Medicare Shared Savings Program Applications for January 1, 2016 Start Date

CMS is proceeding with the application process for the Medicare Shared Savings Program for the January 1, 2016 program start date. Applicants interested in participating must submit a Notice of Intent to Apply by May 29, 2015, and complete the application by July 31, 2015.  A CMS call regarding the Shared Savings Program application review process is scheduled for June 9.

CMS Touts Pioneer ACO Model Savings and Potential Expansion

On May 4, 2015, CMS announced that the Pioneer Accountable Care Organization (ACO) Model generated $384 million in savings to Medicare over two years. Under the Pioneer ACO Model, which was authorized by the ACA, health care organizations and providers with experience coordinating care across settings may share in Medicare savings generated if they meet quality performance standards, but they are at risk of paying a share of any losses generated. While the 32 individual Pioneer ACOs had different levels of savings relative to local markets during their first two years, they collectively saved about $300 per participating beneficiary per year on average, with most savings accruing in the first performance year.

CMS also announced that the CMS Office of the Actuary has certified that the Pioneer ACO model is the first to meet the ACA criteria for expansion to a larger population of Medicare beneficiaries. According to an HHS press release, CMS intends to look for ways to apply elements of this model to permanent Medicare programs.

CMS Calls on Next Generation ACO Model

CMS is hosting a series of calls to discuss its new “Next Generation” ACO Model, which is intended to promote Medicare quality improvement and care coordination. The following upcoming calls are scheduled:

March 31, 2015 -- Focusing on financial methodology and related issues;
April 7, 2015 – Focusing on benefit enhancements and beneficiary care coordination reward; and
April 14, 2015 – Focusing on letter of intent and application.

CMS Invites Stakeholders to Join "Health Care Payment Learning and Action Network" to Promote Alternative Payment Models

As previously reported, CMS has established a public-private partnership, the Health Care Payment Learning and Action Network, to support HHS’s goal of moving Medicare and the broader health industry from a FFS model towards alternative payment models that emphasize value. CMS is now inviting payers, providers, employers, purchasers, state partners, consumer groups, individual consumers, and other interested parties to join the Network and participate in a kickoff event scheduled for March 25, 2015.

Among other things, the Network will: facilitate joint implementation of new models of payment and care delivery; define how best to report on new payment models; collaborate to generate evidence, share approaches, and remove barriers; develop common approaches to issues such as beneficiary attribution, financial models, benchmarking, quality and performance measurement, and risk adjustment; create implementation guides for payers, purchasers, providers, and consumers; and disseminate findings. In order to participate in the Network, interested parties must:

  • Support national goals for use of alternative payment models (e.g., accountable care organizations, bundled payments, and advanced primary care medical homes) for the U.S. health system that match or exceed the Medicare FFS goals (30% alternative payment model penetration by 2016 and 50% by 2018);
  • Agree that progress towards national goals should be measured;
  • Work with Network participants to establish standard definitions for alternative payment models;
  • Set organization-specific goals for alternative payment models within the first six months; and
  • Participate in reporting of progress towards national alternative payment model goals.

The Network will operate independently of HHS and other government entities, and its activities will be supported by an independent contractor that will act as a convener and produce “best practice” white papers.

CMS Announces New "Next Generation" ACO Model; Schedules 3/17 Call

On March 10, 2015, CMS announced the Next Generation Accountable Care Organization (ACO) Model, its latest Affordable Care Act (ACA) innovation initiative intended to promote Medicare quality improvement and care coordination. The Next Generation ACO Model differs from the existing Medicare Shared Savings Program and Pioneer ACO models in several ways. For instance, the Next Generation ACO Model:

  • Provides higher levels of risk and reward, using what CMS characterizes as more stable, predictable benchmarking methods that reward both attainment and improvement in cost containment and that move away from comparisons to an ACO’s historical expenditures;
  • Offers a selection of payment mechanisms to shift from fee-for-service (FFS) reimbursement to capitation; and
  • Includes “benefit enhancement” tools to improve engagement with beneficiaries, including (1) greater access to home visits, telehealth services, and skilled nursing facilities; (2) opportunities to receive a reward payment for receiving care from the ACO; (3) a process to allow beneficiaries to confirm their care relationship with ACO providers; and (4) CMS-ACO collaboration to improve communication with beneficiaries about the potential benefits of ACOs.

