ACO Rule Keeps HIE Consent "On the Fence"

When DHHS published its Proposed ACO Rule in April 2011 and then the Final ACO Rule in November 2011 (I’ll refer to them as the “ACO Rules”), discussions focused predominately on issues such as who is “qualified” to participate, what the required governaConsent on the Fence.pngnce structure should be, what methodology will be used to assign Medicare beneficiaries, and what the payment models will be.  However, as I digested the ACO Rules, my reading deliberately slowed down as I zeroed in on the not unremarkable language and comments CMS included with regard to sharing individually identifiable health information in the ACO context.

Among other things, the ACO Rules would authorize key data sharing between CMS and an ACO.  In particular, four categories of data could potentially be shared:

  • Aggregated Data
  • Personal Identifiers
  • Personally Identifiable Claims Data
  • Prescription Claims Data

In the Preamble to the Proposed Rule, CMS emphasized the importance of sharing these forms of data in order provide more complete information for the services provided or coordinated for the ACO beneficiary populations, better achieve improvements in the quality of care and gain a better understanding of the population served while lowering the growth in health care costs. Notably, while the ACO Rules would permit Medicare beneficiaries to “opt-out” of certain data sharing, other data would be shared without the patient’s consent.  Moreover, it is clear that CMS deliberately chose to proceed with an opt-out approach, given its concerns regarding beneficiary participation and ACO Participant administrative burdens.  In the Preamble to the ACO Rules, it noted that:

An opt-out approach is used successfully in most systems of electronic exchange of information because it is significantly less burdensome on consumers and providers while still providing an opportunity for caregivers to engage with patients to promote trust and permitting patients to exercise control over their data.”  See 76 Fed Reg. 19560 (2011). 

Although some of the information that CMS proposes for “sharing” will be de-identified, other information will be identifiable. For example, limited beneficiary data (i.e., name, DOB, gender, insurance claim number) would be made available at the beginning of the first performance year and in connection with quarterly aggregated data reports.  Other data proposed to be shared could potentially include: (Medicare Part A & B) procedure codes; diagnosis codes; beneficiary IDs; DOB; geneder; date of dealth; claim ID; dates of service; provider/supplier ID; claim payment type; (Medicare Part D) beneficiary ID; prescriber ID; drug service date; drug product ID; if the drug is on the formulary. 

CMS acknowledges in the ACO Rules that there could be privacy concerns with sharing identifiable information, but nevertheless takes the position that the HIPAA Privacy Rule permits disclosure for purposes of sharing Medicare Part A and Part B claims data with ACOs participating in the Shared Savings Program.  The agency also specifically notes that the disclosures of claims data would be permitted as “health care operations”.  Under HIPAA, a covered entity may disclose PHI to another covered entity for the recipient’s health care operations if they both have or had a relationship with the individual, the records pertain to that relationship, and the records will be used for a health care operation function meeting one of the first two paragraphs in the definition of health care operation under HIPAA. 

Yet, although CMS explicitly states that it has the authority to share Medicare Claims Data without patient consent, the agency also notes that it “nonetheless believe(s) that beneficiaries should be notified of, and have meaningful control over who, has access to their personal health information for purposes of the Shared Savings Program.”  See 76 FR 19559; See also 76 FR 67849.  Therefore, while patients would not be able to opt-out of having de-identified aggregated data reports or limited identifiers shared with the ACOs, CMS will allow patients to opt-out of having claims data shared with the ACOs. 

Over the past year, privacy, patient consent and HIE opt-in/opt-out continues to be debated (sometimes painfully).  The debate continues essentially because certain stakeholders hold different and strong views on if, when and at what point affirmative patient consent is required (under current law) or should be required (through promulgation of new rules).  As a result, some HIE collaboratives have required affirmative patient consent before any data is shared. Similarly, Recommendations from the ONC Tiger Team include, in part, that consent should be obtained before any information is shared with third parties, including Business Associates and HIOs(except where sharing is directed exchange (provider-to-provider), or between providers participating in an OHCA (as as side note, query if ACOs might qualify as OHCAs? least in some cases)).  Others have determined that the value of networked electronic HIE – i.e., healthcare quality improvement and cost reduction – is most efficiently realized when certain data is readily shared without prior authorization or consent, in accordance with HIPAA's exceptions, as a presumed default.  Now with CMS throwing its views on consent & opt-in/opt-out into the ring, at least with respect to ACO's data-sharing with Medicare, I'm sure many are anxious to see if the forthcoming HITECH Final Rule and NHIN Governance Rule will offer clear standards for the current HIE consent conundrum, or continue to precariously balance this issue on the fence....... I know I personally can't wait to see.

