1. Karl A. Thallner, Jr., Esquire
Proposed ACO Rule: How Will It Affect Academic Medical Centers? This roundtable discussion is brought to you by the Teaching Hospitals and Academic Medical Centers Practice Group
Wednesday, May 25, 2011  12:00-1:00 pm Eastern
Presenters
Max M. Reynolds, Esquire
Deputy General Counsel
University of California, Oakland, CA
Steven J. Bernstein, MD, MPH
Professor, Department of Internal Medicine
University of Michigan, Ann Arbor, MI
Moderator
Karl A. Thallner, Jr., Esquire
Partner
Reed Smith LLP, Philadelphia, PA 1

2. Proposed Medicare Shared Savings Program Overview & Effect on AMCs
Max Reynolds
University of California 2

3. The Bottom Line 3 3

4. Overview of SSP Significant compliance obligations and costs.
Limited opportunity to earn SSP payments.
Financial liability for uncontrollable risks.
Additional Issues to Consider 4 4

5. Compliance Obligations (Sources)
Regulations (once final)
SSP Application
SSP Participation Agreement 5 5

6. Compliance Obligations (ACO Structure)
General Rule:
Distinct legal entity
75%+ board representation by participating health care providers/suppliers.
Medicare beneficiary on board (no COI)
TIN required but not Medicare enrollment
Exception: (No new entity required)
All participating providers and suppliers already in a single pre-existing legal entity. 6 6

7. Compliance Obligations (Clinical)
CMO: Full-time, board certified, CA licensed.
QAPI: Must address cost-effectiveness.
Remediate poor performers.
Evidence-Based Clinical Guidelines.
Particularly for conditions with savings potential.
Process to monitor, evaluate, provide feedback to, remediate, and expel practitioners.
Sufficient EHR to support monitor/evaluation. 7 7

8. Compliance Obligations (Clinical)
50%+ of PCPs must qualify as “meaningful users” of certified EHR by start of PY2.
Report on 65+ quality measures annually.
Will expand in future years.
Minimum attainment levels.
Reporting
Claims, PQRS/GPRO Reporting Tool, CAHPS Survey
CMS Audits 8 8

9. Compliance Obligations (Clinical)
Evaluate health needs of ACO population and develop a plan to address those needs.
High-Risk Individuals
Process to identify.
Process to develop “individualized health plan.”
Clear mechanisms to ensure coordination of care inside and outside ACO.
Public disclosure of ACO information. 9 9

10. Compliance Obligations (Administrative)
Designated Compliance officer (not legal counsel) who reports to ACO governing body.
Mechanism for ACO employees, contractors and PSP to report suspected problems to ACO.
Mandatory compliance training for all ACO employees and ACO PSP.
Requirement to inform law enforcement of suspected violations of law. 10 10

11. Compliance Obligations (Administrative)
Possible antitrust review.
Subject to future CMS rule changes re SSP. 11 11

12. Compliance Obligations (Disclosure)
Mandatory signage and background materials for patients regarding SSP.
Prior CMS approval of any “marketing material.” 12 12

13. Compliance Obligations (Summary)13 13

14. Overview of SSP Significant compliance obligations and costs.
Limited opportunity to earn SSP payments.
Financial liability for uncontrollable risks.
Additional Issues to Consider 14 14

15. Ltd. Opp. For SSP Payments
Many Hurdles In Order To Qualify for Payment
If You Qualify, Payment Is Limited 15 15

16. Ltd. Opp. For SSP Payments (Hurdle 1)
Must Generate Significant Savings
(PY MFFSPCE) < (98% of ACO Benchmark).
Only savings below 98% of Benchmark are shared.
In some cases must be below 96% of Benchmark. 16 16

