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CMS Clarifies Key ACO Eligibility Requirements

Written by: Christi Braun and Stephanie Willis

Responding to questions from Medicare Shared Savings Program (MSSP) applicants and their counsel, the Centers for Medicare & Medicaid Services (CMS) issued a memorandum on March 16.  CMS' memo focuses on three specific areas: (1) clarification regarding Accountable Care Organization (ACO) participants, ACO providers and suppliers, and their participation in an ACO; (2) the submission and content of ACO participation agreements; and (3) requirements relating to ACO governing bodies.

The MSSP Interim Final Rules published in the Federal Register on November 2, 2011, provided definitions of ACO participant and ACO provider. CMS' memo reiterated these definitions, emphasizing that an ACO participant is the individual or entity that has a Medicare-enrolled Tax Identification Number (TIN). The new revelation in CMS' memo is that an ACO participant will be ineligible to participate in an ACO unless all of the providers and suppliers that bill through its TIN agree to participate in the ACO and comply with the MSSP regulations.

CMS next focused on ACO participation agreements. Prior to submission of an MSSP application, the ACO must have executed agreements with the ACO participants and their providers and supplier. CMS' memo explains that these agreements must explicitly require providers and suppliers to participate in and comply with the MSSP regulations at 42 C.F.R. Part 425. In addition, the agreement should explain the participants' and providers'/suppliers' rights and obligations in the ACO, as well as the right of the ACO to terminate noncompliant participants, providers, and suppliers. CMS further noted that the participation agreements cannot have any patient/beneficiary steering obligations that fall outside the scope of what is expressly permitted under the regulations.

Last, CMS stressed its interpretation of the governing body requirements in 42 C.F.R. section 425.106. Specifically, it discussed how an ACO's governing body must be separate and unique to the ACO, the members of the governing body must be able to meet their fiduciary duty with respect to the ACO, and the governing body must represent the interests only of the ACO's participants. Using independent practice associations (IPAs) as an example, CMS emphasized that each practice that is part of the IPA must be part of the ACO for the existing structure to qualify as a valid ACO governing body and to avoid conflicts between the interests of ACO and non-ACO providers/suppliers. If not all practices agree to be ACO participants, the memo explains that the IPA must form a separate legal entity, with a new governing body, to be the ACO that will participate in the MSSP.

CMS' memo advises MSSP applicants, including those ACOs that have already submitted their applications, to review and, if necessary, modify their structures and agreements. If an application has already been submitted by an ACO that needs to make organizational or other changes, the ACO may file a written request, which must contain: the organization's legal entity name, the ACO ID, and whether the entity is requesting to change its start date for participation in the MSSP or to modify its existing application.

Copyright 2012 American Health Lawyers Association, Washington, D.C.  Reprint permission granted.

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