The IRS/DOJ/FTC Weigh-in on ACOs

Following the release of the CMS proposed ACO rule, the IRS has released a notice requesting comment whether existing guidance for tax-exempt organizations seeking to participate in the Medicare Shared Savings Program as ACOs is sufficient and whether additional, and what, guidance may be needed. 

Released along with the CMS Proposed ACO Rule, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) joint Proposed Antitrust Policy Statement is available regarding antitrust enforcement for ACOs.  The proposed statement sets forth and requests public comment on a proposed "safety zone" for certain ACOs as well as an expedited review process.  It coordinates antitrust competition analysis with CMS's review of ACO applications to ensure necessary guidance is available for the formation of procompetitive ACOs.

For some "light" weekend reading, check out all the documents related to the coordinated efforts of the agencies:

CMS Proposed ACO Rule

CMS/OIG Joint Notice of Potential Fraud and Abuse Waivers

DOJ/FTC Proposed Antitrust Policy Statement

IRS Solicitation of Comments


"Soon" becomes Now - CMS releases long-awaited ACO Rules

The long wait is finally over.  The Centers for Medicare and Medicaid Services finally released the much anticipated Accountable Care Organization (ACO) proposed rules today after lengthy delays and promises that the rules would be out "soon."  The proposed rules set forth the requirements for the Medicare Shared Savings Program and are expected to clarify many questions about how ACOs will operate and receive incentive payments under the Shared Savings Program. 

The HHS Office of the Inspector General (OIG) has also released a notice and request for public comment on proposed fraud and abuse waivers for application of Stark, the Anti-kickback Statute and certain civil monetary penatlies (CMP) law provisions to ACOs. The Secretary is authorized to waive these laws as necessary to implement the Shared Savings Program.  The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are also expected to weigh in on the antitrust implications for ACOs.  

The Antitrust Headache: What ACOs, AT&T and Blue Cross have in Common

So what exactly do a nation-wide health insurer and the second (potentially now first) largest U.S. wireless provider have in common? Upcoming battles over the antitrust implications of their actions and a not-so-beautiful friendship with the DOJ. 

For AT&T, its headache began last weekend when it announced its plans to buy T-Mobile for $39 billion, giving it effectively a 40% share of the current wireless market share and raising questions from network coverage to increased quality of service, pricing and competition.  AT&T and T-Mobile predict that the quality of calls would improve, coverage would be expanded, and more individuals would have access to faster wireless data connections as a result of the merger.

In a completely unrelated market and action, Blue Cross Blue Shield health insurance plans in the District of Columbia, Kansas, Missouri, North Carolina, Ohio, South Carolina and West Virginia recently found themselves on the receiving end of a U.S. Department of Justice (DOJ) subpoena.  The subpoenas come as part of a lawsuit filed last year by the DOJ against Blue Cross Blue Shield of Michigan alleging the insurer entered into agreements to raise hospital prices. 

Far from immune, health care providers and other stakeholders looking to form and operate Accountable Care Organizations (ACOs), the AT&T and Blue Cross cases serve as a reminder of the significant risk of antitrust scrutiny that such collaboratives can be subject to.  The development of such ACOs through hospital and physician joint ventures and similar relationships has the potential to create substantial market power and may encourage monopoly and price-fixing activity, thus coming under the watchful eye of the DOJ.  The DOJ and FTC are expected to address this matter soon in joint collaboration with the forthcoming proposed ACO regulations from CMS (see Statement of Sharis A. Pozen, Chief of Staff, Antitrust Division. before the Subcommittee on the Courts and Competition Policy, Concerning Antitrust Enforcement in the Health Care Industry (December 1, 2010)).

To read more, click "Continue Reading" below.

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FTC & Attorney General Launch Inquiry into a Nevada ACO is reporting that the Nevada Attorney General's office and the Federal Trade Commission have launched an inquiry into a patient-care collaboration between Reno-based Renown Health and a local cardiology practice.  The publication indicates that Renown Health, a not-for-profit health system, confirmed the "informal inquiry."

Based on the write-up by, Renown’s Institute for Heart & Vascular Health and Sierra Nevada Cardiology Associates formed a partnership as a first step the two providers are taking in forming an accountable care organization (ACO).  The report suggests that Renown also is also in discussions with Reno Heart Physicians to form a similar agreement, but apparently the FTC and Nevada Attorney General's office first want a closer look at the arrangements.  The article also writes that a spokeswoman for Renown has stated:

Their interest is not unexpected given the size of the transaction, and we've met and are cooperating and providing requested information . . . 