CMS plans two rounds of applications for the Next Generation ACO Model in 2015 and 2016, with participation expected to last up to five years. Letters of Intent for the 2015 cycle are due May 1, 2015, and applications are due June 1, 2015.  CMS plans an “Open Door Forum” call to discuss the new model on March 17, 2015.

CMS Posts Deadlines for 2016 Medicare Shared Savings Program Application Cycle; Schedules Informational Calls

CMS is gearing up for the program year 2016 Medicare Shared Savings Program, under which physicians, hospitals, and certain other types of providers and suppliers may form Accountable Care Organizations (ACOs) to provide cost-effective, coordinated care to Medicare fee-for-service beneficiaries. CMS has posted the deadlines for applying to the program for 2016 (the notice of intent deadline is May 29, 2015, and the application deadline is July 31, 2015). In addition, CMS is hosting an April 7, 2015 call to discuss organizational structure and governance requirements, antitrust considerations, and the application process for January 2016 starters.  An April 21 call will cover ACO participant agreements, ACO participant lists, and beneficiary assignment. 

FTC/DOJ Workshop on Health Care Competition (Feb. 24).

On February 24, 2015, the Federal Trade Commission and the Department of Justice Antitrust Division will hold a public workshop on health care provider organization and payment model developments that may affect competition in the provision of health care services. Topics for discussion include: accountable care organizations; alternatives to traditional fee-for-service payment models; trends in provider consolidation; provider network and benefit design strategies; and health insurance exchanges.  The government also will accept comments on specific questions related to health care competition until April 30, 2015.

HHS Sets Ambitious Goals for Medicare Quality/Value-Based Purchasing, Alternative Payment Models

Today HHS Secretary Sylvia M. Burwell announced ambitious plans to move from “volume to value in Medicare payments” by accelerating the share of Medicare fee-for-service (FFS) payments that are tied to quality and value and reimbursed through alternative payment models. The first goal in the initiative is for 30% of Medicare provider payments to be in alternative payment models – such as accountable care organizations, medical homes, bundled payments -- by 2016 (up from about 20% today). The goal would rise to 50% by 2018.

Under the second component of the plan, HHS seeks to tie 85% of Medicare FFS payments to quality by 2016, rising to 90% in 2018. In addition to the various alternative payment models, such quality programs include the Hospital Value Based Purchasing Program, the Hospital Readmissions Reduction Programs, and the Physician Value-Based Modifier.

To extend these value initiatives beyond Medicare and reach a “critical mass of payers,” HHS is announcing the establishment of the Health Care Payment Learning and Action Network to coordinate the efforts of the private, public and non-profit sectors, including private payers, large employers, providers, consumers, and state and federal partners. The goal of the Learning and Action Network is to facilitate joint implementation and expansion of new models of payment and care delivery; collaborate to generate evidence and share approaches; develop common approaches to core issues such as beneficiary attribution, financial models, benchmarking, and risk adjustment; and create implementation guides for payers and purchasers. The Network will hold its first meeting in March 2015.

For additional details, see Secretary Burwell’s “Perspectives” article in the New England Journal of Medicine.

MedPAC Voices Concerns about Growing Volume, Burden of Medicare Quality Measures

In December 2014, CMS released a 329-page list of quality measures under consideration for the Medicare program. In a January 13, 2015 comment letter, MedPAC observes that volume of measures under consideration “reinforces our concerns that Medicare’s provider-level measurement activities are accelerating without regard to the costs or benefits of an ever-increasing number of measures.” MedPAC suggests that CMS is “relying on too many clinical process measures that are, at best, weakly correlated with health outcomes.” Moreover, including numerous process measures could reinforce “undesirable payment incentives in FFS Medicare to increase the volume of services and is overly burdensome on providers to report, while yielding limited information to support clinical improvement or beneficiary choice.” While acknowledging that CMS includes more measures than will be adopted in order to solicit comments, MedPAC urges CMS to “carefully consider whether each additional measure would simply reinforce or exacerbate the current system’s problems.”

