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CMS Unveils ACO Draft

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The Centers for Medicare and Medicaid Services (CMS) is asking for comments about the kinds of waivers health care providers might need to participate in Medicare accountable care organization (ACO) programs and private health plan networks without violating federal fraud and abuse laws.

An ACO is supposed to be a vehicle for paying teams of health care providers to provide and manage care for whole patients, instead of paying for care one service at a time.

Section 3022 of the Patient Protection and Affordable Care Act (PPACA) requires caduceusMedicare to set up a Medicare Shared Savings Program that will promote use of Medicare ACOs starting in 2012.

Many private health insurers, including private health insurers that offer Medicare Advantage plans, have already been experimenting with ACOs, either in the commercial market or in connection with state or federal health program pilot programs.

Medicare Advantage plans can continue to offer ACOs, but the new Medicare Shared Savings Program is only for individuals enrolled in the traditional Medicare Part A and Medicare Part B programs, CMS officials say in a preamble to a temporary version of the ACO proposed rule.

The proposed rule and an ACO notice are supposed to appear in the Federal Register April 7.

CMS, an arm of the U.S. Department of Health and Human Services (HHS), administers strict laws and regulations governing the kinds of incentives that can be offered Medicare providers and enrollees, and the kinds of restrictions that can be placed on Medicare providers and enrollees.

In the ACO proposed rule, officials give rules that could permit Medicare providers and vendors to continue to receive traditional Medicare fee-for-service (FFS) payments and also get additional payments based on meeting specified quality and savings requirements.

CMS officials note that some health care providers will get Medicare ACO payments and also get payments under private health carrier contracts.

“We are interested in comments addressing whether a waiver is necessary to address distributions of shared savings payments received by the ACO from a private payer,” CMS officials say. “Some stakeholders have expressed concern that payments under private payer contracts might implicate the fraud and abuse laws where the payments flow between parties that also have referral relationships with respect to federal health care program patients.”

CMS also is asking for comments about any provisions that might be needed to allow or

restrict use of arrangements designed to encourage Medicare enrollees to get services from the providers and vendors participating in ACO arrangements.

Karen Ignagni, president of America’s Health Insurance Plans (AHIP), Washington, says AHIP is still reviewing the proposed rule.

AHIP likes the idea that CMS is looking at ways to move Medicare away from the FFS reimbursement system, Ignagni says.

Traditional Medicare now pays doctors and hospitals based on the number of services provided, rather than a set fee per patient, or a set fee per health problem. Critics of the FFS system say it encourages Medicare providers to provide too much care.

“All across the country, health plans have partnered with providers to change payment models to promote and reward safe, high-quality, patient-centered care,” Ignagni says. “By establishing clear quality goals, tracking progress, and rewarding success, these programs are yielding significant results in better health outcomes and lower costs for patients and employers.”

AHIP has concerns that health care providers could use ACO programs to join together to further increase health care costs, but it is happy to see that CMS and other federal agencies are taking steps to try to address that issue, Ignagni says.

Eric Johnson, a senior vice president at Avalere Health L.L.C., Washington, says CMS adoption of the ACO approach might encourage more commercial health plans to experiment with ACO programs.

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CORRECTION: An earlier version of this article described the nature of the CMS private payer question incorrectionly. The question applies to health care providers that do business with ACOs and also with private payers.