The forgoing may strike fear into many collaboratives and pilots that are in a similar position of trying to move forward with planning and developing the necessary clinical, technological and organizational structure that will allow them to operate an ACO by the January 1, 2012 deadline currently set under the PPACA.  However, because the PPACA regulations have not yet been issued, many remain cautious and concerned about becoming "too invested" (financially, and otherwise) before further guidance regarding how the FTC and CMS will exercise their waiver authority granted under the PPACA.  For instance, will new safe harbors and exceptions be created under Stark and AKS, or will ACOs need to submit for waivers on a case-by-case basis?

Last year, on October 5, 2010, the Federal Trade Commission (FTC), the Centers for Medicare & Medicaid Services (CMS), and the Office of Inspector General (OIG) of the Department of Health and Human Services (DHSS) held a 1-day workshop regarding legal issuesrelated to ACOs, namely: antitrust, physician self-referral, anti-kick-back, and civil monetary penalty laws.  See the FTC's Website and Notice of Meeting, 75 Fed Reg 57039 (September 17, 2010). Public comment was also solicited, and physicians, hospitals, health systems, consumers and "all others interested in ACOs" were invited to participate in person or by telephone. 

That day-long workshop resulted in two comprehensive transcripts being posted on the FTC's website: one for the Morning Session, and one for the Afternoon Session.  These are lengthy documents, however each contains critical discussions regarding the legal issues that need to be addressed by ACOs, and therefore I highly recommend each as a "must read" for individuals involved with developing ACOs.

For a copy of the full agenda for the October 2010 Workshop, click "Continue Reading Below". 

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NJ ACO Pilot Bill Approved by Senate Budget and Appropriations

See prior Legal HIE post "NJ ACOs, will they fly?"
For Release: Immediate
Thursday, March 03, 2011
Contact: Jason Butkowski
(609) 292-5215
TRENTON – A bill sponsored by Senators Joseph F. Vitale and Jim Whelan which would establish a three-year pilot program in the Department of Human Services in order to make sure Medicaid recipients have access to quality health care was approved by the Senate Budget and Appropriations Committee today by a vote of 7-5.

“Under the current health care delivery and payment structure, Medicaid recipients are often unable to access high-quality, cost-effective health care,” said Senator Vitale, D-Middlesex, and Vice Chair of the Senate Health, Human Services and Senior Citizens Committee. “As a result, we pay more money for less-than-stellar results in terms of positive patient outcomes. It’s time that we move away from the existing system which puts vulnerable New Jerseyans at a disadvantage to receive high-quality care, and begin to invest State resources in a smarter, cost-effective model of health care for Medicaid enrollees.”

“This bill is about spending State health care dollars smarter, and improving care for people who depend on our State’s health care safety net for access to medical services,” said Senator Whelan, D-Atlantic, and a member of the Senate health panel. “Right now, we lack the objective evaluation and cost-effective protections to make sure that we’re getting the biggest bang for our buck, and providing the best care possible for people enrolled in the Medicaid system. It’s time that we do better for New Jerseyans in need.”

The bill, S-2443, would create the “Medicaid Accountable Care Organization Demonstration Project” to ensure that Medicaid recipients in New Jersey have access to high-quality, cost-effective medical care. The bill would establish a demonstration project within the Department of Human Services to increase access to primary care, behavioral health care, and dental care by Medicaid recipients in a particular region. The bill would also improve the quality of health care by establishing objective metrics and relying on patient experience, and would reduce unnecessary and inefficient care without interfering with a patients’ access to the health care providers and services they need to stay healthy.

The bill would authorize Accountable Care Organizations (ACOs), defined as nonprofit corporations, to provide coordinated, high-quality care to Medicaid recipients in a municipality or defined geographic region with more than 5,000 Medicaid recipients. If the program proves successful in lowering costs and improving care, the sponsors said they would consider working with the Department to establish a permanent program.

“As part of the federal health care reform law, states have been given the authority to empower ACOs to provide coordinated, high-quality, cost-effective health care to Medicaid recipients,” said Senator Whelan. “Frankly, we’re flying blind right now in terms of the level of care available to Medicaid recipients, and it’s time to try something new to create a high-quality standard of care that allows us to achieve the best patient outcomes at a fraction of the current price. By shifting to a smarter model of care, we can maximize the impact of our health care investment.”

