Foster Swift Health Care Law E-News
April 8, 2011
As the health care industry began to create Accountable Care Organizations ("ACOs") in order to implement the Medicare Shared Savings Program ("Shared Savings Program") introduced by Section 3022 of the Patient Protection and Affordable Care Act ("PPACA), many were concerned that current fraud and abuse laws would prevent the development of ACOs and their benefits of higher quality medicine and lower costs. Moreover, many in the health care industry worried that any proposed exceptions or safe harbors to fraud and abuse laws would be too restrictive and stifle innovation. That is why many in the health care industry supported waivers instead.
Such waivers are allowable under Section 1899(f) of the Social Security Act. Specifically, at the Department of Health and Human Services ("HHS"), the Secretary is authorized under this section to waive certain restrictions found in the Physician Self Referral Law ("Stark"), the Anti-Kickback Statute ("AKS") and the Civil Monetary Penalty ("CMP") Law provisions. On March 31, 2011, CMS and the Office of the Inspector General ("OIG") of HHS proposed such waivers and have solicited public input. CMS has proposed that in order for any ACO to qualify for any of the proposed waivers the following must occur: (i) the ACO shall be required to enter into an agreement with CMS to participate in the Shared Savings Program and (ii) ACOs, ACO participants and ACO providers/suppliers shall be required to comply with the CMS agreement, Section 1899 of the Social Security Act and its implementing regulations, including all transparency, reporting and monitoring requirements of the Shared Savings Program. All the waivers are applied during the term of the agreement with CMS and continue even if the actual distributions occur after the expiration of the agreement term. Three proposed waivers, along with the issues that CMS is requesting comments on, are discussed below.
Under the proposed Stark waiver, CMS would waive application of the provisions of Stark to distributions of shared savings received by the ACO from CMS under the Shared Savings Program: (i) to or among ACO participants, ACO providers/suppliers and individuals and entities that were ACO participants during the year in which the shared savings was earned by the ACO, or (ii) for activities necessary for and directly related to the ACOs participation in, and operations under, the Shared Savings Program. The intent of the proposed Stark waiver is primarily to protect financial relationships created by the distribution of shared savings within the ACO. It also is intended to protect financial relationships created by distribution of the shared savings outside the ACO if the distribution outside the ACO related closely to the requirements of an ACO under the Shared Savings Program (such as achieving the quality and saving goals of the program).
The proposed Stark waiver is not intended to protect distributions of the Shared Savings Program to referring physicians outside the ACO. However, there is one exception. Outside physicians that are being compensated for activities for and directly related to the ACO's participation in the Shared Savings Program are covered by the proposed Stark waiver. All other financial relationships between providers and physicians will still need to satisfy current Stark exceptions. For instance, physicians, if they had an ownership relationship to the ACO, would have to find a different Stark exception to avoid Stark Law prohibitions. Therefore, the Stark waiver contains some restrictions and is not intended to abandon Stark altogether.
2) Anti-Kickback Statute
Under the proposed AKS waiver, CMS would waive application of the AKS to shared savings received by an ACO from CMS under the Shared Savings Program to and for the exact same matters as the proposed Stark waiver. (See (i) and (ii), above, for the Stark waiver.) Thus, the AKS waiver protects the same relationships as the proposed Stark waiver. Moreover, CMS notes the intent is the same for the proposed AKS waiver as the proposed Stark waiver.
CMS would also waive application of the AKS under any financial relationship between or among the ACO, ACO participants and ACO providers/suppliers necessary for and directly related to the ACO's participation in, and operations under, the Shared Savings Program that implicates Stark and fully complies with any exception at 42 CFR 411.355 through 411.357. CMS also emphasizes that any failure to qualify for one of the proposed waivers under the AKS does not mean that the arrangement is automatically illegal under the Anti-Kickback Statute.
3) Prohibition on Hospital Payments to Physicians to Induce Reduction or Limitation of Services (CMP Law)
CMS would waive application of CMP Law, again similar to the proposed AKS and Stark waivers, with respect to the following two scenarios: (i) distributions of shared savings received by an ACO from CMS under the Shared Savings Program in circumstances where the distributions are made from a hospital to a physician provided that (a) the payments were not made knowingly to induce the physician to reduce or limit medically necessary items or services and (b) the hospital and the physician are ACO participants or ACO providers/suppliers or were ACO participants or ACO providers/suppliers during the year in which the shared savings were earned by the ACO, and (ii) any financial relationship between or among the ACO, its ACO participants and its ACO providers/suppliers and necessary for, and directly related to, the ACO as participation in, and operations under, the Shared Savings Program. Thus, hospitals still cannot provide incentives to knowingly decrease medically necessary services. However, the CMP Law waiver does provide some assurance to health care providers when they are potentially being paid an incentive to decrease unnecessary medical services.
4) CMS Seeking Comments
CMS recognizes in its proposed waivers that not all of the possible financial arrangements involved with setting up and operating an ACO are covered by the proposed waivers. CMS, therefore, is seeking comments from the health care industry on how the waivers might be expanded. For example, CMS is particularly interested in comments addressing whether it is necessary to waive Stark, the AKS and CMP for renumeration, that is directly related to (i) forming the ACO (i.e., ownership), (ii) implementing the governance and administrative requirements applicable to the ACO under the final regulations of the Shared Savings Program or (iii) building technological and administrative capacity needed to achieve Shared Savings Program costs and quality goals. CMS is also interested in whether waivers are necessary to address distributions of shared saving payments received by an ACO from private payers. CMS is, additionally, interested in comments addressing whether the waivers should be extended for ACO arrangements that satisfy the existing exception and a safe harbor for electronic health records arrangements (42 CFR 411.357(w) and 42 CFR 1001.952(y)) that will continue or will occur after the sunset date of 2013.
Certainly the proposed waivers are one step in helping manage the risk of forming ACOs. The public is encouraged to submit comments on these waivers. If you would like help in submitting comments or would like FSC&S to submit on your behalf, please contact us at 517.371.8100. While these waivers provide some protection from the fraud and abuse laws, there are still many issues to resolve in order for innovative and quality ACOs to be formed.