By:  George Choriatis, Esq. and David A. Manko, Esq.


The healthcare community can now take a collective breathe of relief.  Earlier today, the Centers for Medicare and Medicaid Services (CMS) issued the much awaited final regulations establishing the Medicare Shared Savings Program.  As discussed in our prior alerts, the Medicare Shared Savings Program is intended to encourage physicians, hospitals, and other healthcare providers to form accountable care organizations (ACOs) to assume accountability and coordinate their services for a defined patient population of Medicare beneficiaries attributed to them based on the patients’ utilization of primary care services.  An ACO is entitled to receive a portion of the savings that the ACO achieves for Medicare with respect to the total costs of care of the defined patient population, provided that it meets certain quality performance measures.  In addition, theCMSInnovationCenter, an agency within CMS, announced today that it has established an Advanced Payment ACO Model Program under which it will make advance funds available to certain physician-owned ACOs and rural ACOs to help fund ACO startup costs.  In addition, a number of regulatory agencies issued additional materials today regarding regulatory laws relating to the Medicare Shared Savings Program.  Each of these developments is discussed further below.




The final regulations issued today contain a significant number of changes from the proposed regulations that had been issued on March 31, 2011 that make it more feasible for a greater number of providers to participate in the Medicare Shared Savings Program.  Among other important changes:


1.     The final regulations add Federally Qualified Health Centers (FQHCs) andRuralHealthCenters(RHCs) to the types of entities that are eligible to independently form and lead ACOs.  The full list of eligible entities also includes physician group practices, networks of independent physician practices, partnerships or joint ventures between hospitals and physicians, integrated delivery systems, and certain Critical Access Hospitals.


2.     ACOs will have the option of participating in the program for all three years without having any of liability for sharing in any losses.  ACOs will also have the option of electing to be liable for sharing in any losses in return for a higher rate of sharing in any savings.


3.     The number of quality measures that the ACO must satisfy in order to be eligible to receive shared savings payments has been decreased from 65 quality measures in 5 domains to 33 quality measures in 4 domains.


4. The attainment of meaningful use of electronic health records is no longer a condition of participation as it had been in the proposed regulations.


5.  Applications will be accepted starting on January 1, 2012.  Two start dates have been established for 2012, so that ACO applicants who are accepted into the program can begin participation on either April 1, 2012 or July 1, 2012.


The final regulations can be accessed here.




In addition, theCMSInnovationCenter announced today that it has established an Advanced Payment ACO Model Program.  Under the Advanced Payment model, certain physician-owned ACOs and rural provider ACOs are eligible to receive from CMS advance payments (in the form of upfront payments) to help offset the startup costs associated with forming an ACO.  The advance payments will be recouped from future shared savings earned by the ACO.




CMS and HHS Office of Inspector General (OIG) jointly issued an interim final rule with comment period establishing waivers of certain Federal fraud and abuse laws—the physician self-referral law, the anti-kickback statute, and certain provisions of the civil monetary penalty law—in connection with the Shared Savings Program. The interim final rule with comment period is available online at


In addition, the Federal Trade Commission and the Department of Justice jointly issued a “Statement of Antitrust Enforcement Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program” (Antitrust Policy Statement). The Antitrust Policy Statement is available online at


Finally, the Internal Revenue Service (IRS) issued a notice that is available online at


George Choriatis, Esq. will be presenting a seminar on the final regulations at the New York State Bar Association Health Law Section Fall Meeting on this Saturday, October 22, 2011.  George Choriatis, Esq. and David Manko, Esq. will be presenting a webinar sponsored by THINC and the New York State Health Foundation on Tuesday, October 25, 2011, from 1:30 – 3:00 p.m., during which they will discuss the final regulations and other legal issues relating to ACOs.  To register for the webinar: click here.


We intend to publish further analyses of the above materials.  Stay tuned.


For more information, please contact George Choriatis at or David Manko at


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