Accountable Care Organizations: A Contracting Primer for Family Physicians

The Medicare Shared Savings Program (MSSP), established by the Patient Protection and Affordable Care Act of 2010, offers a new path in healthcare delivery and aims to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries while reducing unnecessary costs. The MSSP seeks to accomplish these goals through facilitating coordination and cooperation among healthcare providers. Family physicians can voluntarily participate in the MSSP by creating or participating in an Accountable Care Organization (ACO). Many members of the Georgia Academy of Family Physicians have already joined ACOs and are now looking at either terminating their memberships or switching to different ACOs.

ACOs are groups of physicians and other healthcare providers who choose to work together with Medicare to provide medical services to FFS beneficiaries. If beneficiaries receive at least one primary care service from a physician within an ACO, beneficiaries will be assigned to an ACO. In addition, ACOs must have a minimum of 5,000 FFS beneficiaries assigned to ACO participants. Therefore, it is very difficult and can even be impossible for some small group practices to meet the requirements to participate in an ACO. An ACO’s assigned population also cannot fall below 5,000 FFS beneficiaries at any time during the performance year.

A significant distinction in how the MSSP treats primary care practices and specialized medical practices is in the number of ACOs a physician practice can join. A primary care physician is restricted and can only join one single ACO; CMS rules do not limit the number of ACOs that a specialist may join, however.

While the MSSP has established goals it hopes to meet through ACOs, Academy member physicians are experiencing uncertainty regarding how successfully these goals will be met. As a result of the restrictions placed on primary care physicians participating in ACOs, as well as the difficulty some ACOs have in meeting (or continuing to meet) the CMS rules, family physicians should keep the following principles in mind when contracting with ACOs:

1) The contract should allow the family physician to terminate without cause after a certain number of days. This will allow the physician to switch to a different ACO;

2) The term of the contract should be for no more than two years, as ACOs will likely encounter difficulties that may encourage the family physician to switch to a different ACO;

3) The contract should carefully follow the parameters of the ACO rules and not include extraneous terms to the ACO;

4) The contract should describe the compensation methodology in detail (if it does not, the family physician should request the distribution policy from the ACO);

5) The contract should not include a non-compete or any other restrictive covenant that would limit a family physician from joining another ACO; and

6) If this is the first contract that a family physician contemplates signing, he or she should have an attorney review the contract for all the other, non-ACO related provisions.

As ACOs enter their “second generations”, many Academy members will become comfortable with contemplating membership in an ACO. Whether the family physician is looking at terminating or changing ACOs, or joining an ACO for the first time, the Academy member should carefully review the participation contract to ensure that it follows the ACO rules and allows for mobility if the ACO arrangement is not productive.

Richard Sanders, Esq. is a partner in The Sanders Law Firm, P.C. in Atlanta. He can be reached at (404) 806-5575 or