The following is MedPAC’s count of measures under consideration (note that the largest number of measures under review this year apply to accountable care organizations):

CMS program*

Number of measures under consideration

Medicare Shared Savings (ACOs)


Physician Feedback/Quality and Resource Utilization Reports


Physician Value‐Based Payment Modifier


Medicare Physician Quality Reporting System


Physician Compare


Medicare/Medicaid EHR Incentive Programs for Eligible Professionals


Hospital Inpatient Quality Reporting


Hospital Outpatient Quality Reporting


Hospital Value‐Based Purchasing


Ambulatory Surgical Center Quality Reporting


PPS‐Exempt Cancer Hospital Quality Reporting


End‐Stage Renal Disease Quality Incentive Program


Inpatient Rehabilitation Facility Quality Reporting


Inpatient Psychiatric Facility Quality Reporting


Long‐Term Care Hospital Quality Reporting


Medicare/Medicaid EHR Incentive Programs for Eligible Hospitals/CAHs


Hospital‐Acquired Condition Reduction Program


Home Health Quality Reporting


Hospital Readmission Reduction Program


Skilled Nursing Facility Value‐Based Purchasing Program


Hospice Quality Reporting


 *A single measure may be under consideration for more than one program.
Notes: ACOs (accountable care organizations); PPS (prospective payment system); CAHs (critical access hospitals).

MedPAC Meeting on Medicare Policies (Jan. 15-16)

On January 15-16, 2015, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss a number of Medicare topics, including, among others: post-acute care trends; payment updates for a number of provider types; relative costs of Medicare Advantage, accountable care organizations, and fee-for-service Medicare; hospital short stay policy; and quality measurement. 

CMS Proposes Changes to Medicare Shared Savings Program/ACO Payment Regulations

On December 8, 2014, CMS published a proposed rule that would revise the regulations governing the Medicare Shared Savings Program, which is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form Accountable Care Organizations (ACOs) to provide cost-effective, coordinated care to Medicare beneficiaries. The Shared Savings Program now includes more than 330 ACOs in 47 states and serves more than 4.9 million Medicare fee for service (FFS) beneficiaries.

Under current rules, ACOs can participate in two tracks: Track 1, a “one-sided” risk model under which ACOs qualify to share in program savings but are not responsible for losses; and Track 2, a “two-sided” model under which ACOs may qualify to share in savings with an increased sharing rate, but also must take on risk for sharing in losses. The proposed rule would revise the schedule for ACOs to transition to performance-based risk arrangements and make other changes in program regulations to emphasize primary care services, reduce the administrative burden on participants, and improve program function and transparency. Specifically, the proposed rule would, among other things:

  • Allow ACOs participating in “Track 1” that meet specified standards to continue to participate in one additional agreement period under Track 1 after their initial 3-year agreement period, but at a lower sharing rate, to encourage progression along the performance risk continuum.
  • Modify Track 2 to make the minimum savings and loss rates variable.
  • Implement a Track 3 performance risk-based model that would offer a higher sharing rate than Tracks 1 and 2 and would prospectively assign beneficiaries to the ACO.
  • Revise the methodology used to assign beneficiaries to ACOs to remove certain specialty types (e.g., surgeons and radiologists) whose services are not likely to be indicative of primary care services, and to recognize the primary care delivered by nurse practitioner, physician assistant, and clinical nurse specialists.
  • Streamline the process for ACOs to access beneficiary claims data necessary for health care operations, while continuing to allow beneficiaries to decline to have their claims data shared with the ACO.

CMS also is seeking comments on alternative methodologies for establishing, updating, and resetting ACO financial benchmarks, such as using regional FFS expenditures (rather than national FFS expenditures), and resetting the ACO’s benchmark in subsequent agreement periods to account for any shared savings payments received. In addition, CMS invites comments on various options for encouraging organizations to consider taking on greater financial risk, including waiving certain FFS payment and regulations related to qualifying hospital stays for skilled nursing facility admission, telehealth, qualifications for home health services, and qualifications for post-acute referrals. While application or implementation dates may vary, CMS anticipates that the final policies and methodological changes generally would be applied for the 2016 performance year for participating organizations.  CMS will accept comments on the rule until February 6, 2015.

CMS Announces ACO "Investment Model" Initiative to Support Care Coordination Nationwide

CMS has announced a new Accountable Care Organization “Investment Model” that was developed in response to concerns that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management. CMS will provide as much as $114 million in upfront investments to up to 75 ACOs across the country to help these ACOs make infrastructure investments and develop new ways to improve care for Medicare beneficiaries.

