Mike Segal, Esq.
msegal@broadandcassel.com
Pariksith Singh, M.D.
psingh@accesshealthcarellc.net
Alan S. Gassman, Esq.
agassman@gassmanpa.com
Lester J. Perling, Esq.
lperling@broadandcassel.com
Thursday, April 21, 2011
5:30 p.m.
Replays of this webinar and additional materials can be found at:
www.gassmanbateslawgroup.com/media.html
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Must have 5,000 or more primary care patients
treated by designated ACO primary care physicians –
internists, family practice doctors, and
gerentologists.
The total Medicare costs incurred for the ACO
primary care patients will be measured each year.
The ACO will receive 50 or 60 percent of total
Medicare savings on those patients if other
qualifications are met.
All participants in the ACO may be paid directly by
Medicare Part A and Part B for the actual services that
they provide to patients.
ACO must meet the 65 Quality Measures.
Mandatory 25% Withholding of savings payments.
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Track 1 Rules (No loss participation in first two years)
Savings Rate
Threshold
(Must exceed
the below
percentages
to qualify for
shared
savings
payment)
Year
1
2% - 3.9%
depending
number of
patients
Year
2
2% - 3.9%
depending
number of
patients
Year
3
2%?*
Shared
Savings
Rate
50%
50%
60%?*
Shared
Savings Rate
is Increased
Based on
Visits to
Federally
Qualified
Health
Center or
Rural Health
Center
Shared
Loss
Cap
Up to 2.5%
No
shared
losses
Track 2 Rules (Loss participation exposure every year)
Savings Rate
Threshold
(Must
exceed the
below
percentages
to qualify for
shared
savings
payment)
Shared
Savings
Rate
Shared Savings
Rate is
Increased
Based on
Visits to
Federally
Qualified
Health Center
or Rural
Health Center
Shared
Loss
Cap
Year
1
2%
60%
Up to 5%
5%
Up to 2.5%
No
shared
losses
Year
2
2%
60%
Up to 5%
7.50%
Up to 5%?*
5% of
the
benchmark*
Year
3
2%
60%
Up to 5%
10%
*NOTE: The ACO under Track 1 “converts” from a One-Sided Model
to a Two-Sided Model in the third year.
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Better Care for Individuals
 Better Health for Populations
 Lower Growth in Expenditure
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BETTER QUALITY OF CARE AT A LOWER COST!
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Some of the new ACO regulations issued March
31st:
◦ PCPs, Internists, Family Practitioners, and General
Practitioners are limited to one ACO!
◦ A Board certified physician must serve as the medical
director
◦ ACO participants hold at least 75% control of the
governing body
◦ Certain ACOs are required to get anti-trust approval
◦ Early termination of ACO status = forfeit 25% of withheld
shared savings
◦ Patients need to be told that you are part of an ACO
◦ Patients are not bound to one ACO
◦ CMS will require documentation setting forth the division
of shared savings and ability to pay for losses
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Quality/Cost Initiative fueled by the ability to review patient
records electronically, file claims electronically, and to create
meaningful data to closely monitor quality and cost
DATA, DATA, DATA - IT’S ALL ABOUT THE DATA
Meaningful use - ARRA rebates for achieving standards
begins this year.
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The Advisory Board Company defines Clinical
Integration as “a strategy in which physicians
– often in partnership with a hospital or
health system – make a significant collective
commitment to performance improvement
and investment in infrastructure to facilitate
these quality and efficiency gains”
CI designed to bring together different
specialties under common governance and
incentive structures to create – and reward –
collaboration between groups of physicians
who may not currently work together
CI an imperative for a successful ACO
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1996 - FTC and DOJ issues joint guidelines
regarding antitrust issues for health care
combinations
Guidelines require, in network where not all
physicians are members of same medical group,
that physician members be “clinically integrated”
in order to share financial information and jointly
negotiate fee for service contracts
There have been three FTC opinions since 2002
holding that CI in network was achieved (see,
e..g., www.tristatehealth.com)
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Participants must demonstrate significant
commitment (both in time and money) to cost
control and quality improvement, with realistic
opportunity to achieve goals
Joint fee for service contracting with payers, must
be reasonably necessary to support network’s
infrastructure and support greater collaboration
(in other words, network may negotiate higher
prices, but only if this is directly connected with
offering a more effective CI product)
Network cannot have too much market power
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The Advisory Board Company identifies 8 critical components
for a CI network:
 (1) Selective Physician Partners
 (2) Physician Oversight
 (3) Meaningful Performance Metrics
 (4) Optimized IT Infrastructure – (EHR not absolutely
necessary – registries or web-based data may suffice)
 (5) Support for Clinical Redesign
 (6) Performance Monitoring
 (7) Payer Engagement
 (8) Performance-Based Incentive Pool
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Pursuant to PPACA, an ACO must, among
other things:
Formal Legal Structure
Leadership and management
Minimum of 5000 Medicare beneficiaries
3 year contract with Medicare
Primary care participation is a MUST!
