11/3/11

Health Care Alert: CMS Releases Interim Final Rule for ACO Fraud & Abuse Waiver Provisions

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In conjunction with its October 20, 2011 issuance of the Medicare Shared Savings Program for Accountable Care Organizations ("MSSP") final regulations, the Centers for Medicare and Medicaid Services ("CMS") and the Office of the Inspector General of the U.S. Department of Health and Human Services ("OIG") jointly released an interim final rule establishing waivers of the application of certain health care fraud and abuse laws to specified arrangements involving Accountable Care Organizations ("ACOs") participating in the MSSP (the "Interim Rule").  This interim final rule was published in the November 2, 2011 edition of the Federal Register (76 Fed. Reg. 67992.).

The MSSP is a Medicare program designed to promote quality and cost accountability within the Medicare patient population, coordinate care delivery and under Parts A and B, and encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery.  In the Interim Rule, CMS and OIG recognize that certain fraud and abuse laws may impede development of some of the innovative integrated-care models envisioned by the MSSP.  To enable the MSSP to most effectively promote ACOs, CMS and OIG have deemed it necessary to waive certain provisions of the Physician Self-Referral Law ("Stark Law"), the Federal Anti-Kickback  Statute ("AKS"), the Civil Monetary Penalty ("CMP") law prohibiting inducements to beneficiaries ("Beneficiary Inducement CMP"), and the CMP law prohibiting hospital payments to reduce or limit services ("Gainsharing CMP"). 

Waiver Requirements

CMS and OIG have established five separate, independent waivers intended to afford flexibility to ACOs in structuring their operations and sharing costs and revenues as part of the ACO.  The waivers are intended to be self-implementing (i.e., no separate grant or approval of a wavier to an ACO by CMS or OIG is necessary assuming all requirements are met).  Arrangements that do not fit into a waiver have no additional protection by virtue of existing within an ACO construct, and must be evaluated on a case-by-case basis for compliance with all applicable laws.  The waiver authority under the MSSP does not extend to any other laws or regulations, including, without limitation, antitrust laws, the Internal Revenue Code ("IRC") or state laws and regulations.  Moreover, nothing in the interim final rule changes any Medicare program reimbursement or coverage rules, or alters any obligations parties may have under the MSSP.

Set forth below is a brief description of the requirements of each waiver.

  1. ACO Pre-Participation Waiver

The Stark Law, the Gainsharing CMP, and the AKS are waived with respect to a start-up arrangement that pre-dates an ACO's participation agreement, provided all of the following conditions are met:

If all these conditions are met, the waiver period starts on October 20, 2011 for a 2012 target date, or one year preceding an application due date for later target dates.  The waiver period end dates vary:  (1) for ACOs that timely submit an application and enter into a participation agreement for the target year, on the start date for that agreement; (2) for ACOs that apply for participation but whose application is denied, on the date of the denial notice, unless the arrangement qualified for the waiver before the date of the denial notice, in which case the waiver period ends 6 months after the denial notice; or (3) for ACOs that fail to timely apply, the application due date or the date the ACO submits its reasons for not applying, with some exceptions.

CMS and OIG offer by way of example the provision of the following items, services, facilities, an goods which may qualify as start-up arrangements:

  1. ACO Participation Waiver

The Stark Law, the Gainsharing CMP, and the AKS are waived with respect to any arrangement of an ACO, one or more of its ACO participations or ACO providers/suppliers, or a combination thereof, provided all of the following conditions are met:

If all these conditions are met, the waiver period begins on the start date of the participation agreement and will end six months following the earlier of the expiration of the agreement, including any renewals, or the date of the ACO's voluntary termination.

  1. Shared Savings Distribution Waiver

The Stark Law, the Gainsharing CMP, and the AKS are waived with respect to distributions or use of shared savings earned by an ACO, provided all of the following conditions are met:

  1. Compliance With the Stark Law Waiver

The Gainsharing CMP and the AKS are waived with respect to any financial relationship between or among the ACO, its participants, and its ACO providers/suppliers that implicates the Stark Law, provided all of the following conditions are met:

If all these conditions are met, the waiver period begins on the start date of the participation agreement and will end on the earlier of the expiration of the participation agreement, including any renewals, or the date the agreement is terminated. 

  1. Waiver for Patient Incentives

The Beneficiary Inducement CMP and the AKS are waived with respect to items or services provided by an ACO, its ACO participations, or its ACO providers/suppliers to beneficiaries for free or below fair-market-value, or a combination thereof, provided all of the following conditions are met:

If all these conditions are met, the waiver period begins on the start date of the participation agreement and will end on the earlier of the expiration of the participation agreement, including any renewals, or the date the agreement is terminated. 

"Reasonably Related to the Purposes of the MSSP"

Several waivers described above require that arrangements be "reasonably related to the purposes of the MSSP."  CMS and OIG define this phrase to include the following:

CMS and OIG make clear that arrangements that involve care for non-Medicare patients as well as Medicare beneficiaries are eligible for the waivers.  Moreover, the arrangement need only be reasonably related to one enumerated purpose.  Although this definition is broad, CMS and OIG expect parties to apply a "reasonable interpretation" of the waiver terms.  The interim final rule provides that CMS and OIG will closely monitor ACOs entering the MSSP in 2012 through 2013, and will narrow the waivers unless the Secretary of HHS determines that the waivers have not had the unintended effect of shielding abusive arrangements.  CMS and OIG are soliciting additional comments on whether and how they should further define the "reasonably related to the purposes of the MSSP" standard.  This indicates that while the waiver provisions provide a significant amount of flexibility to structure financial arrangements within an ACO, and with ACO participating providers and suppliers, OIG and CMS anticipate further changes to the waiver provisions after the initial period of ACO participation and operation.