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Thursday, July 26, 2012

Have We Been Here Before?


This blog has been prepared by the author, Gary M. Levin MD as a preparatory narrative for forming an ACO and/or Medicare Shared Savings Group.

This information is reprinted from the regulations promulgated by:

Centers for Medicare & Medicaid Services

Not for the faint of heart.

Accountable Care Organizations, Guidelines for Medicare Shared Savings Programs

Today we start a …multi-part narrative on how ACOs are formed, the process and explanations of numerous templates to legally form an accountable care organization.

It's a brave new world. Some of the issues sound very much like the failed health maintenance organizations of the 1990s, although the process is much more defined and carefully regulated by CMS. The agreements solely pertain to Medicare and eligible Medi-caid participants. Nothing is said about private insurers or the remaining marketplace.

It may be assumed that CMS leads the way in a controlled marketplace, while the private market will operate under the free market system with price competition and guidelines taken from CMS in regard to outcomes and quality of care.

It is a giant leap of faith that this will work across the country. The expense of establishment of ACOs is not known. Most of the early ACOs are already well organized health systems which serve as the foundation for layering an ACO upon it. In markets that do not yet have ACOs the burden is upon the local stakeholders to begin the process. An unknown factor for these less privileged hospitals and providers is the cost of organizing and the overhead and cost factors to determine what their rates will be. It will not be a cookie-cutter process.

Chances are very likely that insurance companies will evaluate and dictate their payment structure taking into account the federal regulations that not more than 15% can be allocated to their own administrative costs. Hospitals and ACO providers will have to negotiate from a position of relative weakness given the market power of CMS and larger and larger health insurance companies. Wellpoint's acquisition of another company (Amerigroup) for $4.9 billion dollars bespeaks the profits insurance companies sit upon. It begs the question why health care is so expensive in the first place.

As usual CMS has a project deadline that is heavily loaded upfront requiring entities to organize and file applications on relatively short notice (much like HIT incentives and meaningful use) with enrolled providers signed into the ACO. Most of this on faith that it will work financially. In other words, sign on the dotted line, and then we will tell you how you and how much you will be paid.


An ACO participant is identified at the billing TIN level. An ACO provider/supplier is a practitioner billing through the ACO participant’s TIN.

We want to ensure that each applicant understands the definition of an ACO participant and ACO provider/supplier. According to the regulations at 42 CFR 425.20, an ACO participant means an individual or a group of ACO providers/suppliers that is identified by a Medicare enrolled TIN that alone or together with one or more other ACO participants comprises the ACO. For example, an ACO participant may be a solo practice, a group practice, a hospital, an FQHC, among others.

An ACO participant may be composed of one or many ACO providers/suppliers that use, or have reassigned their billings to, the ACO participant TIN. An ACO provider/supplier means a provider or supplier enrolled in Medicare that bills for items and services furnished to Medicare fee-for-service beneficiaries under a Medicare billing number assigned to the TIN of an ACO participant. The key point is that an ACO participant is identified by its Medicare-enrolled TIN.

All ACO providers/suppliers billing through an ACO participant TIN are included in the ACO by virtue of their relationship to the ACO participant and the ACO participant’s relationship with the ACO.

The Medicare Shared Savings Program is a program designed for ACO participants, as described above, that come together to form an ACO. Many important program operations use claims and Center for Medicare Medicare Shared Savings Program

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other information submitted to CMS by the ACO participant through its billing TIN, including calculation of shared savings, assignment, and benchmarking. Therefore, an ACO cannot apply to participate in the Medicare Shared Savings Program unless the ACO participants have agreed to participate in the Medicare Shared Savings Program and to comply with the program regulations.

The ACO applicant also must ensure that all ACO providers/suppliers associated with each ACO participant TIN have agreed and will comply with the program regulations.

Consequently, an ACO may not include an entity as an ACO participant unless all providers and suppliers billing under that entity’s billing TIN have agreed to participate.

