ACO PROPOSED RULES - WILL THE POTENTIAL WAIVERS FROM MEDICARE FRAUD LAWS BENEFIT ANESTHESIOLOGISTS?
April 11, 2011
It is no surprise that on March 31, 2011 the Centers for Medicare and Medicaid Services (CMS) released its long-awaited notice of proposed rulemaking regarding the Medicare Shared Savings Program (the Shared Savings Program) and ACOs (Proposed Rule)—a product of Section 3022 of the Affordable Care Act.1 By way of clarification, Section 3022 requires the Department of Health and Human Services (HHS) Secretary (Secretary) to establish the Shared Savings Program, which will incentivize providers and suppliers to create and operate ACOs, by January 1, 2012.
One of the primary goals of the Shared Savings Program, and therefore ACOs, is to improve coordination of care and keep patients out of hospitals through stronger primary care and ambulatory care efforts. This is consistent with a broader movement towards integration within the health care delivery system, which is being fueled by an increased emphasis on payment for value (i.e., quality and efficiency). As a result of this evolving healthcare reimbursement environment, many questions have been raised about how ACOs and other new payment models will fit under our current legal framework.
Fortunately, among its many provisions, the Affordable Care Act contemplates that the Federal government will make certain changes to the current regulatory regime to ensure that the Shared Savings Program and ACOs are successful. More specifically, Section 3022 provides that the Secretary may waive certain provisions of the fraud and abuse laws under the Social Security Act to allow ACOs to achieve three aims: better health, better care, and lower cost.
To provide much needed guidance to the healthcare community, the Federal government has issued three guidance documents concurrent with CMS’ release of the Proposed Rule:
1. A joint CMS and HHS Office of Inspector General (OIG) Medicare Program notice and solicitation for comments titled Medicare Program; Waiver Designs in Connection with the Medicare Shared Savings Program and the Innovation Center (CMS/OIG Waiver Design Guidance);
2. A Federal Trade Commission (FTC) and Department of Justice (DOJ) (collectively, the Antitrust Agencies) proposed document titled A Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program (the FTC/DOJ Proposed Antitrust Policy Statement); and
3. An Internal Revenue Service (IRS) notice soliciting comments regarding the need for additional tax guidance for tax-exempt organizations.
The focus of this alert will be to provide a brief background on ACOs, including who is eligible to be an ACO, and an overview of the CMS/OIG Waiver Design Guidance.
Brief Overview of ACOs and Who is Eligible
Under the Shared Savings Program, ACOs that meet certain quality and efficiency performance standards will be eligible to receive certain financial incentives (enhanced reimbursement). ACOs must satisfy numerous eligibility requirements in order to participate in the Shared Savings Program. Many of these requirements are set forth in the Affordable Care Act itself and additional more detailed provisions are set forth in the Proposed Rule.
Healthcare providers have substantial flexibility when structuring their ACOs. Under the Proposed Rule, each of the following would be eligible to participate in the Shared Savings Program as ACOs:
- ACO professionals (defined as physicians or practitioners) in group practice arrangements;
- Networks of individual practices of ACO professionals;
- Partnerships or joint venture arrangements between hospitals and ACO professionals;
- Hospitals employing ACO professionals;
- Providers or suppliers otherwise recognized under the Social Security Act that are not ACO; and
- Certain critical access hospitals.
As is evident, primary care physicians, hospitals or large integrated physician-hospital organizations are the focus of the Shared Savings Program; however, anesthesiologists stand in a unique position to coordinate and manage peri-operative care by improving efficiency and reliability of care, which, inevitably, impacts patient outcome.
ACOs will be eligible to participate in the Shared Savings Program beginning January 1, 2012. CMS is currently soliciting comments regarding the date on which it will begin accepting applications from ACOs.
Brief Overview of Current Fraud and Abuse Laws
There are three primary Federal fraud and abuse laws that may be implicated by the establishment and operation of ACOs: (1) the Physician Self Referral Law (i.e., the Stark Law); (2) the Anti-Kickback Statute (AKS); and (3) the Civil Monetary Penalties (CMP) Law. A brief explanation of each is provided below:
Stark (42 USC §1395nn) – Stark is a civil statute prohibiting physicians from making referrals for Medicare designated health services, including hospital services, to entities with which they or an immediate family member has a financial relationship, unless an exception applies.
