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++++++++++++++++++ + + ++++++++++++++++++ LEGAL EASE +++ +++ AN INTRODUCTION TO Accountable Care Organizations By Thomas A. Mobilia and Katie L. Harrison A CCOUNTABLE CARE ORGA- NIZATIONS (ACOs) were recognized in the Patient Protection and Affordable Care Act (PPACA), enacted nearly two years ago. On January 1, 2012, the Centers for Medicare & Medicaid Services (CMS) began monitoring ACOs as part of PPACA's Medicare Shared Savings Program (MSSP).1 Since PPACA's enactment, several states, including New York, have experimented with parts of the ACO model in their state Medicaid programs. The impact that ACOs may have is substantial, leading one com- mentator to predict that "[b]y 2020, the American health insurance industry will be extinct."2 This article provides an introduction to ACOs and their current role in the federal Medicare and New York state Medicaid programs. What Is an ACO? CMS describes an ACO as a group of physicians, hospitals and other health care providers, voluntarily joined together to provide coordinated, high-quality — yet, low-cost — care to Medicare patients. An ACO must provide primary care services to at least 5,000 Medicare patients annually, agree to participate in the MSSP for at least three years, and demonstrate shared governance that includes at least one Medicare beneficiary and proportions control of the ACO's decision-making process among its providers. As its hallmark, MSSP is offering shared savings to health care providers in ACOs. While those providers will con- tinue to receive Medicare fee-for-service payments, they can also receive a share of the ACO's annual savings. To determine savings, the ACO's expenditures are com- pared to the total Medicare estimated expenses that ACO beneficiaries would have incurred in the absence of the ACO. If the ACO has provided those services at or above a minimum savings rate, it can 12 | Long Island MD NEWS ■ MDNEWS.COM receive up to 60% of its savings, provided it also meets certain quality-of-care standards in four areas: (i) patient and caregiver experience, (ii) care coordina- tion and patient safety, (iii) preventive health, and (iv) at-risk populations. New York and ACOs It is clear at this juncture that the ACO model is a "dramatic change [that] will be difficult for many individuals and organizations"3 to embrace and imple- ment. As a result, on March 31, 2011, the New York State Legislature adopted the Accountable Care Organization Demonstration Program to experiment with the ACO model.4 This five-year program aims to "test the ability of accountable care organizations to assume a role in delivering an array of health care services, from primary and preventive care to acute inpatient hospital and post-hospital care."5 Pursuant to the legislation, the Commissioner of the New York State Department of Health must approve seven ACOs by 2015. The guidelines for ACOs under this program are compatible with those of the MSSP, but they are not identical. For example, under MSSP, an ACO must have 5,000 Medicare beneficiaries, while in New York, beneficiaries can also be enrollees of third-party payers. In addition, ACOs formed under New York's Accountable Care Organization Demonstration Program are not limited to Medicare's fee-for-service system and can establish alternative payment meth- odologies with third-party payers. Lastly, New York's ACOs are permitted to depart from the MSSP's shared savings model and negotiate their own compensation arrangements with third-party payers. Despite the Accountable Care Organization Demonstration Program legislation, ACOs are not yet a part of New York's Medicaid program, and their pro- spective role in Medicaid remains unclear. In New York, as in other states, health care providers have already grouped together in organizations similar to ACOs with the goal of providing collaborative and cost- effective care to Medicaid patients. New York's Medicaid Health Homes program, for example, extends financial incentives to groups of providers offering coordinated health care to Medicaid patients with long- term, chronic conditions.6 Consequently, the potential for ACOs being embraced fully by New York's Medicaid program will likely depend on the success of their federal counterparts, the interest of New York's health care providers and public support. Time will tell whether ACOs are the new model that will bring about significant change to both the federal and state health care systems. Thomas A. Mobilia is a senior partner and trial attorney at Martin Clearwater & Bell LLP who has defended the firm's hospital clients, medical practices and physicians in high-exposure neurosurgical, cardiothoracic, orthopedic and obstetrical cases in state and federal courts for more than 20 years. He has also represented physicians and health care professionals in disciplinary proceedings brought by the New York State Department of Health, Office of Professional Medical Conduct and Office of Professional Discipline. Katie L. Harrison is a law clerk at Martin Clearwater & Bell LLP. ■ References 1 42 U.S.C. § 1899 (2010). 2 Ezekiel J. Emanuel and Jeffrey B. Liebman, "The End of Health Insurance Companies," N.Y. Times, Jan. 30, 2012, http://opinionator.blogs. nytimes.com/2012/01/30/the-end-of-health- insurance-companies/?pagemode=print. 3 Thomas E. Bartrum, et al., The ACO Handbook: A Guide to Accountable Care Organizations (Peter A. Pavarini, et al. eds., 2012). 4 New York Public Health Law, art. 29-E. 5 Id. 6 New York Social Services Law, § 365-L.

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