ACO Contracting Guide for SNFs - AHCA Home Contracting Guide for SNFs Part 3: ... nonprofit...

ACO Contracting Guide for SNFs

Part 3: Model Contract Terms

Updated December 2016

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About the Author Alexis Finkelberg Bortniker

Alexis F. Bortniker is Senior Counsel with Foley & Lardner LLP and a member of the Health

Care Industry Team. She is an experienced health care attorney who has represented hospital

systems and other provider clients in numerous complex transactions and regulatory projects,

and has advised on matters such as Medicare reimbursement, Stark and anti-kickback

compliance, nonprofit corporate law and governance, and federal tax exemption. She has also

represented hospital systems and other providers in complex managed care negotiations.

Ms. Bortniker has significant experience working with providers looking to form Accountable

Care Organizations (ACOs), and working with providers on alternative payment arrangements,

including bundled payments, risk sharing, and shared savings arrangements.


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ACO/SNF MODEL AGREEMENT

ACO PARTICIPANTS

Prepared by Alexis Finkelberg Bortniker, Esq.

Foley & Lardner LLP1

This document is not intended as legal advice and should not be used as or relied upon as

legal advice. It is provided for general information purposes only and may not be substituted

for legal advice. Specific legal advice is crucial when preparing for or negotiating an important

contract that would have significant financial and legal consequences: ALWAYS SEEK THE

ADVICE OF KNOWLEDGEABLE COUNSEL TO PROVIDE ADVICE THAT IS

TAILORED TO THE ACTUAL FACTS AND CIRCUMSTANCES AND TAKES INTO

ACCOUNT ALL RELEVANT LAW.

PART III: MODEL CONTRACT TERMS

ACO Participant contracts are likely to be formulaic: these will likely track the regulatory

requirements closely. The ACO may be reluctant to vary what they consider a template

contract for all participants although there will have to be differences to capture varying

duties of different types of participants. These differences may be captured in exhibits or

attachments to the main agreement. The SNF might propose other terms of interest to it

be included in exhibits or even “side letters.” So-called “side letters” may also be useful

in documenting unique terms. These are essentially written agreements that are

consistent with the main agreement but further elaborate on a unique issue between the

parties.

Effective January 1, 2017, there are new requirements that will need to be included in

ACO Participant contracts. As a result, amendments for existing agreements may be

required.

The template language that follows is organized the way that services agreements are typically

organized except that much of the content of this template is dictated by the ACO regulations.

Contracts typically have the following parts:

an introductory clause that identifies the parties to the contract and

usually the date that the parties entered into the contract;

recitals that explain why the parties are entering into the agreement and

provide a context for understanding the clauses in the main body of the

agreement;

1 The author would like to thank Jan Murray, Esq., the author of the prior version of this guide, and Frederick

Geilfuss Esq. and Kush Das, Esq. of Foley & Lardner LLP for their thoughtful review and comments.


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the main body of the agreement that describes the obligation of the

parties to each other under the contract and the warranties and

representations that each makes to the other to induce the other to enter

into the contract. The main body will also include sections on

compensation and other key obligations including cross-

indemnification and confidentiality provisions;

term and termination of the agreement includes a description of the

effective date of the agreement and the length of the first term and whether

and how the agreement may be renewed (automatically or by mutual

agreement). Grounds for termination are also defined, whether for cause

or not for cause, and any notification required prior to termination.

Other technical provisions include how the contract may be amended;

how notice is given to the other party; and the effect on the agreement if a

court strikes a provision or a change in law calls into question the validity

of certain provisions.

As indicated earlier, ACO Participant contracts may be in the form of a typical contract

outlined above or may have standard “terms and conditions” that are attached to a very

short contract. The terms and conditions may include all of the requirements that the

regulations specify must be imposed on Participants and Provider/suppliers. The

provisions that includes required regulatory language is noted in the comment section of

the template.

The Template is organized into three columns. The first column includes the language

that would appear in a contract between an ACO and an ACO Participant. The second

column explains the language included in the first column. The third column states

what language from the first column would be included in a contract between an ACO

and an “other entity.”

This Template is intended for participation in the MSSP. There are no regulatory requirements

for contracts for Next Generation ACO Model participation, however, we would expect that

many of the terms outlined below will be the same and will translate to a Next Generation

Participant contract. For participation in the Next Generation ACO model, however, the contract

should clearly outline the compensation provisions, as there are various models available under

the Next Generation ACO Model and any Next Generation Participant will want to clearly

understand the compensation terms under which it will be paid. There is a brief discussion at the

end of this guide outlining the terms that are required to be included in a Next Generation

Participant contract.


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Contract

Provisions/Participant

Comments and Explanations Contract Provisions/ Other Entity

Language

1. THIS AGREEMENT is

entered into this ___day of

_______, 201_ by and between

______ ACO [a non-profit

corporation][a limited liability

company][a corporation]

(“ACO”) and

___________[specify entity] (“

SNF Participant”) .

1. This clause should identify what

type of organization is the ACO:

non-profit, for-profit or LLC and

what state laws it is subject to:

e.g., organized under the laws of

the Commonwealth of

Massachusetts.

Effective January 1, 2017, the

regulations require that the only

parties to the Agreement can be the

ACO and the ACO Participant (this

is also required under the Next

Generation ACO Model, this is not

required for an Other Entity

Agreement)

1. THIS AGREEMENT is entered

into this _____ day of

_________, 201__ by and

between _________________

(“ACO”), [____________] and

_____________ Skilled Nursing

Facility (“SNF”)

2. RECITALS: First, under the

Medicare Shared Savings

Program (“MSSP”) established

by the Patient Protection and

Affordable Care Act, 42 U.S.C.