OIG and CMS Extend Fraud/Abuse Waivers for Medicare Shared Savings Program/ACOs; Invite Feedback on Waiver Policy

Today the OIG and CMS published a joint notice continuing the effectiveness of fraud and abuse law waivers granted in 2011 in connection with the Medicare Shared Savings Program, which is intended to encourage physicians, hospitals, and certain other types of providers and suppliers to form accountable care organizations (ACOs). 

By way of background, in a November 2, 2011 joint OIG-CMS interim final rule with comment period, the agencies established waivers of the application of the federal physician self-referral law, the federal anti-kickback statute, and certain civil monetary penalties law provisions to specified arrangements involving ACOs participating in the Shared Savings Program (the Waiver IFC).  In 2011 Reed Smith prepared an in-depth analysis of the Medicare Shared Savings Program, including an analysis of the Waiver IFC.  Because of a general 3-year deadline for publishing Medicare final rules after the publication of a proposed or interim final rule, the agencies are extending the timeline for publication of a final rule concerning Shared Savings Program waivers to avoid “creating legal uncertainty for ACOs participating in the Shared Savings Program and potentially disrupting ongoing business plans or operations of some ACOs.”  The notice also states that CMS is developing a proposed rule to make certain modifications to the Shared Savings Program regulations; in order to ensure that the final waiver regulations align with the Shared Savings Program rules, the agencies believe “the prudent course of action at this time is to extend the effectiveness of the Waiver IFC.”  Thus the Waiver IFC will remain in effect through November 2, 2015, unless a final waiver rule becomes effective on an earlier date.


In the notice, the agencies also suggest that they would benefit from additional stakeholder input to inform their understanding of:

  1. how and to what  extent ACOs are using the waivers;
  2. whether the existing waivers serve the needs of ACOs and the Medicare program;
  3. whether the  waivers adequately protect the Medicare program and beneficiaries from the types of harms associated with referral payments or payments to reduce or limit services; and
  4. whether there are new or changed  considerations that should inform the development of additional notice  and comment rulemaking.

No deadline is specified for providing feedback on these considerations. 

CMS Publishes Proposed MPFS Rule for 2015

On July 11, 2014, CMS published its proposed rule to update the Medicare physician fee schedule for CY 2015. The proposed rule reflects enactment of the Protecting Access to Medicare Act (PAMA) of 2014, which provides for a 0% update to the conversion factor (CF) for MPFS services furnished between January 1, 2015 and March 31, 2015. In the Proposed Rule, CMS estimates that with the application of a budget neutrality adjustment, the CF for the first quarter of 2015 would be $35.7977 (compared to $35.8228 in 2014). Under PAMA, the CF will be adjusted on April 1, 2015 according to the Sustainable Growth Rate (SGR) formula unless Congress takes additional legislative action. CMS does not speculate on the CF that will be applicable April 1, 2015 through December 31, 2015, but CMS previously estimated that the SGR would result in about a 20.9% cut in MPFS payments for 2015 if Congress does not again intervene. There is an expectation that Congress eventually will override this payment cut, but the timing and extent of any such relief cannot be assured at this time. Other key provision in the proposed rule include the following:

