Sneak Peak at Upcoming ACO Risk Sharing, Quality Measure and Beneficiary Assignment Regulations?

Medicare Payment Advisory Commission (MedPAC) Chairman, Glen Hackbarth, recently submitted comments in response to the Center for Medicare & Medicaid Services’ (CMS) Request for Information regarding the much-anticipated Patient Protection and Affordable Care Act (PPACA) Accountable Care Organization (ACO) regulations, to be published early next year.  MedPAC’s comments were outlined in a letter dated November 22, 2010, from Mr. Hackbarth to CMS.  MedPAC’s comments were focused on three primary areas that it believes will be crucial to the success of ACOs and the Shared Savings Program:

1. A two-sided (upside and downside) risk sharing model for ACOs;
2. Pre-notification to Medicare beneficiaries of assignment to an ACO; and
3. Development of a meaningful set of quality measures for ACO patient outcomes.

I. Two-Sided Risk Corridors.

MedPAC has expressed concerns over the shared-savings model under PPACA because, MedPAC contends, it places 100 percent of the risk for losses on Medicare.  As currently contemplated under PPACA, if an ACO exceeds the spending target for the Medicare beneficiaries enrolled in the ACO, and/or the ACO fails to meet designated quality targets, ACO providers still receive 100 percent of the normal Medicare fee-for-service reimbursement.  MedPAC refers to this as the “bonus-only” model and contends that the bonus-only model does not create sufficient incentives for cost reduction or quality improvement.

In addition, the Commission argues that under the bonus-only model, some ACO providers would receive bonuses not based on quality of care or reduction of costs, but simply by virtue of random variations in the health status of beneficiaries enrolled in the ACO.  As such, MedPAC is recommending the inclusion of some type of minimum threshold of cost savings before the ACO would be eligible for any bonus distributions.  The threshold would be higher for ACOs with smaller member enrollment (because of the greater variation in health status), and smaller for ACOs with higher enrollment.  MedPAC points..

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