CMS Announces ACO Initiatives Including New Model Options for Establishing ACOs

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On May 17, 2011, the Centers for Medicare & Medicaid Services (“CMS”) announced three initiatives to help physicians, hospitals and other providers become Medicare Accountable Care Organizations (“ACOs”). A copy of the announcement is available here. The announcement follows CMS’s proposal last month of long-awaited regulations for the Medicare Shared Savings Program (the “Shared Savings Program”), authorized under section 3022 of the Affordable Care Act (the “Act”) (analyzed by Ropes & Gray in a previous alert). The three new initiatives are: (i) the Pioneer ACO Model (“Pioneer Model”), (ii) the Advance Payment ACO Model (“Advanced Payment Model”), and (iii) the provision of Accelerated Development Learning Sessions on ACOs. The newly established Center for Medicare and Medicaid Innovation (“CMMI”), which has broad authority and $10 billion in funding to develop and support new delivery system models, will undertake these initiatives. The initiatives provide alternatives to the Shared Savings Program, modifying many of the program details that have been criticized by the provider community, and offer other means to support the efforts of physicians, hospitals and other providers to become ACOs.

Pioneer Model. The Pioneer Model is designed for “vanguard” organizations that are already functioning as an ACO or other accountable care model and is designed to work in conjunction with similar “outcomes based” payments systems developed by other payers (Medicaid and commercial insurance). While many of the requirements of the Pioneer Model are consistent with those of the Shared Savings Program, the two models differ in several important respects, including the opportunity for a more aggressive assumption of risk (and potential upside) by the ACO, the possibility of electing a prospective beneficiary assignment methodology, and an expansion in the kind of primary care providers serving ACO patients. The Pioneer Model Request for Application includes a chart summarizing the differences between the Shared Savings Program and the Pioneer Model. The Pioneer Model will be open to up to 30 organizations and is projected to save Medicare up to $430 million over three years. Participating organizations will be selected through a competitive application process. Letters of Intent are due to CMS by June 10, 2011, and applications must be postmarked by July 18, 2011. CMS will hold an Open Door Forum to review the request for applications on June 7, 2011.

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