Processes and procedures to enhance
quality/reduce costs
◦ Clinical and administrative systems to report on
quality/cost measures
◦ Demonstrate it meets patient-centeredness criteria
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Possible Participants:
◦ integrated delivery systems
◦ primary care medical groups
◦ single specialty medical groups
◦ multi specialty medical group
◦ hospital-based systems
◦ virtual networks of physicians
◦ hospitals (strongly encouraged)
◦ health plan management companies
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ACOs may involve a variety of
configurations of the possible participants
Don’t get caught up with the acronyms (IPA,
PHO, SSGP, MSGP, HPPO, etc.), focus on the
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(i) forming the necessary relationships
(ii) achieving the necessary level of integration
(iii) governance
(iv) data collection and analysis
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• Engage payers, employers
informally in program
Launching the
development
Go-to-Market • Leverage potential value in formal
Strategy
contract negotiations
Optimizing the•
Performance •
Management
Structure
•
Build systems to capture data
Develop policies to remedy
underperformance
Share best practices
Building the • Establish participation requirements
Physician
• Select premium physicians
Network
• Engage physicians in governance,
leadership
Investment
Required
• Develop high-yield metrics and
Mapping Out
targets
Initiatives and • Build care management support
Incentives
systems
• Craft incentive distribution policies
Building the • Establish participation requirements
Physician
• Select premium physicians
Network
• Engage physicians in governance, leadership
Time
*Source Health Care Advisory Board Interviews and analysis
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Coordinating all of the key players and
aligning their incentives
Getting physicians across specialties to
collaborate
Start up costs (legal, EHR, staff)
Physician culture
Keeping the patient within the ACO
Determining how to split shared savings
Less healthcare dollars to be paid out
Lack of experience with formal physician
relationships
This list can go on and on and on and on……
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Internal Obstacles to ACO Development
As rated by CEOs
No Small Undertaking.
“Navigating this migration is our central management challenge for the next decade. Transitions are
always messy, and we’re in a transition period. You can’t have one foot in two boats forever.”
Chief Executive Officer
10-Hospital Health System
*Source Gates, S. “HR’s Role in Building a Culture of Innovation,” The Conference Board, 2005;
Advisory Board Interviews and analysis
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Stark
Anti-kickback and CMP (reducing care issues)
Anti-Trust Law - will consolidation cause prices
to rise? How much market share do you have
(less than 30%, more than 50%)
On April 7, 2011, CMS and OIG published
proposed waivers of the Stark law, the antikickback statute and CMP law. Comments
period ends June 6, 2011.
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Stark waiver only for the ACO’s distribution of shared
savings
AKS and CMP waivers for all financial relationships in
ACO
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The proposed Regulations are available at:
http://www.cms.gov/sharedsavingsprogram
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An easier to read version of the proposed regulations, with acronym definitions throughout the
text, a table of contents with page numbers, and an index, is available from Gassman, Bates &
Associates, P.A.