  • The proposed rule includes numerous proposals to review addition codes as being potentially misvalued, and to revise the data considered by CMS in assessing the value of procedures. CMS proposes to add about 80 codes to its list of potentially misvalued codes, most of which are high-expenditure specialty services that have not been recently reviewed. CMS also discusses implementation of a PAMA provision authorizing CMS to use alternative approaches to establish practice expense (PE) relative value units (RVUs), including the use of data from other suppliers and providers of services. CMS is specifically seeking comments on the possible use of the Medicare hospital outpatient cost data in the PE valuation methodology. In addition, CMS is proposing to transform all 10- and 90-day global surgery codes to 0-day global codes. Under this provision, CMS would include in the value for these procedures all services provided on the day of surgery, and pay separately for visits and services actually furnished after the day of the procedure, effective beginning in CY 2017.
  • CMS proposes a new process intended to enhance transparency in MPFS ratesetting and ensure that all payment input revisions are subjected to public comment prior to being used for payment. In short, beginning with the MPFS proposed rule for CY 2016, CMS will include proposed values for all new, revised, and potentially misvalued codes for which it has complete American Medical Association’s Relative Value Update Committee (RUC) recommendations by January 15th of the preceding year (thus for the CY 2016 rulemaking, CMS would include in the proposed rule proposed values for services for which it has RUC recommendations by January 15, 2015). CMS would delay consideration of RUC recommendations received after January 15th of a year. For codes that describe wholly new services, CMS will work with the RUC to try to receive recommendations in time to include proposed values in the proposed rule; if not, and CMS determines that it is in the public interest for Medicare to begin using the code, CMS would establish values for the code’s initial year as under current policy. CMS is also revising how it accounts for costs associated with radiation therapy equipment and x-ray services.
  • CMS proposes numerous changes to the Physician Quality Reporting System (PQRS), including the addition of 28 new individual measures and two measure groups, and removal of 73 measures. CMS also proposes that eligible professionals who see at least one Medicare patient in a face-to-face encounter report measures from a new cross-cutting measures set in addition to other required measures. The proposed rule also includes revisions to Shared Savings Program/accountable care organization (ACO) quality requirements, including changes to the scoring strategy to recognize quality improvement, revisions to quality measure benchmarks, and revisions to individual quality measures.
  • CMS proposes changes to the Physician Value-Based Payment Modifier program, under which CMS will adjust payment to physicians based on the quality of care compared to costs. For 2017 (the last year in a three-year phase-in period), CMS proposes to apply the Value Modifier to physicians in groups with two or more eligible professionals (EPs) and to physicians who are solo practitioners. CMS also would apply the Value Modifier beginning in CY 2017 to non-physician EPs in groups with two or more EPs and to non-physician EPs who are solo practitioners. Moreover, CMS proposes a number of changes to the payment adjustment framework for 2017, increasing the potential upward and downward adjustment to +/- 4%.
  • CMS raises concerns about “operational and program integrity issues” arising from the use of substitute (locum tenens) physicians to fill staffing needs or to replace a physician who has permanently left a medical group, particularly with regard to potentially inappropriate use of the departed physician’s Provider Transaction Access Numbers (PTAN) or National Provider Identifier (NPI). CMS solicits comments on specific questions associated with substitute physician billing arrangements as the agency considers whether to adopt regulations in this area, including with regard to implications for the physician self-referral law.
  • CMS is proposing changes to its Physician Payment Sunshine Act regulations, also known as the Open Payments program. These provisions are discussed in a separate post.
  • Among many other things, the proposed rule also would: establish a revised local coverage determination (LCD) process for all new draft clinical diagnostic laboratory test LCDs published on or after January 1, 2015; require physicians (and hospitals) to report a modifier for services furnished in an off-campus provider-based department; update malpractice RVUs; revise Geographic Practice Cost Indices; reduce beneficiary cost-sharing associated for anesthesia related to screening colonoscopies; and add to the list of services that can be furnished to Medicare beneficiaries under the telehealth benefit annual wellness visits, psychoanalysis, psychotherapy, and prolonged evaluation and management services.

CMS will accept comments on the rule until September 2, 2014.

CMS Planning Changes to Medicare Shared Savings Program/Accountable Care Organization (ACO) Rules

Yesterday CMS submitted to the White House Office of Management and Budget (OMB) a proposed rule to make changes to the Medicare Shared Savings Program, including provisions relating to Medicare payments to providers participating in ACOs. These changes would apply to existing ACOs and approved ACO applicants participating in the program beginning January 1, 2016. The text of the rule is not available until it is cleared by OMB and sent to the Federal Register.

MedPAC Issues Medicare Delivery Reform Recommendations

On June 13, 2014, the Medicare Payment Advisory Commission (MedPAC) released its June 2014 Report to the Congress on Medicare and the Health Care Delivery System. Among other things, MedPAC addresses ways to align Medicare fee-for-service (FFS), Medicare Advantage, and accountable care organization policies on payment, risk adjustment, and quality measurement. MedPAC also discusses various FFS reforms, including post-acute care reforms to promote payment consistency across settings and bonus payments to support primary care. Finally, MedPAC discusses changing income eligibility standards for the Medicare Savings Programs to help low-income Medicare beneficiaries afford out-of-pocket costs, and it examines the impact of medication adherence on health spending. 

