On March 31, 2011, the same date as the proposed rules for implementing the Medicare Shared Savings Program (MSSP),
the Centers for Medicare and Medicaid
Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued a
Notice with a 60-day comment period proposing to establish waivers of certain
federal healthcare fraud and abuse laws. While the proposed waivers simplify compliance with fraud and abuse laws for Accountable Care Organizations
(ACOs) participating in the MSSP, the waivers are limited in their scope and applicability.
One of the underpinnings of ACOs, and the MSSP in particular, is the alignment of payment mechanisms across healthcare providers that participate in an ACO to incentivize the three-part aim of better care for individuals, better health for populations, and lower growth in expenditures. Under the MSSP,
this is achieved through the distribution of shared savings to healthcare providers within an ACO. The existence of financial relationships and other
remunerative arrangements among healthcare providers such as
distribution of shared savings can implicate the Stark physician self-referral law, the federal Anti-Kickback Statute, and the
civil monetary penalty (CMP) or “gainsharing” law.
Under authority granted by the Patient Protection and Affordable Care Act, CMS and the OIG have proposed to waive the application of these laws under
certain circumstances. CMS is responsible for enforcing the Stark physician self-referral law, which prohibits physicians from making referrals for
designated health services – including hospital services – to entities with which they have a financial relationship. The OIG is responsible for
enforcing the federal Anti-Kickback Statute, which prohibits the payment or receipt of remuneration to induce or reward referrals for Medicare and
Medicaid services, as well as the CMP law, which prohibits a hospital from paying a physician to reduce or limit services to Medicare or Medicaid
How the Waivers Will Work
The proposed waivers are designed as follows:
- Waive application of Stark and the Anti-Kickback
Statute to distributions of shared savings earned under the MSSP to ACO participants. The waiver is also extended to distributions of shared savings outside the ACO, but only for activities “necessary and directly related to” the
ACO’s participation in the MSSP. The Notice does not define what constitutes “necessary and directly related to.” There are two significant
limitations to this waiver:
- It does not apply to financial relationships other than distributions of shared savings. For example, the waiver would not apply to an agreement
between an ACO and a physician for clinical direction services. In this instance, some existing Stark exception and Anti-Kickback Statute safe
harbor would have to be met.
- It does not apply to distributions of shared savings under programs with private payors. As a result, an ACO that distributes shared savings from
a program with private payors cannot rely upon this waiver with respect to these amounts and would need to analyze the distribution of shared
savings under existing Stark exceptions and Anti-Kickback Statute safe harbors.
- Waive application of the CMP or “gainsharing” law to distributions of shared savings, so long as the payments are not made to knowingly induce the physician to reduce or limit medically necessary items or services. One open
question with respect to this waiver is how medical necessity will be determined and what appeal rights might be available under this
- Provide immunity under the Anti-Kickback Statute and CMP law for financial relationships among ACO participants (other than distribution of
shared savings) where Stark is implicated and an available Stark exception is met. Again using the example of an agreement between an ACO and a physician for clinical direction services, if Stark is implicated and the Stark
personal services exception is met, then application of the Anti-Kickback Statute and CMP law are waived with respect to this arrangement. This
simplifies the regulatory analysis by eliminating the need to separately determine if an
Anti-Kickback Statute safe harbor is met or to evaluate the
arrangement under available OIG advisory opinions regarding gainsharing.
Although it is not specifically addressed in the Notice, agency officials have stated to industry groups that the waivers will apply uniformly, meaning
that there will not be any application or advisory opinion process in order to rely upon the waivers.
Surprisingly, the waivers do not expressly include any of the usual limitations to avoid selective treatment of physicians based on referrals, such as
requiring distributions of shared savings on a per capita basis, requiring payments to be set in advance and not varying with the value or volume of
referrals, or fair market value requirements. Limitations such as these were included in a previous CMS proposed rule regarding a Stark exception for
certain shared savings payments that has not been finalized. Since the proposed rules for the MSSP require an ACO to include as part
of its application a description of the criteria it plans to use for distributing shared savings,
it may be that CMS regards the ability to approve and monitor such
criteria as a sufficient control to protect against these concerns. Perhaps this is something that CMS will address in responses to comments to the
Application and Scope of the Waivers is Limited
A key point for all of the waivers is that a minimum qualification is a Shared Savings Agreement with CMS and compliance with all ACO
regulations. The waivers are unavailable to an ACO that does not participate in the MSSP. For ACOs that do not participate in the MSSP, but instead enter into shared
savings programs and other pay-for-performance programs only with private payors, the waivers do not provide any additional protections. Such ACOs
would be required to analyze financial relationships and other remunerative arrangements among ACO participants under
federal healthcare fraud and abuse laws without any
reliance upon the waivers.
The waivers are welcome guidance for ACOs looking to participate in the MSSP and will help to simplify the regulatory analysis under federal
healthcare fraud and
abuse laws. It remains to be seen whether CMS or the OIG will be willing to extend similar protections to distributions of shared savings from private
payors outside the MSSP. There have been recent proposals by CMS to do this, but none that have been finalized. In addition, all ACOs must be mindful
that there are state “baby Stark”, anti-kickback, and fee-splitting laws that could be implicated by ACOs that are not affected by the waivers. ACO
compliance with these state laws will need to be carefully analyzed as well.