§18001 (“ACA”), the ACO has

been organized for the purpose

of providing improved care and

service for individuals, better

health for populations, and

lower growth in expenditures

for Medicare beneficiaries

assigned to the ACO

(“Beneficiaries”); and Second,

SNF Participant provides

skilled services in a residential

facility to residents including

Beneficiaries who have been

hospitalized at or are under the

care of an ACO Participant or

ACO Provider/supplier; and

Third, ACO desires to have

SNF Participant serve

Beneficiaries in accordance

with the term of the Agreement

and SNF Participant agrees to

use reasonable efforts to

2. The recital clauses set forth the

purposes of the ACO that are

defined in the law. These clauses

(or some other introductory

clause) should also make clear

that this is a contract with a

Medicare qualified MSSP ACO

(as distinct from a private or

Pioneer ACO). This clause does

use a “reasonable effort” rather

than “best effort” standard by the

SNF Participant in conducting its

duties. A best effort standard can

be very difficult for any

contracting party to reach.

2. Except for the change of

reference from “SNF Participant”

to “SNF” this provision would be

the same.


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undertake the obligations set

forth in this Agreement to

assist the ACO in fulfilling its

purpose.

3. Service Obligations of SNF

Participant. SNF Participant

shall provide the following

(collectively “Covered

Services”):

(a) timely evaluate and,

where appropriate, admit as

residents Beneficiaries

referred to it by ACO

Participants and ACO

Providers in accordance with

the requirements of

applicable federal and state

law including without

limitation 42 C.F.R. Part 483

and applicable state law

(collectively “Applicable

Law”) and ACO SNF

Transfer Policies and

Procedures listed on Exhibit

__. [ACO shall provide

copies of such Transfer

Policies and Procedures

within [--] days of execution

of this Agreement or may be

attached hereto];

(b) develop and implement a

plan of care for each

Beneficiary as required by

Applicable Law and in

cooperation with the ACO

Participant and/or ACO

Provider responsible for the

Beneficiary’s care;

(c) monitor each

Beneficiary’s clinical

3. These obligations should specify

the main responsibilities of the

SNF Participant. This section

should acknowledge that SNF

actions are regulated by state and

federal law and therefore, the

services provided by the SNF

must be in conformity with that

law. These clauses should also

include any policies or

procedures imposed by the ACO

that will guide the way the main

obligations will be undertaken.

These should either be attached

to the Agreement or if too

voluminous, listed and provided

within a specified period of time.

This section also includes a

clause that refers to another

section of the Agreement that

prevents the ACO from imposing

policies that cause the SNF to

violate “Applicable Law.”

Applicable Law is defined to

include 42 C.F.R. Part 483 as

well as applicable state law that

applies to SNF operations.

[The ACO provider referenced

here may be the SNF’s Medical

Director who if employed by and

billing under assignment to the

SNF would be an ACO

Provider.]

3. Same language applies to “other

entity” contract


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condition and communicate

in a timely manner with

resident’s ACO Provider

about changes in each

Beneficiary’s clinical

condition all as required by

Applicable Law and [ACO

_______ Policies and

Procedures attached hereto].

(d) transfer or discharge such

Beneficiary when warranted

by the Beneficiary’s clinical

condition or for other

permitted grounds as certified

in accordance with SNF

policies, Applicable Law and

[ACO ______ Policies and

Procedures attached hereto].

(e) The parties acknowledge

and agree that the ACO

policies and procedures

identified in this Section 3 must

conform to the requirements for

policies and procedures set

forth in Section 15 of this

Agreement.

Sections 4-11 are specifically required by the federal regulations governing MSSP ACOs. Some of these

obligations apply equally to both parties and accordingly are drafted that way here.

4. Other ACO Participation: SNF Participant represents that

it does not and will not

participate in the (i)

independence at home medical

practice pilot program under

section 1866E of the Social

Security Act; (ii) Pioneer ACO;

or (iii) a model tested or

expanded under section 115A

of the Social Security Act that

4. This clause is a requirement of

the law: no ACO participant can

also be a party to another CMS

initiative involving shared

savings. The legal prohibition

would not include privately

organized ACOs; a health care

provider could participate in a

private ACO that involves shared

savings as long as it does not

involve Medicare shared savings.

4. Would not be included in “other

entity” contract.


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involves shared savings, or any

other Medicare initiative that

involves shared savings

payments.

(a) If SNF Participant was

previously terminated from

the MSSP, it shall notify

ACO and disclose the cause

of the termination and what

safeguards are now in place

to enable the Participant to

participate in the MSSP for

the full term of the MSSP

Agreement.

(b) SNF Participant

acknowledges that it has

disclosed to ACO whether

(i) it has participated in

another Shared Savings

Program under its own or

another name; or (ii) it is

related to or has an

affiliation with another

Shared Savings ACO.

Section 4(a) is required by the

regulations.

Section 4(b) reflects a regulation

that requires disclosure if an

ACO participant has an

affiliation with another Medicare

ACO. If, on the rare chance the

SNF bills primary care services

under its TIN, then participation

in more than one MSSP ACO

would be precluded. CMS is

very concerned that there be no

“double dipping” in savings from

the Medicare program itself.