HHS Launches Second Round of State Innovation Models Initiative

On May 22, 2014, CMS announced the second round of funding under the State Innovation Models Initiative. This initiative was announced in 2013 to support state design and testing of multi-payer payment and delivery models -- such as accountable care organizations, accountable care communities, patient centered medical homes and bundled payments -- intended to generate savings and improve care for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries. Under round two, CMS will award as much as $30 million for 15 Model Design cooperative agreements (providing funding and technical assistance as states assess system improvement options) and up to $700 million in funding for 12 state-sponsored Model Test cooperative agreements (intended to assist in implementing developed models).

Highlights from Reed Smith's Post-Acute Care Conference

In early April, Reed Smith hosted an enlightening, industry-leading conference on post-acute care in Washington, D.C. The conference, entitled “Reed Smith 2014 Washington Health Care Conference: Focus on Post-Acute Care," brought together a panel of experts to discuss episodic care, bundling models, and alternative payment and delivery systems. The conference also featured other speakers who presented from the perspective of investors and Capitol Hill, along with a keynote address from American Enterprise Institute resident scholar Dr. Norman Ornstein.

Policy Discussion on Payment Models

The conference started with a panel discussing bundling initiatives and other alternative payment models. The panel featured Barbara Gage, Ph.D., Fellow and Managing Director of Engelberg Center for Health Care Reform at the Brookings Institution; Judy Feder, Ph.D., Professor at Georgetown University; Vincent Mor, Ph.D., Professor at Brown University School of Medicine; and James Michel, Director for Medicare Research & Reimbursement at the American Health Care Association (“AHCA”). The panel brought with them decades of experience in health care policy and research, and a deep knowledge of post-acute care providers’ current reimbursement systems, in addition to models expected to reform payment for post-acute services in the future.

Dr. Gage spoke first, and introduced bundling by discussing the triple aim adopted by the Centers for Medicare & Medicaid Services (“CMS”): achieve better care for patients, better communities’ health, and lower costs by improving the health care system. She explained how new payment models—including bundled payment initiatives and accountable care organizations—strive to accomplish the above-mentioned triple aim. Gage discussed whether the post-acute setting in which a patient receives treatment distinguishes the patient’s outcome and the level of resources that different post-acute settings (e.g., home health, skilled nursing facilities (“SNF”), inpatient rehabilitation facilities (“IRF”), or long-term acute care hospitals (“LTCH”)) furnish to patients. Gage described in great detail the arguments in favor of bundled payments, emphasizing that one of the benefits of a bundled payment model is that it forces communication across all care settings.

Dr. Feder, on the other hand, urged caution as reimbursement moves to new models. She stressed that bundled payment models, for example, create powerful incentives to potentially reduce or limit the care furnished to patients, and therefore could result in reduced quality of care. Feder explained that bundling is not new, and that, e.g., payers have bundled in the inpatient hospital setting for 30 years. Feder pointed out that when Medicare implemented diagnosis-related groups in the inpatient hospital prospective payment system, hospital length of stay “dropp[ed] like a stone.” Feder underscored that the biggest challenges arise from patients whose health is deteriorating, and explained that the number of home health visits, for instance, are the lowest when patient acuity is the highest. In order to ensure adequate, appropriate, and high-quality care for patients, Feder suggested that policymakers thoughtfully develop and implement any new payment system over time, and incorporate quality mechanisms that serve to protect patients. Feder suggested that good patient data and strong accountability measures are essential to any bundled payment program.

After Feder spoke, Dr. Mor took the podium and analogized capitation versus fee-for-service as being “between the devil and the deep blue sea.” He further explained that fee-for-service reimbursement models have encouraged runaway costs and increased utilization, and that there is a lack of provider accountability and responsibility. In contrast, he explained that in capitation reimbursement models, there is an inherent incentive to deny care. Mor discussed how policymakers can ensure patients receive quality care from providers, and raised a number of thought-provoking questions, such as whether a SNF or other post-acute provider should be responsible for rehospitalization after the discharge of a patient, and whether low rehospitalization reflects overall high-quality care. Mor urged the development of a common assessment tool that includes hospital assessment data in order to more accurately measure post-acute quality and case-mix. He also recommended that CMS use the “Welcome to Medicare” assessment and other periodic beneficiary assessments to obtain risk profiles for patients. Mor ended his presentation by suggesting that while capitation models—such as bundling—are preferable to fee-for-service because one entity is responsible for patients’ care, capitation models face challenges as well, including how to properly measure case-mix and outcomes.