“Whether it’s FamilyCare or the medical home pilot program, New Jersey has been a laboratory for best practices in administering and delivering health care for New Jerseyans in greatest need, and the Medicaid ACO Demonstration Project is another step forward in better health care at less cost to the State’s taxpayers,” said Senator Vitale. “We recognize that we have a responsibility to provide quality care for people who depend on Medicaid, and we have to stretch limited health care dollars as far as they will go. By moving to an ACO model of delivering health care services, we can achieve both, and will once again set New Jersey up as a national model for other states to follow.”

The bill now heads to the full Senate for consideration.

Patient Protection and Affordable Care Act Declared Unconstitutional

In a brief 78 page Opinion, Federal District Court Judge Roger Vinson of the U.S. District Court of the Northern District of Florida struck down portions of the the Patient Protection and Affordable Care Act on constitutional grounds.  The impact of that decision on PPACA initiatives in Florida, such as Accountable Care Organizations, remains to be seen, althought the DOJ has expressed its intent to appeal the ruling. In addition, Deputy Senior Advisor Stephanie Cutter responded:

We don't believe this kind of judicial activism will be upheld and we are confident that the Affordable Care Act will ultimately be declared constitutional by the courts.

She characterized the ruling as "well out of the mainstream of judicial opinion," noting that 12 federal judges have dismissed challenges to the law's constitutionality and two--in Michigan and Virginia--have upheld the law.

ACO Pilots for New Jersey -- Will they "fly"?

The New Jersey Health Care Quality Institute (NJHCQI) brought together several distinguished experts to discuss the development of and implications for the new accountable care organization (ACO) models and rules being established on a federal and state level for Medicare and Medicaid. The focus of the seminar was on exploring what ACOs were (and what they were not), as well as the anticipated CMS rule and pending New Jersey legislation for a Medicaid ACO demonstration project. Speakers included, among others, David Knowlton, President and CEO of the NJHCQI, Jonathan Blum, Deputy Administrator and Director for the Center of Medicare, CMS, and Dr. Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers.

The keynote speaker, Jonathan Blum, discussed CMS’ views for the forthcoming CMS Rule on ACO participation in the Shared Savings Program established by the Patient Protection and Affordable Care Act (PPACA). Anticipated by mid-January, Blum noted that the focus would be on both quality and cost-control, not just solely for participants for the Medicare program, but for the broader scheme of health care delivery systems and all other payors on a state and private level. Mr. Blum provided ten central principles that the anticipated Notice of Proposed Rulemaking would center around:

  • ACOs are not one-size fits all and therefore the Rule will need to respond to and attract large integrated hospital systems, small and medium sized physician groups, and hospital-physician groups. Mr. Blum acknowledged that this could require different payment models and “entry ramps” that would create multiple pathways suitable for different types of organization as well as populations (eg., urban or rural).
  • ACOs must change patient care. The ACO structure must move away from uncoordinated and fragmented care and move towards coordinated, patient-centered “journeys.”
  • ACOs must prioritize clinical quality and standards. The Rule will strive to ensure that delivery systems reward outcomes and processes, as well as focus on improving patient experiences and responding to patient expectations. Mr. Blum noted that the Rule will almost certainly establish quality measures that ACOs will need to meet.
  • ACOS are about constant improvement and evolution. Although the Rule will certainly set benchmarks and standards, CMS is aware that there will need to be a constantly evolving process, with updated payment rules and policies each year, as well as policies that incentivize (not dictate) organizations to invest in health information technology and other vital improvements.
  • ACOs must include data-exchange solutions for understanding patient histories and identifying high-risk patients. Mr. Blum noted that CMS is very much aware of the culture of privacy and confidentiality that this conflicts with at the same time as understand the need for information to be shared with doctors and CMS.
  • ACOs must involve communication to patients. Patient advocacy and notice of participation is key. Patient-beneficiaries will be notified when being assigned to an ACO, and Mr. Blum highlighted how notice helps patients understand the incentives their physicians have in participating in ACOs but at the same time understanding also the benefits their participation in an ACO will result in.
  • ACOs are NOT just about signing up and taking a gamble that it will work, or attempting to maintain the “status quo.” Mr. Blum noted the Rule will take this in to account and create mechanisms to ensure that organizations seeking to participate share the same values that CMS does towards improving quality and controlling costs.
  • ACOs are NOT about dominating markets. Mr. Blum underscored how CMS was well aware of the antitrust implications of ACOs and gave assurances that CMS was working with the DOJ and OIG to ensure the Rule would be compliant and not create anticompetitive concerns.
  • ACOs are NOT about changing the nature of the underlying Medicare fee-for-service structure. Mr. Blum emphasized that the Rule will not take away rights for beneficiaries to receive care from different hospitals or physicians.
  • ACOS are NOT static. They must be constantly evolving, creating new models and striving to meet the concerns of organizations and patients as they emerge.