SNFs should be alert to this

provision if they have any other

relationship with a healthcare

provider that may be

participating in another Medicare

ACO and seek consultation to be

sure that it does not create a

problem under the regulations.

5. SNF Commitments: SNF

Participant acknowledges that

(a) It hereby agrees to (i)

become accountable for the

quality, cost, and overall

care of the Beneficiaries

assigned to ACO under the

MSSP, (ii) comply with and

implement ACO’s

processes required by 42

C.F.R. §425.112; and (iii)

be held accountable for

meeting ACO’s

performance standards for

5. As noted, this provision is drawn

from the regulations. SNF

leadership should note that

participation in an ACO is a

major commitment, although

certainly SNFs are already

committed to quality, cost and

care. However, the ACO

regulations obligate all ACO

Participants to honor this

commitment through very

specific mechanisms that will be

different for SNFs—e.g., ACO

policies that require certain care

coordination or data collection.

5. SNF agrees to use reasonable

efforts to comply with care

coordination efforts of ACO

including implementation of

individual care programs. ACO

will provide SNF with copies of

documentation of its methods

and processes for coordinating

care including its individualized

care program.


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each required process.

(b) Upon request of

ACO, SNF Participant will

certify to the statements set

forth in preceding

paragraph.

(c) SNF will update its

enrollment information,

including the addition and

deletion of ACO

Professionals and ACO

Providers/Suppliers billing

through the TIN of the SNF,

on a timely basis in

accordance with Medicare

program requirements and

to notify the ACO of any

such changes within 30

days after the change.

(C) This section is required as of

January 1, 2017. This does not

apply to Other Entities.

In addition to the above:


agreement must set forth the

ACO Participant's rights and

obligations in, and representation

by, the ACO, including without

limitation, the quality reporting

requirements, the beneficiary

notification requirements, and

how participation in the MSSP

affects the ability of the ACO

Participant and its ACO

Providers/Suppliers to participate

in other Medicare demonstration

projects or programs that involve

shared savings. This does not

apply to Other Entities.

As of January 1, 2017, the

agreement must describe how the

opportunity to receive shared

savings or other financial

arrangements will encourage the

ACO Participant to adhere to the

quality assurance and

improvement program and

evidence-based medicine

guidelines established by the

ACO. This does not apply to

Other Entities.


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6. Compliance With Law: The

parties will comply with

Applicable Law which the

parties acknowledge includes,

but is not limited to,

specifically, (i) The False

Claims Act (31 U.S.C. §3729 et

seq.); (ii) the anti-kickback

statue (42 U.S.C. §1320a-

7b(b)); (iii) the civil monetary

penalties law (42 U.S.C.

§1320a-7a); (iv) the physician

self-referral law (42 U.S.C.

§1395nn); and (vi) the MSSP

regulations (42 C.F.R. Part

425). The parties will also

comply with the applicable

terms of the agreement entered

into between ACO and CMS

(“CMS Agreement”).

6. This provision is required by the

MSSP ACO regulations; it is an

obligation of both parties to the

agreement although some may

identify this obligation as only

applicable to the SNF Participant.

SNF leadership should have a

copy of the ACO’s CMS

Agreement and be familiar with

it as well as the MSSP

regulations.


entity” contract.

7. Compliance Programs: ACO

shall provide SNF Participant

with compliance training

related to ACO performance

and operations. ACO shall

have a system for SNF

Participant and other

individuals or entities

performing functions or

services related to ACO

activities to anonymously

report suspected problems

related to the ACO to the

compliance officer. SNF

Participant shall maintain a

formal compliance program

that conforms to Applicable

Law which shall be

documented in written policies.

SNF shall ensure that its

officers, employees and agents

are appropriately trained to

their responsibilities under the

7. The ACO regulations include a

requirement for the development

of a compliance program for the

ACO which must be

communicated to and

coordinated with ACO

Participants and

Providers/suppliers. SNFs are

required to have compliance

programs as a result of the ACA

and these can be a good resource

in meeting this obligation.

As of January 1, 2017, the agreement

must permit the ACO to take

remedial action against the ACO

Participant, and must require the

ACO Participant to take remedial

action against its ACO

Providers/Suppliers, including

imposition of a corrective action

7. ACO shall maintain a

compliance program that

conforms to 42 C.F.R. §425.300

and accordingly, will provide a

method for SNF to report any

suspected compliance problems

related to the ACO’s operations

and performance. SNF agrees to

report to ACO any suspected

compliance problems related to

the ACO’s operations and

performance.


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SNF compliance program.

SNF Participant agrees to

cooperate with ACO’s efforts

to fulfill its responsibilities

relating to oversight and

auditing related to clinical

matters as well as the detection

and remediation of fraud, abuse

and waste.

The ACO may take remedial

action against the SNF, and

may require the SNF to take

remedial action against any

Provider/Supplier billing under

the SNF TIN, for

noncompliance with the

requirements of the MSSP and

other program integrity issues,

including any issues identified

by CMS. Such action will be

consistent with ACO’s policies,

and may include imposition of

a corrective action plan, denial

of incentive payments, and

termination of this Agreement.

plan, denial of incentive payments,

and termination of the ACO

Participant Agreement, to address

noncompliance with the

requirements of the MSSP and other

program integrity issues, including

those identified by CMS. This does

not apply to other entities.

