ...29

1. Antitrust Agencies ...29

2. Stark, Anti-Kickback, and Gainsharing CMP...31

3. IRS Issues Partial Guidance...33

B. State Law Waivers ...35

X. Monitoring and Termination of ACO Participation ...36

A. Avoidance of Patients At-Risk ...37

B. Quality Performance Standards ...37

C. Additional Causes for Termination & Termination by ACOs ...37

D. Reconsideration Review Process ...39

XI. Conclusion.…39