AKS (42 USC §1320a-7b(b)) – AKS provides for criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration (defined as anything of value in cash or in kind) to induce or reward the referral of business reimbursable under any of the Federal healthcare programs.
CMP Law (42 USC §1320a-7a) – CMP Law prohibits hospitals from making a payment, directly or indirectly, to induce a physician to reduce or limit services to Medicare or Medicaid beneficiaries under the physician’s direct care.
CMS/OIG Waiver Design Guidance
The CMS/OIG Waiver Design Guidance addresses the Federal fraud and abuse laws that will apply to ACOs by proposing certain waivers to such laws to ensure that they do not hinder the success of the Shared Savings Program but to also ensure that ACO arrangements are not misused in a manner that results in Federal health care program fraud or abuse. To qualify for a waiver, CMS proposes that ACOs would be required to enter into an agreement with CMS to participate in the Shared Savings Program and comply with such agreement, Section 3022 and its implementing regulations. The CMS/OIG Waiver Design Guidance also emphasizes the following: “…a waiver of a specific fraud and abuse law is not needed for an arrangement to the extent that the arrangement: (1) does not implicate the specific fraud and abuse law; or (2) implicates the law, but either fits within an existing exception or safe harbor, as applicable, or does not otherwise violate the law.”
CMS proposes to include a waiver of the Stark Law for the sharing of distributions of the shared savings received by an ACO from CMS. Specifically, CMS proposes that the waiver be available for either of the following:
- For distributions to or among ACO participants, ACO providers/suppliers, and individuals and entities that were ACO participants or ACO providers/suppliers during the year in which the shared savings were earned by the ACO; or
- For distributions that are for activities necessary for and directly related to the ACO’s participation in and operations under the Shared Savings Program.
The CMS/OIG Waiver Design Guidance provides the following: “[w]e do not intend to protect distributions of shared savings dollars to referring physicians outside the ACO, unless those referring physicians are being compensated (using shared savings) for activities necessary and directly related to the ACO’s participation in and operations under the Medicare Shard Savings Program. Interestingly, the CMS/OIG Waiver Design Guidance does not define what activities would be “necessary” or “directly related” as such terms are used in the notice.
Echoing several of the principles set forth in the proposed Stark waivers described above, CMS proposes to waive the AKS with respect to two scenarios:
|Scenario #1||Distributions of shared savings received by an ACO (a) to or among ACO participants, ACO providers/suppliers, and individuals and entities that were ACO participants or ACO providers/suppliers during the year in which the shared savings were earned by the ACO; or (b) for activities necessary for and directly related to the ACO’s participation in and operations under the Shared Savings Program.|
|Scenario #2||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, but only if it implicates Stark and fully complies with one of its exceptions.|
It is also important to note that, consistent with the current interaction between the AKS and its safe harbors, failure by an ACO to qualify for one of the proposed AKS waivers would not automatically mean that the arrangement is illegal under the AKS.
In connection with the waivers described above, CMS also proposes to waive the CMP prohibition in the following scenarios:
|Scenario #1||Distributions of shared savings received by an ACO from CMS under the Medicare Shared Savings Program where the distributions are made from a hospital to a physician provided the following conditions are met: (a) the payments are not made knowingly to induce the physician to reduce or limit medically necessary items; and (b) the hospital and 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.|
|Scenario #2||Any financial relationship between or among the ACO, its ACO participants, and its ACO providers/suppliers necessary for and directly related to the ACO’s participation in and operations under the Shared Savings Program, if such relationship implicates Stark and fully complies with an exception.|
While much remains uncertain, anesthesiologists can be sure that Medicare payment methodologies will inevitably change. The ASA warns that if anesthesiologists do not actively participate in the movement towards payment for value (i.e., payment for higher quality care with lower expenditures) and contribute to its success, they may see substantial and undesired changes in compensation. As such, anesthesiologists and anesthesia groups must be actively engaged with the leadership of their hospitals and ASCs, and others in positions of power, to ensure anesthesia is not forgotten during this intense time of expansion and change.
We are grateful to Neda Mirafzali, Esq. and Kathryn Hickner-Cruz, Esq. of the Health Law Partners for preparing the article above. We would like to remind readers that the new regulations are in the proposed stage only. CMS has requested and will receive numerous comments from organizations like ASA and from individuals by the deadline of June 6, 2011. There will be changes, and we will keep you updated.
President and CEO
1The “Affordable Care Act” refers to the Federal Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Federal Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152).