8. Data Submission: SNF

Participant shall submit all data

and information related to ACO

activities, including as may be

applicable encounter data,

medical records, data on

quality performance measures

or other information that may

be requested by CMS. Such

data shall be provided by SNF

Participant in a timely manner

to enable ACO to fulfill its

obligations under the CMS

Agreement and 42 C.F.R. Part

425. [ACO shall provide SNF

8. Although this section is required

by the regulations, the language

in the brackets was added in this

model to ensure that there is

meaningful dialog about how this

very important obligation will be

met.


entity” contract.


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Participant with a plan for data

collection and appropriate

training and other assistance to

ensure that the SNF Participant

staff is sufficiently

knowledgeable about data

collection requirements to

comply. The ACO shall

provide advance written

notification as requirements for

data collection are modified

over the course of the

Agreement.] SNF Participant,

upon request by ACO, shall

certify its compliance with

MSSP requirements and the

accuracy, completeness, and

truthfulness of data and

information.

9. Beneficiary Inducements: Both parties are prohibited

from:

(a) providing gifts or other

remuneration to

Beneficiaries as

inducements for receiving

items or services from or

remaining in, an ACO, or

with Participant in a

particular ACO or

receiving items or services

from ACO participants or

ACO Providers/suppliers.

Participant may provide in-

kind items or services to

Beneficiaries if there is a

reasonable connection

between the items and

services and the medical

care of the Beneficiary,

9. This provision is required by law

and preserves freedom of choice

principles as well as healthcare

program integrity principles.

Note the exception that is

included in the language related

to in-kind items or services that

have a connection to the medical

care of the Beneficiary.

Subsection (b) refers to a

section of the law that permits

employees or contractors to

make directed referrals but

only if it is within the scope of

their contract or employment

as long as they remain free to

make referrals without

restriction if the beneficiary

expresses a preference for a

different provider or supplier;

the beneficiary’s insurer

9. 9(a) Same, technically 9(b)

applies only to ACO Participants

and ACO Providers and

Suppliers.


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including adherence to a

treatment regime,

adherence to a drug

regime, adherence to a

follow-up care plan, or

management of a chronic

disease or condition.

(b) requiring that Beneficiaries

be referred only to ACO

participant or ACO

Providers/suppliers or to

any other provider or

supplier, except as

permitted by 42 C.F.R.

§425.304.

determines which provider or

supplier to use; or the referral

is not in the beneficiary’s

medical interests in the

judgment of the referring party

10. Marketing: SNF Participant

shall:

(a) notify Beneficiaries at the

point of care that it is

participating in the MSSP.

(b) post signs in its facilities to

notify Beneficiaries that it

is participating in the

MSSP.

(c) make available

standardized written

notices regarding

participation in an ACO

and, if applicable, data opt-

out. Such written notices

must be provided by SNF

Participant in settings in

which beneficiaries receive

primary care services.

(d) use the template written

notice in the form attached

10. This requirement reflects CMS’

concern about freedom of choice

and also specific issues that have

arisen in the way that some

health care coverage (e.g.,

Medicare Managed Care) have

been marketed in the past.

Marketing materials do not

include certain information that

is customized or limited to a

subset of Beneficiaries; materials

that do not include information

on the ACO, ACO Participants or

ACO Provider/suppliers;

educational information on

specific health issues; materials

that cover beneficiary specific

billing or claims issues or other

specific health related issues; or

written referrals for items and

services.

10. Subsections 10(a)-(d) do not

apply to “other entities”.

However, subsections 10(e)-(f)

do apply.


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as Exhibit ___.

(e) only market MSSP

involvement using

approved CMS or ACO

materials.

(f) discontinue use of any

marketing materials or

activities disapproved by

CMS.

11. Maintenance of Records and

Audits:

(a) SNF Participant shall

maintain all books,

contracts, records and

other documents in

connection with the

Covered Services

performed under this

Agreement (“Records”).

SNF Participant shall

maintain Records in a

manner that is sufficient to

allow ACO to comply

MSSP requirements.

(b) SNF Participant shall

maintain the Records for

ten (10) years from the

final date of the CMS

Agreement provided that,

SNF Participant shall

maintain Records for a

longer period of time if it

receives notice from the

ACO that CMS has

determined there is a

special need to retain

particular Records. SNF

Participant shall also retain

11. The SNF should review its

records retention policies to

ensure that it conforms to these

requirements.

11. These requirements do apply to

“other entities.”


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the Records an additional

six (6) years if there has

been a termination,

dispute, or allegation of

fraud or similar fault

against ACO, Participant,

or other individuals or

entities performing

functions or services

related to ACO activities

under the MSSP

Agreement.

(c) SNF Participant shall

maintain and provide

access to the Records to

CMS, the Department of

Health and Human

Services, the Comptroller

General, the Federal

Government or their

designees sufficient to

enable them to audit,

evaluate, investigate and

inspect the ACO’s

compliance with program

requirements, quality of

services performed, right

to any shared savings

payment or obligation to

repay losses the ability to

bear the risk of potential

losses and pay losses to

CMS.

12. SNF Participant

Representations: SNF

represents that it is:

(a) properly organized under

state law and that it holds all

licenses, certificates or other

evidence of authority

necessary to provide Covered

12. SNF Participants may be asked to

make certain representations

about whether it is legally

organized and operated. Note

that these representations are also

suggested to be made by the

ACO in Section 14; in a balanced

agreement they would be

reciprocal as further elaborated in

12. Except for the reference to the

“Participation Agreement” those

provisions would appropriately

be in a contract with “other

entities.”