To sign up to receive the Broad and Cassel Integration Update emails, please contact Alicia
Florio at amflorio@broadandcassel.com
It’s all in the Math: Financial Mechanisms, Structures and Questions Under the Accountable
Care Organization Proposed Regulations by Alan S. Gassman, Mike Segal, Dr. Pariksith Singh
and Martha Sosa, soon to be published in the American Bar Association Health eSource
Newsletter. You do not have to be an ABA Health Law Section member to receive the ABA
Health eSource Newsletter. Sign up at
http://www.americanbarassociation.org/content/newsletter/publications/aba_health_esource_
home.html
Accountable Care Organizations Proposed Regulations Reveal Significant Financial
Opportunities and Structural Requirements by Alan S. Gassman and Martha Sosa, published in
the American Bar Association Health eSource Newsletter. Available at
http://www.americanbarassociation.org/content/newsletter/publications/aba_health_esource_
home/aba_health_law_esource_2011_april_volume_7_issue_8.html
ACO’s: A Work in Progress by Mike Segal and Heather Siegal Miller, published in the Florida Bar
Health Law Section Newsletter.
http://www.floridabar.org/TFB/TFBResources.nsf/Attachments/8009082626D825D78525782
010054293C/$FILE/Final%20copy%202,pdf?OpenElement
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Who will be initiating the formation of these ACOs? Where will a physician turn to join one, and how will they know what
the options are?
ACOs will be initiated only by hospitals, HMOs, large physician groups, big medical corporate entities that can sign up
physicians, or consultants who have a big network that can influence physicians and sign them up. People will have to
have resources to pull together ACOs. Only the strong will even file for them. There will be a lot of these entities
initially, because for consultants, accountants, and lawyers, it is a windfall; they are charging physicians money to give
lectures and seminars. Even right now, when all the regulations are unclear, they are giving lectures and charging
$5,000 to $7,000 to explain the regulations.
What will happen is that these consultants, accountants, lawyers, actuaries, and even other physicians will go around
trying to sign up people, but the biggest strength will likely be with hospital groups, HMOs that are already present, and
perhaps big physician groups.
Is there a buy in for a physician joining an ACO?
It is unlikely that there will be a buy in for primary care physicians. It depends on where the group is; there will certainly
be some incentives offered. Maybe some ACOs or people who have stronger networks will establish a pyramid system,
where the stronger physicians will make more money than the new physicians who are joining in. However, there
should not be a buy-in unless an ACO is extremely successful, or unless the doctors are buying shares in the ACO.
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What do you think the chances of survival are for a physician who chooses not to join an ACO?
Initially, physicians should be okay “going rogue”, because joining an ACO is not mandatory. But once the groups form,
the direction for most primary care physicians will likely be toward joining an ACO. The physicians who will survive are
the physicians who do not need Medicare, who do fee for service, who are already operating as cash practices. Primary
care physicians who have a niche business may be able to stay the course outside the system. Specialists will have no
choice but to work with ACOs, because they need referrals. So wherever you have ACOs, specialists will be signing up
and working with them, but primary care physicians may have the option, for a little while, to stay out and still succeed.
It depends on how hard the government starts pushing the ACOs, and how deep the penetration of ACOs is in a certain
area. For example, in California, every physician has to sign up and make sure they are part of a bigger managed care
network. In Florida, there are certain areas where they have no choice, that even though they save much less than
Medicare when they sign up with managed care companies, they will still sign up. In certain rural areas, solo physicians
might be okay for a while. Bigger areas, where the networks are strong and ACOs have a bigger presence, it will be
more and more difficult for them to survive on their own. It depends on several factors.
An apt metaphor could be that of a hand caught in its own mousetrap. The government is setting a trap for the
physicians, using incentives to sign them up with the ACOs. However, the government’s hand may be the one caught in
the trap instead; it may end up taking huge losses on these ACOs if it is not done right. ACOs will have to be managed
by very savvy people who understand this kind of goal-based care and healthcare where quality of care is not
compromised, but also people who are very mindful of the costs involved with the care. That is going to be the key.
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Mike Segal, Esq.
msegal@broadandcassel.com
305-373-9430
Dr. Pariksith Singh
psingh@accesshealthcarellc.net
352-688-2883
Alan S. Gassman, Esq.
agassman@gassmanpa.com
727-442-1200
Lester Perling, Esq.
lperling@broadandcassel.com
(954) 745-5261
Martha Sosa, Esq.
martha@gassmanpa.com
727-442-1200
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