Agreements or contracts between or among the ACO, ACO participant, and ACO providers/suppliers related to participation in the Medicare Shared Savings Program must be executed before the ACO submits its application.

As part of the application process, we ask that you submit the list of ACO participants, who, along with all the ACO participants’ associated ACO providers/suppliers, have agreed to participate in the program. This means that the ACO participants you submitted or will submit, in addition to all their associated ACO providers/suppliers, signed agreements or contracts before the application was or is submitted.

It is important that agreements between and among the ACO, ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to ACO activities comply with our regulations.

Content of agreements or contracts between the ACO and ACO participant.

As part of the application process, we ask that you submit a sample agreement you have with each of your ACO participants. This sample agreement and the associated executed agreements with ACO participants, at minimum, MUST contain the following:

1) An explicit requirement that the ACO participant agrees to participate in and comply with the requirements of the Medicare Shared Savings Program under 42 CFR part 425.

General references to compliance with Federal law are not sufficient. General references to compliance with Medicare regulations are not sufficient.

2) A description of the ACO participants’ rights and obligations in, and representation by, the ACO, including how the opportunity to share in savings or other financial arrangements will encourage ACO participants and ACO providers/suppliers to adhere to the quality assurance and improvement program and evidence-based clinical guidelines and should include language giving the ACO the authority to terminate an ACO participant for its non-compliance with the ACO’s participation agreement with us or any of the requirements of 42 CFR part 425.

Additionally, ACOs must not require that beneficiaries be referred to ACO participants or ACO providers/suppliers or to any other provider or supplier (42 CFR 425.304(c)(2)), except under the specific and limited circumstances expressly permitted by the regulations.Medicare Shared Savings Program

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The ACO may or may not need a separate legal entity, however the ACO governing body must have a specific fiduciary duty to the ACO.

“””We want to ensure each applicant understands the eligibility requirement related to the ACO’s governing body. According to the regulations at 42 CFR 425.106, the ACO must maintain an identifiable governing body with authority to execute the functions of the ACO.

The governing body must have responsibility for oversight and strategic direction, holding the ACO management accountable for the ACO’s activities. The governing body members must have a fiduciary duty to the ACO and must act consistent with that fiduciary duty.

• The governing body of the ACO must be separate and unique to the ACO in cases where the ACO comprises multiple, otherwise independent ACO participants.

The governing body members cannot meet this fiduciary duty requirement if the governing body is also responsible for governing the activities of individuals or entities that are not part of the ACO.

• If an already existing entity applies to the program as an ACO, the ACO governing body may be the same as the governing body of that existing entity, provided it satisfies the other requirements for a governing body, including the fiduciary duty requirement.

These regulations mean that if your ACO is comprised of two or more otherwise independent ACO participants, your ACO must have a legal entity and governing body that is distinct and separate from each of them (the governing body must be the governing body of the legal entity that is the ACO, and not the governing body of a parent or subsidiary entity).

For example, if several separate group practices decide to come together for purposes of participating in the Medicare Shared Savings Program (but will otherwise maintain separate practices), they must form a separate legal entity to be the ACO.

This legal entity must have a legal structure with a governing body that has a fiduciary responsibility to the ACO alone and not to any other individual or entity. If an existing entity, such as an IPA representing many group practices wants to apply as an ACO using its existing legal structure and governing body, each group practice represented by the IPA must agree to be an ACO participant and each provider and supplier within each group practice must agree to be ACO providers/suppliers as discussed above.

If only some of the represented group practices want to become ACO participants, the IPA cannot use its existing legal structure and governing body for the ACO, because it cannot meet the regulatory requirements, including the fiduciary duty requirement.

If only some of a group practice’s providers and suppliers agree to be ACO providers and suppliers, then that group practice may not become an ACO participant.

In summary, the ACO’s governing body decisions must be independent from influence of interests that may conflict with the ACO’s interests, including the interests of group practices that are not participating in the ACO but continue to be represented by the IPA for other purposes, such as commercial contracting.