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Services, and participates in

the Medicare program; and

(b) its execution of this

Participation Agreement has

been properly authorized and

represents a binding

obligation of SNF Participant

and does not conflict with

any other binding obligation

or legal duty imposed on SNF

Participant.

The SNF Participant further

represents:

Neither it nor any of its

employees or contractors have

(i) been excluded as

“sanctioned persons” under any

federal or state program or law;

(ii) been listed in the current

Cumulative Sanction List of the

Office of Inspector General for

the United States Department

of Health and Human Services

for currently sanctioned or

excluded individuals or

entities; (iii) been listed on the

General Services

Administration's List of Parties

Excluded from Federal

Programs; (iv) been convicted

of any criminal offense related

to health care.

The SNF further represents:

It will, and it will ensure that

each ACO Provider/Supplier

billing through the TIN of the

ACO Participant agrees, to

participate in the MSSP and to

the comment to Section 14. Also

with respect to subsection (b), the

SNF should do due diligence to

ensure that it can live with the

ACO policies and procedures—

that those policies and

procedures would not cause the

SNF to violate other law and

regulation that is applicable to it.


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comply with the requirements

of the MSSP and all other

applicable laws and regulations

(including, but not limited to,

those specified at 42 C.F.R.

§425.208(b)).

[There will be other

representations that the

SNF Participant would be

obligated to make if it will

have ACO

Providers/suppliers billing

under its TIN.]

13. Confidentiality of Health

Information: The parties

hereto agree to comply with all

applicable law regarding the

privacy of health information

and the proper use and

disclosure of medical records

or other information with

respect to Beneficiaries.

Nothing herein shall limit or

restrict appropriate sharing of

medical record data with

providers and suppliers both

within and outside the ACO in

accordance with applicable

law.

13. This general obligation may be

supplemented by the requirement

to sign a Business Associate

agreement if necessary to ensure

free flow of data as contemplated

by the regulations.


entity” contract.

14. ACO Representations. ACO

warrants and represents that: (i)

it is properly organized under

Applicable Law, and holds all

licenses, certificates or other

evidence of authority necessary

to operate in conformity with

applicable law and the CMS

Agreement; (ii) its execution of

14. This section is suggested because

if an ACO is not properly

organized, it could lose its

authority to operate and any

compensation due from the ACO,

whether in the form of shared

savings or other compensation,

could be jeopardized. Also,

Medicare participating providers


entity” contract.


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this SNF Participation

Agreement has been properly

authorized and represents a

binding obligation of ACO and

does not conflict with any other

binding obligation or legal duty

imposed on ACO; (iii) it has

executed agreements obligating

ACO Participants and

Provider/suppliers to conform

to substantially the

requirements set forth in

Sections 4-12 hereof; and (v)

neither it nor any of its

employees or contractors have

(a) been excluded as

“sanctioned persons” under any

federal or state program or law;

(b) been listed in the current

Cumulative Sanction List of

the Office of Inspector General

for the United States

Department of Health and

Human Services for currently

sanctioned or excluded

individuals or entities; (c) been

listed on the General Services

Administration's List of Parties

Excluded from Federal

Programs; (c) been convicted

of any criminal offense related

to health care.

are generally not permitted to

employ or contract with

individuals who have been

excluded from participating in

any federal or state program.

Failing to comply could result in

substantial penalties.

15. ACO Obligations. ACO shall

ensure that it has sufficient

staff and other resources

available to meet the

obligations set forth in the

CMS Agreement and 42 C.F.R.

Part 425 throughout the term of

this Agreement. ACO further

agrees that it shall ensure that it

will comply with CMS

Agreement and ongoing

15. ACOs are obligated to develop a

number of mechanisms to

coordinate care, better treat high

risk individuals, engage

individuals in their care and

otherwise demonstrate patient-

centered care. Although SNFs

have many of the same

obligations under state and

federal law, ACOs may adopt

policies that are in detail at odds

15. The regulations require that an

ACO work with ACO

Participants and

Providers/suppliers to implement

its approach to incorporating

certain required processes [42

C.F.R. §425.112(a)(b)]. These

provisions are not directly

applicable to Other Entities.

Nonetheless, subsection 15(a) (or

some variation of it) may be


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Language

obligations imposed pursuant

to 42 C.F.R. Part 425 including

without limitation ongoing

provision of complete and

accurate data to CMS,

provision of notice to CMS of

ACO changes, and submission

of marketing material. Without

limiting the generality of the

foregoing, ACO shall provide

SNF Participant with timely

information about requirements

SNF Participant is obligated to

fulfill, policies and procedures

adopted or amended by ACO

that affect the manner in which

SNF Participant is obligated to

fulfill its obligations hereunder

and an opportunity comment on

these same policies and

procedures. Accordingly, ACO

agrees to provide any proposed

new or amended policies and

procedures to SNF Participant

at least fifteen (15) business

days prior to their effective

date for review and comment.

ACO agrees to consider and

adopt SNF Participant’s

proposed changes that ACO

determines are reasonable.

ACO acknowledges and agrees

that it may not adopt or seek to

enforce any policy or procedure

that would cause SNF

Participant to take or forego

any action that would be

inconsistent with Applicable

Law.

(a) ACO shall provide on a

timely basis financial and

clinical data that bears on the

performance of SNF

with the way SNFs are regulated.

