The Centers for Medicare & Medicaid Services (CMS) has announced the upcoming deadlines for the third round of new applications to the Medicare Shared Savings Program (MSSP).  Accountable Care Organizations (ACOs) that ultimately are accepted into the MSSP would begin their three-year participation agreements with CMS on January 1, 2015 and join the over 360 existing ACOs currently in the MSSP or Pioneer ACO model.  This timeline is very similar to last year’s schedule.

Many entities have been planning to apply to the MSSP well in advance of the deadline, and some may be reapplying after having been rejected in previous cycles.  In the experience of our attorneys who have helped clients submit applications to the MSSP, it is extremely important to make the following five decisions early to make the application process as smooth as possible:

1) Estimate the number of Medicare beneficiaries for whom the prospective ACO wants to be accountable.  Understanding the size (and ideally, the disease mix) of the prospective ACO’s potential Medicare patient population is integral to planning the appropriate infrastructure and resources needed to ensure success in the MSSP.  MSSP participants must have a minimum of 5,000 assigned Medicare beneficiaries, and in past application cycles, the MSSP has rejected applicants that missed the minimum beneficiary threshold by less than ten individuals.   It is better for a prospective ACO to aim for an assigned Medicare beneficiary target well above the 5,000 individual threshold to control for ACO participants withdrawing from the program and endangering the ACO’s application, or worse, its participation agreement with CMS.   In addition, the costs of starting an ACO can be upwards of $2 million in the first year according to some estimates, depending on how large the beneficiary population and infrastructure is and how ambitious the ACO’s goals are.  Thus, understanding the prospective beneficiary population and their disease mix is crucial to accurately estimating the financial investment the ACO and its participants will likely make throughout the three-year MSSP participation period.

2) Determine an appropriate contracting vehicle through which to operate the ACO.  For instance, if the prospective ACO may involve a collaboration between for-profit and not-for-profit entities, it will be important to understand how potential joint investments could impact the not-for-profit’s tax-exempt status.  Additionally, some states like New York and California have corporate practice of medicine prohibitions that restrict the type of entities that can contract for the provision of physician services.  Other state laws, such as those that address fraud and abuse,  may create additional hurdles to the creation and lawful operation of an ACO.  Early key decisions include which type of corporate entity to use, who will own the entity, how the ACO’s governing body will be composed, and how the leadership and management structure will function.  It is important to seek outside counsel or experienced consultants on these important entity formation issues and to consult the Frequently Asked Questions (FAQ) page often.

3) Consider the types of health care professionals and facilities the prospective ACO should target as participants.  Successful ACOs generally include a mix of health care professionals (physicians, physician assistants, nurse practitioners, and allied health professionals) and facilities as participants.  Primary care physicians (PCPs) are subject to very stringent exclusivity requirements that prevent them from participating in more than one ACO.  Although specialists may not be subject to these same exclusivity requirements at the outset, they may inadvertently become restricted to one ACO if they provide primary care services (e.g., certain evaluation & management (E&M) visits in a home, office, SNF or outpatient facility, the annual wellness visit, or the “Welcome to Medicare” visit).  Overall, the prospective ACO will be better able to estimate its assigned beneficiary population if it includes a mix of PCPs and specialists.

4) Set expectations for prospective ACO participants in advance.  A prospective ACO should, at minimum, have a framework for how it will implement criteria such as membership fees, minimum electronic health record (EHR) technology capabilities, and participation in requirements relating to quality improvement, cost reduction, and compliance activities.  The ACO’s participation agreements with health care professionals and facilities must be disclosed in the MSSP Application, so having such a framework will inform the drafting of these participation agreements and aid in the creation of operating procedures and policies. Additionally, the prospective ACO should determine how, and for what purposes shared savings will be distributed (e.g., incentive payments, coverage of expenses, investment in additional infrastructure, future reserves, etc.).  Recruiting participants to the ACO will be easier if the participants are engaged in these key ACO decisions.

5)  Gather the appropriate staff to address particular aspects of the MSSP Application early and set milestones in advance of submission deadlines where possible.  To get started, review the Notice of Intent and Application schedule provided above, the MSSP Application from the last cycle, and the FAQ page.  CMS will likely update the MSSP Application and the FAQ page to address some issues it experienced in the previous application cycle, but both are good tools to address the aforementioned decision points in an organized manner.