James Michel from AHCA noted the operational challenges associated with bundled payments. For example, it is difficult for post-acute providers to assume the responsibility for patients after the post-acute provider discharges a given beneficiary. Michel also stated that the Center for Medicare & Medicaid Innovation Bundled Payments for Care Improvement initiative’s models incentivize low-cost providers to participate, but providers who recognize they have higher costs than the community average will not participate because of the risk that they will miss the spending target, resulting in a payment to the government. Michel noted that AHCA has developed its own bundled payment proposal, in part to preserve a process in which patients and their families can decide where the patient should be treated after an acute stay. The AHCA bundled payment proposal includes four proposed episodes (e.g., major respiratory condition and septicemia) that would account for approximately 60 percent of all SNF care and more than 50 percent of all post-acute care.

Wall Street Perspective

Jay Barnes, a Senior Vice President for Healthcare Investment Banking at Jefferies, LLC, spoke from the Wall Street perspective, addressing the current appetite for deals in the post-acute space. He described a tepid outlook for post-acute investment stemming from the uncertainty of the future payment models and the changing regulatory landscape, particularly with regard to LTCHs. He informed attendees that the private equity market has been non-existent in the post-acute space because it is challenging to create projection models when future reimbursement for post-acute care remains murky. He explained that the post-acute transactions occurring are largely driven by real estate. For example, Barnes described the recently announced Emeritus Senior Living and Brookdale Senior Living merger as driven by real estate.

Congressional Activity

Cate McCanless, Senior Policy Analyst at Brownstein Hyatt Farber Schreck, provided an insightful overview of Medicare activity on Capitol Hill. She explained that Congress has focused on post-acute care because of the perceived “comfortable” margins achieved by post-acute providers (according to the Medicare Payment Advisory Commission). McCanless also described the outlook for the discussion draft of the Improving Medicare Post-Acute Care Transformation (“IMPACT”) Act of 2014, released by the House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sandy Levin (D-Mich.), along with Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah), March 18, 2014. The IMPACT Act draft includes one measure discussed by Mor during the bundling panel: the reporting of common data across post-acute providers, and the required reporting by acute-care hospitals of patient assessment data gathered in advance of discharge. McCanless also explained that while there has been some Congressional momentum in eliminating Medicare's sustainable growth-rate (“SGR”) formula in order to move to an alternative payment model, such momentum may lose steam this year now that a temporary patch has been enacted, because eliminating the SGR would be expensive, and it is an election year. McCanless pointed out certain post-acute policy proposals that would result in cost savings, such as reducing the SNF payment update by 1.1 percent, which would save an estimated $12 billion, and equalizing certain payments for SNFs and IRFs, which would save an estimated $1 billion; these provisions could be targets for offsets for future Medicare reforms.

Impact of Political Polarization on Health Policy

Dr. Norman Ornstein, noted observer of Congress and politics, and keynote speaker at Reed Smith’s inaugural Health Care Conference, closed the session with a thoughtful discussion regarding the current state of American politics. He described not just the polarization, but also the tribalism, of American politics today, depicting a broken American political system where opposing parties have adopted a mantra of, “if you support it, I am against it.” Despite Ornstein’s bleak description of the current state of politics, he offered some suggestions for reform, including incentivizing citizens to vote. He argued that if more of the American public is engaged, politicians must meet in the middle on at least some policy debates.

In all, the inaugural Reed Smith Health Care Conference led to provocative discussions and a deeper understanding of the political climate and policy recommendations likely to impact—or even transform—post-acute care in the not-so-distant future. We look forward to next year’s conference.

CMS Call: Applying for the 2015 Medicare Shared Savings Program (April 8)

 On April 8, 2014, CMS is hosting a call on how to prepare for the Medicare Shared Savings Program application process for the January 1, 2015 start date. Among other things, the call will cover accountable care organization (ACO) structure and governance, application key dates, and the Notice of Intent to Apply submission process.

CMS Requests Feedback on ACO Initiatives

CMS is inviting public input on “the evolution of Accountable Care Organization (ACO) initiatives” at CMS, including feedback on a second round of applications for the current Pioneer ACO Model along with new ACO models that encourage greater care integration and financial accountability. Responses should be submitted by March 1, 2014.