This provision forbids the ACO

from imposing policies that

conflict with the way that SNFs

are regulated.

useful in the ACO/SNF “other

entity” relationship.


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Language

Participant and ACO. ACO

shall notify SNF Participant

in writing if it determines

that SNF Participant is or

may not meet quality

standards or other

obligations imposed on SNF

Participant and may impose

[a financial penalty] [and/or

seek to terminate the

Agreement]. ACO will meet

with SNF Participant to

develop a mutually

acceptable action plan

(“AP”) to assist SNF

Participant in meeting its

obligations. The AP shall

specify the goals that SNF

Participant is obligated to

meet, the tasks that are to be

undertaken to meet the goals

and the time frame within

which the AP is to be

executed. ACO agrees that

it may not [financially

penalize] [or terminate SNF

Participant] for failing to

meet certain standards

without first engaging in the

foregoing notice and AP.

(b) SNF Participant and

ACO shall each identify

contact person(s) who shall

be responsible for

communicating mandatory

information identified in this

Agreement. For SNF

Participant for clinical

matters, the contact

is:_________ For ACO for

clinical matters, the contact

is:_____________. For all

other matters, the SNF


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Language

Participant contact

is:_____________; For all

other matters, the ACO’s

contact is:_____________.

16. Compensation. For the

Covered Services rendered to

Beneficiaries, SNF Participant

agrees to submit claims to

Medicare and any other payer

that is responsible for payment

to patients served pursuant to

this Agreement including

Beneficiaries.

(a) ACO agrees to pay to SNF

Participant a portion of

Shared Savings received by

ACO if SNF Participant

achieves [quality metrics;

other measures] as set forth

in the Shared Savings Plan

developed by ACO and

provided to SNF Participant.

SNF Participant’s right to

share in savings requires it

agree to adhere to the quality

assurance and improvement

program and comply with all

ACO and MSSP guidelines.

ACO represents that the

Shared Savings Plan is

designed to distribute

savings [or assess losses] in

a manner that 1) reinforces

achievement of the ACO

purposes set forth in the First

Recital herein (“Purpose”);

2) is fair and equitable and

does not discriminate against

participants for any reason

other than that participant’s

performance on metrics that

are tied to achievement of

16. The language should reflect the

plan for shared savings that 42

C.F.R. Part 425 requires the

ACO develop and make available

to ACO Participants. The

Agreement should specify either

in the body of the Agreement or

an attachment exactly what the

SNF must do or achieve in order

to receive some portion of the

shared savings.

Subsection (c) describes the

methodology that would be

required by population-based

payment from a Pioneer ACO.

As indicated, if a SNF is a

Pioneer ACO Provider, under

one payment scenario, in the

third year it would submit claims

to Medicare for services rendered

to ACO beneficiaries and would

be paid 50% of the total owed

from Medicare. The ACO itself

would receive the balance in Per

Beneficiary Per Month

(“PBPM”) payments. The SNF

Provider should be entitled to

additional compensation for

services it provided that would

be paid out of the PBPM

amounts received by the ACO.

Under another payment scenario,

the Pioneer ACO may receive a

payment from CMS for Part A

and Part B services. The SNF

Participant must have a good

understanding of what the

mechanism will be and these

16. According to FAQs published by

CMS, an “other entity” could

participate in shared savings if

that is what the ACO decides and

therefore, it is important that this

is specified in the agreement.


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Contract



Language

ACO Purpose; and 3) is

transparent to all

participants.

(b) For additional services

provided pursuant Exhibit

__hereof, ACO agrees to pay

[or provide in-kind support]

to SNF Participant the

amount of __________.

[This may be a one-time

amount to defray the cost of

software or additional staff

that is required to perform

certain duties specified by

the ACO but that otherwise

would not be required to be

supported by the SNF.]

(c) [If a Pioneer ACO during

“performance period 3,”],

SNF Provider shall be paid

monthly by ACO [__] Per

Member Per Month

(“PBPM”) [for each ACO

beneficiary served by SNF

Provider as verified on a

monthly basis] [or that

reflects __ % of the total

charges for ACO

beneficiaries billed by SNF

Provider during the

applicable Performance

Period as adjusted by

attainment of

quality/efficiency metrics set

forth in Exhibit __ of the

Agreement.] “Performance

Period” shall have the same

meaning as is set forth in the

Request for Application

published by CMS.]

provisions should be tailored to

reflect it. There are several

alternatives to consider that the

SNF Provider should model

financially before including them

in the contract. Two are

suggested here: the SNF

Participant receives a PBPM

payment for each resident or it

receives some percentage of the

total amount that it would have

received from Medicare if it

meets certain goals which should

be realistic and clearly spelled

out in the document. This may

be even greater than 100% of

Medicare payment that would

have been due if it includes

shared savings paid to the ACO

as well and attainment of goals

that are defined in the ACO

documents.

This section is an example and

the actual financial relationship

and obligations would have to be

carefully spelled out in the actual

contract.

For Next Generation ACO Model

participation, payment language

should be explicit as there are

different options available to the

ACOs.


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Contract



Language

17. Term. This Agreement shall

take effect on _________and

continue until _______ unless

terminated earlier as provided

herein.

17. The term must be no longer than

the term established by the CMS

Agreement itself and is usually

three years. For Pioneer ACOs,

the CMS RFA states that there

will be three “Performance

Periods that may be followed by

optional 4th and 5th Performance

Periods.”