17. Ltd. Opp. For SSP Payments (Hurdle 2)
Limited Ability To “Manage” Patient Care
Crucial Point 1: No advance knowledge as to which patients affect calculation of your Actual PCMFFSE.
Crucial Point 2: Beneficiary is free to get care outside ACO, and it will affect your PCMFFSE.
Disincentive To Refer Hospital Patients To Academic Hospitals (IME Payment). 17 17

18. Ltd. Opp. For SSP Payments (Hurdle 3)
Grounds For Denying SSP
Failure to report on all 65+ clinical metrics.
Must follow prescribed format.
10%+ error rate on audit of quality score.
Failure to meet minimum attainment level.
Failure of 50%+ of ACO PCPs to qualify as meaningful EHR users by start of PY2. 18 18

19. Ltd. Opp. For SSP Payments (Hurdle 4)
Only Limited Portion of Savings Is Shared
Maximum Sharing Rate is 52.5% to 65%
Track 1 or 2
Performance on Quality Metrics
RHC/FQHC Bonus
Payment Cap (10% Benchmark Amount)
7.5% PY1-2 in Track 1.
25% Withhold (subject to forfeiture). 19 19

20. Overview of SSP Significant compliance obligations and costs.
Limited opportunity to earn SSP payments.
Financial liability for uncontrollable risks.
Additional Issues to Consider 20 20

21. Liability For Uncontrollable Risks21 21

22. Liability For Uncontrollable Risks
At Risk for Increased Costs
(PY MFFSPCE) > (102% of ACO Benchmark).
Only losses above 102% of Benchmark are shared. 22 22

23. Liability For Uncontrollable Risks
Limited Ability To “Manage” Costs
Crucial Point 1: No advance knowledge as to which patients affect calculation of your Actual PCMFFSE.
Crucial Point 2: Beneficiary is free to get care outside ACO, and it will affect your PCMFFSE.
IME payments become a burden to Academic Hospitals. 23 23

24. Liability For Uncontrollable Risks
Only Limited Portion of Savings Is Shared
Minimum Loss Sharing Rate is 35%-47.5%.
Performance on Quality Metrics
RHC/FQHC Bonus
Loss Liability Cap (10% Benchmark Amount)
Losses apply against withhold and carry forward.
Could subject ACO to state regulation as health insurer. 24 24

25. Overview of SSP Significant compliance obligations and costs.
Limited opportunity to earn SSP payments.
Financial liability for uncontrollable risks.
Additional Issues to Consider 25 25

26. Additional Issues to Consider
Attribution
Primary care vs. specialty
Prospective vs. retrospective
Stability of assigned / attributed population
Cost adjustments
Risk: CMS expects average population risk scores to be stable
Geography: keeps in but what if differential increase vs. national
Quality Measures
Increasing from 32 in PGP Demo Project to 65 in one year!
Many measures outside Physician Organization experience
Many measures not tested and with limited previous use 26 26 26

27. Quality Measures Domain # items Comment Patient Experience 7
Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey
 Care Coordination 16
Post-discharge; Medication Reconciliation; Ambulatory Sensitive Conditions Admissions; Meaningful Use
 Patient Safety 2
Hospital acquired condition (2 composites = 23 measures)
 Preventive Health 9
Vaccination; Screening (cancer, BP, depression); Tobacco; Weight; Cholesterol
 At-Risk Population/ Frail Elderly Health 31
(Coronary Artery Disease, Chronic Obstructive Pulmonary Disorder, Diabetes, Heart Failure and Hypertension) composite “all-or-nothing” measures + Elderly (falls, osteoporosis management, anticoagulation management) 27 27

28. Overview of SSP Significant compliance obligations and costs.
Limited opportunity to earn SSP payments.
Financial liability for uncontrollable risks.
Additional Issues to Consider 28 28

29. Do You Really Want to Do This?29 29

30. Questions? 30 30

31. Proposed ACO Rule: How Will It Affect Academic Medical Centers
Proposed ACO Rule: How Will It Affect Academic Medical Centers? © 2011 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America.
Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association.
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