Older Entries

November 25, 2013 — CMS Letter to States on Quality Considerations for Medicaid and CHIP Integrated Care Models

June 6, 2013 — CMS Hosts Calls on Medicare Shared Savings Program Application Process

March 25, 2013 — CMS Call on Medicare Shared Savings Program Application Process (April 9 & 23)

November 12, 2012 — Affordable Care Act and the Post-Election Implications for Radiology

August 16, 2012 — CMS Call to Focus on ACO Educational Opportunities (Aug. 27)

July 25, 2012 — CMS Call: Medicare Shared Savings Program and Advance Payment Model Application Process (July 31)

July 19, 2012 — CMS Guidance on Medicaid Integrated Care Models

June 22, 2012 — CMS Call on Medicare Shared Savings Program and Advance Payment Model Application Process (July 16)

June 18, 2012 — MedPAC Examines Medicare Benefit Redesign, Dual Eligible Policy Options

June 18, 2012 — CMS Accepting New Applications for Advance Payment ACO Model

May 14, 2012 — GAO Report on Impact of Fraud and Abuse Laws on Medicare Financial Incentive Programs

April 23, 2012 — GAO Summarizes Stakeholder Views on Health Care Provider Antitrust Policy

February 21, 2012 — Medicare Shared Savings Program and Advance Payment Model Application Process National Provider Call (March 1)

January 23, 2012 — Medicare Shared Savings/ACO Program Webinar (Jan. 31)

January 5, 2012 — CMS Announces 32 Pioneer ACOs

December 28, 2011 — CMS Call on Advance Payment ACO Model (Jan. 5)

December 2, 2011 — CMS Open Door Forum on Final Medicare Shared Savings/ACO Rule (Dec. 7)

December 1, 2011 — Reed Smith Analysis and Overview of the Medicare Shared Savings Program for Accountable Care Organizations

November 7, 2011 — CMS Schedules Two Educational Events on Medicare Shared Savings Program/ACO Rule (Nov. 10 & Nov. 15).

October 20, 2011 — CMS Releases Final Medicare Shared Savings Program/ACO Rule

October 14, 2011 — MedPAC Endorses Medicare SGR Proposal, With Offsetting Medicare Cuts

October 13, 2011 — CMS Shared Savings/ACO Rule Entering Final Review Stage

September 29, 2011 — CMS ACO Learning Session in Baltimore (Nov. 17-18)

July 20, 2011 — CMS to Host ACO Learning Session in San Francisco (Sept. 15-16)

July 16, 2011 — CMS Hosts Webinar on Physician Culture Change for Improving ACO Cost and Quality Outcomes (July 19)

June 14, 2011 — Lawmakers Seek Investigation of Physician Owned Distributors (PODs) for Medical Devices

June 9, 2011 — CMS Extends Deadlines for "Pioneer ACO Model" Applications

June 2, 2011 — CMS is holding a Special Open Door Forum on ACO Advance Payment Initiative (June 14)

May 25, 2011 — CMS Call on Pioneer Accountable Care Organizations (ACOs) - June 7

May 18, 2011 — CMS Seeks Comments on Advance Payments to ACOs, Announces "Pioneer" ACO Model and ACO Training Sessions

May 17, 2011 — CMS Hosts Briefing on ACO Proposed Rule (May 24)

May 3, 2011 — FTC Workshop on ACO Policy Scheduled for May 9

April 21, 2011 — Summary and Analysis of Medicare's Shared Savings Program for Accountable Care Organizations

April 13, 2011 — Official Version of CMS Accountable Care Organization (ACO) Rule Now Available

April 12, 2011 — Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations

April 6, 2011 — CMS Call on Accountable Care Organization Rule (April 7)

April 1, 2011 — CMS Proposes Long-Awaited Accountable Care Organization (ACO) Regulations

December 29, 2010 — HHS Semiannual Regulatory Agenda for FY 2011

November 20, 2010 — CMS Forum on Health Care Delivery System Reform (Nov. 22)

November 15, 2010 — CMS Seeks Feedback on ACOs/Medicare Shared Saving Program

September 17, 2010 — FTC/CMS/OIG Workshop on Accountable Care Organizations (Oct. 5, 2010)

September 17, 2010 — MedPAC Policy Meeting

June 15, 2010 — CMS Call on the Medicare Shared Savings Program/Accountable Care Organizations (June 24)

June 8, 2010 — Q&As on ACA Medicare "Accountable Care Organization" Shared Savings Program