Agreement must be for a term at

least 1 performance year and

must articulate potential

consequences for early

termination from the ACO. This

does not apply to an Other Entity

contract.


entity” contract.

18. Termination.

(a) This Agreement may be

terminated by either party

immediately in the event that:

(i): ACO receives

notification from CMS

that its CMS Agreement

will be terminated;

(ii) either party loses or

has suspended any

licenses or certificate

necessary to perform the

duties under this

Agreement or no longer

participates in the

Medicare program;

(iii) either party files a

petition in bankruptcy; or

makes an assignment for

18. It is important to think through

how easily the SNF Participant

would like to be able to exit from

the relationship and how easy or

difficult it should be for the other

side to terminate. Although this

termination clause is written so

that only the SNF Participant can

terminate without cause usually

both sides have the same

termination rights. As to “for

cause” termination, there are

obvious grounds such as

termination of the CMS

Agreement and breach of the

Agreement itself. This clause

also gives the SNF the ability to

terminate immediately if the

ACO tries to mandate that it do

(or not do) something that would

cause the SNF to violate

regulations that are applicable to


entity” contract.


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Contract



Language

the benefit of creditors;

or if any involuntary

petition in bankruptcy or

petition for an

arrangement pursuant to

any bankruptcy laws is

filed against the other

party and is not

dismissed within ninety

(90) days; or if a receiver

is appointed for the

business of either party

or any part thereof.

(b) This Agreement may be

terminated by either party if

the other party breaches this

Agreement provided that the

non-breaching party provides

sixty (60) day written notice

of its intent to terminate and

the grounds therefor allowing

the breaching party the

opportunity to cure the

breach. If at the conclusion

of the sixty day period, the

breaching party is making

active and diligent efforts to

cure the breach, the

Agreement will stay in effect

for an additional thirty (30)

day period. If at that time,

the cure has not been

effected, the non-breaching

party may terminate the

Agreement. Notwithstanding

the foregoing, this Agreement

may be terminated

immediately by the SNF

Participant if the breach

involves an ACO attempt to

impose a policy or procedure

or other mandatory directive

that would cause the SNF

it. This type of termination

would be a “for cause”

termination which may be a

predicate for seeking damages

and does permit the SNF to

terminate immediately to avoid

either not complying with the law

or the ACO Agreement.


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Contract



Language

Participant to violate

Applicable Law.

(c) The SNF Participant may

terminate this Agreement

with ninety (90) days written

notice.


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Contract



Language

19. Effect of Termination.

Within 90 days of the date of

termination or expiration of this

Agreement, or in such shorter

time frame as may be required

by CMS, the SNF will furnish

all data reasonably necessary

for CMS to complete an annual

assessment of the ACO’s

quality of care.

19. Effective January 1, 2017, the

agreement must require

completion of a close-out process

upon termination or expiration of

the agreement that requires the

ACO Participant to furnish all

data necessary to complete the

annual assessment of the ACO's

quality of care and addresses

other relevant matters. This does

not apply to other entities.

19. This language should not be

included in an Other Entity

agreement.

20. Disputes. [The parties agree in

good faith to negotiate any

disputes that may arise under

this Agreement. If either party

determines that a dispute exists,

it will first attempt to resolve

the dispute with the manager

who has authority to resolve it.

If this fails, the SNF Participant

Chief Executive Officer

(“CEO”) and the ACO CEO

will meet to resolve the issue.

If they are unable to reach a

resolution, the SNF Participant

may designate a Board of

Directors member who

represents Participants to meet

with the Board of Directors’

Chair and an ACO and SNF

representative to resolve the

dispute. The entire dispute

resolution process, once

invoked in writing, shall be

completed within thirty (30)

days unless the parties agree to

extend the time.] In the event

that such negotiation fails, any

disputes will be submitted to a

single arbitrator for

confidential binding arbitration

as set forth in this Section. The

arbitration will be conducted

20. The ACO may have an internal

dispute resolution process. These

types of dispute resolution

processes can avoid expensive

litigation by ensuring full and

thoughtful communication

between the parties and elevating

above the staff where it may have

started. This clause also calls for

binding arbitration. Binding

arbitration can be less expensive

than litigation but is also usually

a time-consuming process as

well. It can be held on a

confidential basis which is an

advantage over litigation. The

SNF should weigh the pros and

cons of binding arbitration with

counsel.


entity” contract.


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Language

under the rules of the

[American Health Lawyers

Association (“AHLA”)]. The

arbitrator will be chosen by

mutual agreement of the parties

from a list of five qualified

arbitrators provided by the

[AHLA]. The arbitrator shall

resolve the dispute by adhering

as closely as possible to the

terms of the Agreement.

21. Insurance. ACO will secure

and maintain insurance against

claims for professional liability

[with limits of

$_____________ per claim and

$____________in the

aggregate] and such other

insurance as is reasonable to

protect against claims of loss or

damage arising from the

performance of its duties under

this Agreement. If any policy

required by this Agreement is

written on a “claims made”

basis, ACO shall purchase a

reporting endorsement (or

“tail” coverage) for a

reasonable period of time

following termination of the

claims made coverage. In

addition, SNF Participant will

secure and maintain insurance

against claims for professional

liability and such other

insurance as is reasonable to

protect against claims of loss or

damage arising from the

performance of its duties. If

any policy required by this

Agreement is written on a

“claims made” basis, SNF

Participant shall purchase a

21. The clause is likely to impose a

certain level of coverage for both

parties. The best protection

against becoming a “deep

pocket” for other contracting

parties’ claims is to ensure that

they are adequately ensured.

