- Legal Structure and Governance: ACOs are required to “have a formal legal structure that would allow the organization to receive and distribute payments for shared savings to participating providers of services and suppliers.”
- Legal Entity—
- The legal entity can be structured in a variety of ways: corporation, partnership, LLC, foundation or other entity permitted by State law. Governance must be shared among all ACO participants (Medicare enrolled providers with TIN) with appropriate proportionate control over the ACO’s decision making process.
- Each ACO must be constituted as a legal entity appropriately recognized and authorized to conduct its business under applicable State law in order to best achieve the objectives of the Shared Savings Program (SSP) and that it must have a TIN. The organization must be capable of:
- Receiving and distributing shared savings;
- Repaying shared losses;
- Establishing, reporting, and ensuring ACO participant and ACO provider/supplier compliance with program requirements, including the quality performance standards; and
- Performing the other ACO functions identified in the statute;
- NOTE: while each ACO participant must be enrolled in Medicare; the ACO itself is not required to be enrolled in Medicare.
- NOTE: if an existing legal entity meets the eligibility requirements for being an ACO, then a new legal entity does NOT need to be formed (e.g., a hospital employing ACO professionals)
- CMS specifically would like comments on whether they should require all ACOS participating in the SSP to be formed as a distinct legal entity appropriately recognized and authorized to conduct is business under applicable State law or whether an existing legal entity could be permitted to participate in the SSP as an ACO, including entities that have similar arrangements with payors. However, CMS also proposes that a hospital who employs ACO professionals, but wants to include as ACO participants other providers of services and suppliers who are not already part of its existing legal structure, would have to establish a separate legal entity to provide all ACO participants a mechanism for shared governance and decision making.
And the organization would have to certify that it is recognized as a legal entity under State law and authorized by the State to conduct its business (and if the ACO is in more than one state, it will need to be certified by all states in which it does business)
- CMS would like comments on the proposal for the required legal structure and seek input on other suitable legal structure requirements that we should consider adding.
- Also, CMS wants to encourage not-for-profit, community-based organizations to participating and further requests comment on whether requirements for the creation of a separate entity would create disincentives for the formation of ACOs and whether there is an alternative requirement that could be used to achieve the aims of shared governance and decision making and the ability to receive and distribute payments for shared savings.
- Governance
- An ACO must establish and maintain a governing body with adequate authority to execute the statutory functions of an ACO as defined by the shared governance criterion. The governing body may be a board of directors, board of managers, or any other governing body that provides a mechanism for shared governance and decision -making for all ACO participants, and that has the authority to execute the statutory functions of an ACO (e.g., to define processes to promoted evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care…).
- The governing body would be comprised of the ACO participants or their designated representatives, include Medicare beneficiaries served by the ACO, and possess broad responsibility for the ACO’s administrative, fiduciary, and clinical operations.
- CMS is concerned that allowing existing entities to become ACOs would complicate their monitoring and auditing of the ACO—Also CMS wants to encourage not-for-profit, community-based organizations to participate in the SSP, so they would like comments on whether requirements for the creation of a governing body as a mechanism for shared governance would create disincentives for the formation of ACOs and whether there is an alternative requirement that could be used to achieve the aims of share governance and decision making.
- Composition of Governing Body
- The ACO should be directed by ACO participants that directly provide health care services to beneficiaries; however, in order to assist ACOs in gaining access to capital, like partnering with health plans or entrepreneurial management companies, the regulations propose that ACO participants control at least 75% of the ACO’s governing body, in order to ensure that ACOs remain provider driven. This allowance is designed to accommodate small provider groups that want to form an ACO but lack sufficient access to capital to do so. CMS would like comments on whether 75% control by ACO participants is appropriate.
- ACOs would be required to describe how they will partner with community stakeholders as part of their application. ACOs that have a community stakeholder organization serving on their governing body would be deemed to have satisfied that application criterion.
- There must be Medicare FFS beneficiary representation on the ACO governing body.
- Community stakeholder engagement in an ACO could be explicitly incorporated via community representation on the governing body, by having a community representative on an advisory board, or by other innovative mechanisms.