Medicare ACO rule addresses physician concerns; no provision for disease-specific ACOs

The final regulation governing Medicare accountable care organizations (ACOs) includes numerous improvements from the original proposal that the Centers for Medicare & Medicaid Services (CMS) issued last spring. These improvements—many of which are a direct result of advocacy by AMA, RPA and other physician groups—will make it easier for independent physician practices to form ACOs. RPA is developing guidance for nephrologists regarding ACO participation.

In response to criticism of the lack of Medicare ACO opportunities for groups of independent practitioners, CMS stated in the final rule:

There is no requirement that an ACO include a hospital. Similarly, we have not established any "hospital-oriented" requirements. We have intentionally provided ACOs the flexibility to establish their organizations in such a manner that will most effectively define their preferred ACO model.

Following are some of the key changes that CMS made.

No mandatory shared "losses"
The proposed rule offered two tracks for payments to Medicare ACOs, both of which would have allowed the ACOs to share a portion of any Medicare savings they achieved. However, both tracks also would have required ACOs to pay Medicare a share of any spending that exceeded their target amount.

In response to comments, the final rule modifies the two tracks such that ACOs in one track are eligible to share savings without having to pay Medicare a portion of spending over the target amount. The final rule also revised the two-sided risk track so that Medicare will not withhold a portion of the ACO's shared savings to pay any shared losses.

Number of quality measures cut in half; meaningful use requirement dropped
In the final rule, CMS adopted AMA recommendations to reduce the number of required quality measures and better align these measures with other quality reporting programs. CMS reduced the number of required measures from 65 to 33, attempting to remove measures perceived as redundant, operationally complex or burdensome.

The AMA cautioned CMS that ACOs without a hospital would have difficulty reporting hospital-acquired conditions measures and that the majority of primary care physicians would be unable to adopt the burdensome "meaningful use" stage one requirements. Consequently, CMS removed the hospital-acquired conditions composite measure and the requirement that at least 50 percent of an ACO's primary care physicians must be "meaningful users" of electronic health records by the program's second year.

Patient attribution more prospective and inclusive
The AMA's comments included serious concerns about the proposed retrospective methodology for attributing patients to ACOs. Under this approach, ACO physicians would not know which patients were in the ACO and which were not.

CMS addresses this issue in the final rule, which states that CMS will identify a preliminary patient population for each ACO prospectively and then determine final patient assignments at the end of the performance year. It quotes the AMA's letter urging CMS "at a minimum … to move further down the continuum toward some hybrid approach between prospective assignment and retrospective attribution."

The AMA also objected to basing patient attribution solely on visits with physicians in four primary care specialties and encouraged CMS to also count services provided by physicians in other specialties. Adopting this recommendation, CMS will allow attribution of patients who have not seen physicians in the identified primary care specialties to be attributed to ACOs based on visits with other specialists.

First dollar of savings to be shared
A major concern with the proposed rule was that the Medicare program would have kept the first 2 percent of any savings; ACO participants would have only received a portion of the savings that exceeded this threshold. Given the investments that ACOs must make in order to achieve the targeted savings, this reluctance to share more of the savings contributed to a widespread perception that the financial risks for Medicare ACOs outweighed potential benefits.

CMS responded positively to comments from the AMA and others by removing the 2 percent threshold so that ACOs whose savings exceed their required minimum can share in the first dollar of savings.

Governance structure to mandate physician leadership
CMS's proposed rule included favorable requirements that ACO participants must have at least 75 percent control of the ACO's governing body and that the ACO's clinical management and oversight must be managed by a senior-level medical director who is a physician. In accordance with AMA recommendations, CMS included these proposals in the final rule—despite having received a number of objections from other organizations.

In 2003, as several popular drugs moved to over the counter (OTC) status, the IRS loosened restrictions on the use of Flexible Spending Accounts (FSAs) and Health Spending Accounts (HSAs) for the purchase of nonprescription medications and other health care products. As a way to offset costs associated with the Affordable Care Act (ACA), Congress revisited these guidelines as the law was drafted. .

As an alternative to returning to the earlier limits, the ACA allowed consumers to continue purchasing OTC medications with pre-tax dollars, but only with a prescription. Though intended as a way to discourage overconsumption of health care products, several unintended consequences emerged.

In response to federal rulemaking, the AMA wrote to IRS Commissioner Douglas Shulman in December 2010 to point out the many shortcomings of the new policy. Rather than saving money, the new policy may increase overall health care spending by forcing patients to schedule office visits with their physicians to obtain prescriptions for OTC medications, or they may seek more expensive prescription drugs that are covered by their health insurance plans.

Furthermore, since a prescription for an OTC product must be treated as any other prescription, record keeping requirements are increased for both physicians and pharmacies.

At the 2011 Annual Meeting of the House of Delegates, AMA adopted a resolution, which supports repeal of the federal restriction on the use of tax-exempt funds to buy medications without a prescription.

Subsequently, the AMA joined with a coalition of stakeholders, including retailers, consumer health product manufacturers and other physician groups to call for legislation repealing these requirements.

Rep. Lynn Jenkins, R-Kan., Rep. Shelley Berkley, D-Nev., Sen. Pat Roberts, R-Kan., and Sen. Ben Nelson, D-Neb., have introduced the Restoring Access to Medication Act (H.R. 2529 and S. 1368, respectively). This legislation repeals the new restrictions and would once again allow consumers to use FSAs and HSAs to purchase OTC medications.

A controversial provision of the Affordable Care Act (ACA) that has been highlighted recently in the media calls for establishing an Independent Payment Advisory Board (IPAB). The purpose of this 15-member panel would be to extend Medicare program solvency through the use of a spending target system and an expedited congressional process for approving Medicare cost savings.

Throughout the congressional debate leading up to passage of the ACA, RPA along with the AMA expressed opposition to the IPAB's broad authority, the lack of flexibility in its mandate and the fact that it would effectively subject physicians to double-jeopardy for Medicare payment cuts so long as the sustainable growth rate formula remains in place.

As ACA refinements were being crafted in the form of a reconciliation bill, the AMA worked with leaders in the U.S. House of Representatives to address these issues, but all recommended changes were ruled out of order by the Senate parliamentarian. The AMA has continued to recommend changes and, ultimately, during the Annual Meeting of the AMA House of Delegates, the AMA adopted policy calling for full repeal of the IPAB.

Concerns about the IPAB include:  

Legislation that would repeal the IPAB was introduced earlier this year in the U.S. House of Representatives (H.R. 452) by Rep. Phil Roe, MD, R-Tenn., and the Senate (S. 668) by Sen. John Cornyn, R-Texas.