Questions asked of Mr. Blum by attendees revolving around how exactly the proposed Rule would address anticompetitive concerns for multi-hospital concerns, what the ACO model would look like (physician-led, hospital-led?) and how the Rule would address the conflict of patient-choice and a cohesive coordinated system of care. Mr. Blum, although unable to provide specifics, noted that the Rule would try to capture multi-system patients in one-system of care while balancing market concerns and competiton, avoinding monopoly creating incentives. He also acknowledged that PPACA was somewhat inconsistent in striving to maintain patient choice but yet seeking a coordinated system of care, and that the Rule would seek to establish incentives for patients to stay with providers in an ACO, noting that “creation of demand for quality of care” was a key for success. He also focused on the role of physicians in ACOs as a key success and although not embracing any one ACO model, stated CMS would try to make participation attractive to all types of leadership roles. Finally, Mr. Blum emphasized again how important it was for ACO organizations not only to “work for CMS” but to work for other payors, including Medicaid.

Jeffrey Brenner focused on the establishment of Medicaid ACOs in NJ, highlighting the problems in the past of increasing volume without increasing quality of care for patients. The goal of ACOs, he emphasized, was to move away from volume, and instead towards increasing quality and lowering costs. The legislation introduced into NJ would be that aimed towards “safety-net” ACOs with a focus towards better primary care that was community-based, not hospital-based. The board would be composed of providers, hospitals, social service providers AND patients within the organizations chosen geographic area. He then focused on why ACOs are necessary, emphasizing that the nation as a whole, including NJ, was going broke, and how NJ in particular was an outlier in hospitalization and care. He highlighted that cost-shifting methods and remote care management simply did not work to reduce costs, and that hospitals needed assistance transitioning, or face mass closings, in response to the shift in volume expected from ACOs. Finally Mr. Brenner re-emphasized that the NJ Medicaid ACO model will seek to develop mechanisms for delivering ground-up, high quality care.

Representatives from the business community stressed that quality and access to care was critical to businesses and that the NJ ACO legislation had the full backing of the Chamber of Commerce and business community. Mr. Wilson, from the Kaufman Zita Group, noted that the goal was to have the legislation passed, in full, by March, and that as many problems and concerns of stakeholders would be addressed as possible.

The general concern among attendees appeared to revolve around ensuring that all social service providers and community representatives were included within the ACO structure, as well as general antitrust and anticompetitive concerns. Of particular concern to some was the transition process and the difficulties hospitals would face in light of the new legislation and Mr. Brenner acknowledged that while the transition would likely be “messy”, hospital closings, where necessary, would need to be done methodologically and carefully and noted that the legislation would help at-risk hospitals learn the skills they need to reinvent themselves in the wake of the ACO movement. And finally, some expressed concern that the NJ Medicaid ACOs would not be able to “stand on their own” if PPACA were repealed at the federal level. Panelists stressed that the NJ legislation was entirely independent of PPACA. Because the ACO model predated the Act, they felt that it would continue even if the remote possibility of PPACA’s repeal came true.

JAMA recently published an article noting that:

Proponents hope that ACOs will allow physicians, hospitals, and other clinicians and health care organizations to work moreeffectively together to both improve quality and slow spending growth. Skeptics are concerned that ACOs will focus narrowly on their bottom line and either stint on needed care or use the leverage they achieve through local integration to demand unreasonable prices from payers…. It is likely that the success of ACOs (and the many other payment-reform initiatives included in the Affordable Care Act) will depend in large part on whether the Centers for Medicare & Medicaid Services, private payers, physicians, and health system leaders can work together to establish a tightly linked performance measurement and evaluation framework that not only ensures accountability to patients and payers, but also supports rapid learning, timely correction of policy and organizational missteps, and broad dissemination of successful organizational and practice innovations." (emphasis added).  

For additional information about the PPACA the AMA has a good summary posted that is worth checking out.  To receive a copy of our health law bulletin discussing antitrust and other legal issues for ACOs, including privacy laws that continue to affect how health information exchange among providers may occurr, even in the ACO context, submit your request to

This post was prepared with assistance from Krystyna Nowik, Esq.