ACOs will be (relatively) newly

formed entities so it would be

prudent to determine their

insurance arrangements either

through a bilateral clause such as

Section 20 or through a request

for documentation as part of the

due diligence and negotiation

process.


entity” contract.


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Contract



Language

reporting endorsement (or

“tail” coverage) for a

reasonable period of time

following termination of the

claims made coverage. The

parties will provide each other

copies of insurance documents

verifying the coverage and

provide written notice to the

other as soon as practically

possible if any such required

policy is modified, suspended

or terminated.

ACO warrants and represents

that all ACO Participants and

ACO Providers are also

obligated to secure and

maintain adequate levels of

professional liability insurance

and provide documentation and

notice of modification or

termination in substantially the

form as set forth herein.

22. Indemnification. Each of the

parties shall be responsible for

the acts or omissions of its

officers, employees and agents

and nothing herein shall

transfer such responsibility to

the other party.

[ACO shall defend, hold

harmless and indemnify SNF

Participant from and against all

claims, actions, liabilities,

costs, damages, expenses and

attorney’s fees solely resulting

from or attributable to: (i) the

negligent acts or omissions of

ACO, its officers, employees

and agents which occur while

fulfilling ACO’s duties

hereunder; and (ii) the

22. The first paragraph simply states

that each party is responsible for

its own acts or omissions. If this

section stopped there, then there

would be not indemnity

obligation. The implication of

most indemnity provisions is that

the indemnifying party is

obligated to pay for the defense

of a claim that resulted from the

malfeasance or misfeasance of its

employees or agents. In the

absence of an indemnity clause,

the parties to an agreement will

be liable for damages (as distinct

from the cost of defense)

attributable to the actions of their

employees or agents where those

folks are fulfilling their

responsibilities to their employee


entity” contract.


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Language

application of ACO policies or

procedures by SNF Participant

employees or agents to ACO

beneficiaries in SNF

Participant’s care. SNF

Participant shall defend, hold

harmless and indemnify ACO

from and against all claims,

actions, liabilities, costs,

damages, expenses and

attorney’s fees solely resulting

from or attributable to the

negligent acts or omissions of

SNF Participant, its officers,

employees and agents which

occur while fulfilling SNF

Participant’s duties hereunder.

Such indemnification

obligations shall be conditioned

upon the Indemnified Party

providing the Indemnifying

Party written notice of any

claim for which it seeks

indemnification in a timely

manner to permit the

Indemnifying Party to assume

control of the defense of such

claim. The Indemnifying Party

may compromise or settle any

such claim without the consent

of the Indemnified Party if such

compromise or settlement does

not include any admission of

negligence or wrong doing on

the part of the Indemnified

Party. If the Indemnified

Party’s consent is required for

any compromise or settlement

of such claim, its consent shall

not be unreasonably withheld.]

or principal. The other aspect to

consider carefully about

indemnity clauses is that

insurance policies will pay for

damages arising from employee

negligence or malpractice but

may not pay for the cost of

defending a party that they do not

insure. A SNF should consult

with counsel about whether to

agree to an indemnification

clause and if so, how to structure

it in view of its own insurance

arrangements.


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Next Generation ACO Contracts

The following CMS requirements for contracts for participation between a Next Generation

ACO and a Next Generation Participant or Preferred Provider:

1. The only parties to the contract are the ACO and the Next Generation Participant or

Preferred Provider.

2. The contract requires the Next Generation Participant or Preferred Provider to agree to

participate in the Next Generation ACO Model, to engage in ACO Activities, to comply

with the applicable terms of the Next Generation ACO Model, and to comply with all

applicable laws and regulations.

3. The contract expressly sets forth the Next Generation Participant’s or Preferred

Provider’s obligation to comply with the applicable terms of this Agreement, including

provisions regarding the following: participant exclusivity, quality measure reporting,

and continuous care improvement objectives for Next Generation Participants; Voluntary

Alignment; Beneficiary freedom of choice; Benefit Enhancements; the Coordinated Care

Reward; participation in evaluation, shared learning, monitoring, and oversight activities;

the ACO compliance plan; and audit and record retention requirements.

4. The contract requires the Next Generation Participant or Preferred Provider to update its

Medicare enrollment information on a timely basis in accordance with Medicare program

requirements.

5. The contract requires the Next Generation Participant or Preferred Provider to notify the

ACO of any changes to its Medicare enrollment information within 30 days after the

change.

6. The contract requires the Next Generation Participant or Preferred Provider to notify the

ACO within seven days of becoming aware that it is under investigation or has been

sanctioned by the Government or any licensing authority (including, without limitation,

the imposition of program exclusion, debarment, civil monetary penalties, corrective

action plans, and revocation of Medicare billing privileges).

7. The contract permits the ACO to take remedial action against the Next Generation

Participant or Preferred Provider (including the imposition of a corrective action plan,

denial of incentive payments such as Shared Savings distributions, and termination of the

ACO’s agreement with the Next Generation Participant or Preferred Provider) to address

noncompliance with the terms of the Model or program integrity issues identified by

CMS.

8. The contract is for a term of at least one year, but permits early termination if CMS

requires the ACO to remove the Next Generation Participant or Preferred Provider.


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9. The contract requires the Next Generation Participant to complete a closeout process upon

termination or expiration of the contract that requires the Next Generation Participant to

furnish all quality measure reporting data.

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