Assess your application for the Medicare Shared Savings Program.

Please review this memo carefully and consider your current ACO organization, agreements, and application attestations in light of it. “””

List of Required Documents for ACO formation and Application to become an ACO for CMS approval process.

Medicare Shared Savings Program

Submit FormCMS-20037 Application for Access to CMS Computer Systems no later than July, 9 2012

See How to complete Form CMS-20037 [PDF, 427KB] for instructions on how to complete your CMS 20037.

Your application is pre-populated with the information you gave us on your Notice of Intent to apply (NOI).  If you find an error in any pre-populated information, send an email with the change request and correct information to  In the subject line, include your ACO ID and the words “Request to Change Pre-populated Information.”

How to Submit an Application if you are a Physician Group Practice Transition Demonstration Participant

This group has special privileges in regard to abbreviated applications.

How to Complete the Application

Use the MSSP Reference Table [PDF, 506KB as a guide as you complete your application in HPMS. See 2013 Medicare Shared Savings Program Application Form [PDF, 259KB] for a copy of the application questions. Be sure to use the required templates,

All the documents you submit must clearly identify you as the ACO applicant with the identification number (ACO ID) you got with your Notice of Intent to Apply (NOI) acknowledgement e-mail

Some questions require you to submit supporting documentation to us.  Using file compression software such as WinZip, compress each section’s files together.  Upload the compressed files in HPMS in their respective file upload locations.  Narratives and/or other supporting documentation are compressed and uploaded to the ‘Supporting Applications Materials’ location. This does not apply to your ACO Participant List. Use the ACO Module User Guide in HPMS for help uploading.

How to complete the ACO Participant List Template

Use the ACO Participant List Template [ZIP, 5KB] to give us your ACO Participant List. See How to complete Participant List Template [PDF, 424KB] for instructions on how to complete it. See also ACO Participant List Frequently Asked Questions.

How to Complete the Governing Body Template

Use the Governing Body Template [ZIP, 10KB] to tell us about your Governing Body. All fields relate to the members on the Governing Body. Do not leave any fields blank.

See How to complete Governing Body Template PDF, 255KB] for instructions on how to complete it. See also Governing Body Frequently Asked Questions.

How to Complete the ACO Participation Agreement Template

Use the ACO Participation Agreement Template [ZIP, 282KB] to tell us about your agreements with your ACO participants. For additional guidance, see Additional Guidance for Medicare Shared Savings Program Accountable Care Organization (ACO) Applications [PDF, 113KB]

See How to complete Participation Agreement Template [PDF, 249KB] for instructions on how to complete it.

How to Complete the Executed Agreements Template

Read the guidance we issued around applicants, participants and agreements.

Use the Executed Agreement Template [ZIP, 11KB] to list the ACO Participants you have executed ACO Participation agreements with.

See How to complete Executed Agreements Template [PDF, 176KB] for instructions on how to complete it.

Requests for Additional Information

In two words: “ON DEMAND”


We must get the requested information by the date specified on the CMS notice.  We consider the date of submission as the actual date we get the information, and not the postmarked date on the submission.

Patients and Providers: “We're from the Government and we're here to help you “

Applications posted on CMS Web site

Updated in July 2012

NOIs accepted  Nov. 1, 2011 - June 29, 2012

CMS User ID forms accepted Nov. 9, 2011 - July 9, 2012

Applications accepted

Aug. 1,2012 - Sept. 6, 2012 Application approval or denial decision

Fall 2012

Reconsideration review deadline* Dec. 11, 2012

Helpful Links and Additional Information

Final Rule Published in the Federal Register on November 2, 2011

Shared Savings Program Web site

Shared Savings Program Final Waiver


Shared Savings Program Frequently Asked Questions


Disclosures and Waivers:

None of the above information should be considered official and this document is NOT endorsed by CMS. The reader should not base decisions or deadline dates without first contacting CMS at the indicated email addresses listed herein.


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