ACO Compliance Waivers: Finding the Right Fit and Developing a Checklist to Stay in Shape

April 15, 2016 | Health Services

Introduction

Established the by Patient Protection and Affordable Care Act, the Medicare Shared Savings Program was designed to provide better care for individuals, better health for populations, and lower growth in expenditures through the investment in infrastructure and redesigned care delivery.¹Early in the development of the Shared Savings Program, it was apparent that such arrangements, on their face, could implicate fraud and abuse laws, as providers are in a position to make and receive Medicare referrals and obtain payments connected to such referrals. In order to mitigate any interference with the operations of an ACO in the Shared Savings Program, Congress authorized the Secretary of the United States Department of Health and Human Services (HHS) to waive particular fraud and abuse statutes as necessary to carry out the Shared Savings Program.² The waivers, as discussed below, apply in addition to any existing applicable fraud and abuse safe harbors and exceptions available to these arrangements.

The Centers for Medicare & Medicaid Services (CMS) and the HHS’ Office of Inspector General (OIG) jointly published the “Final Waivers in Connection with the Shared Savings Program” on November 2, 2015,³ establishing five waivers4 for the application of certain provisions of the physician self-referral law, also called the Stark Law,5 the federal anti-kickback statute,6 and the Civil Monetary Penalty Law addressing inducements to beneficiaries.7 ACOs obtained a relatively clear picture of the available waivers from the Interim Final Rule published in November 2011,8 and such waivers did not, for the most part, change significantly in the Final Rule. What remains unclear, nonetheless, is how ACOs should go about not only with the task of determining which waivers are the correct fit for their arrangement but also making sure that they stay in shape in terms of compliance throughout the duration of the Shared Savings Program by having mechanisms in place to ensure continuous satisfaction of the requirements for their chosen waivers.

Finding the Right Fit

Given the variety of options and severity in consequences related to the violation of fraud and abuse laws, including fines, treble damages, prison time and exclusion from federal healthcare programs, it is imperative that ACOs consider each waiver and choose the right fit for their arrangement. Although an arrangement need only to fit within one waiver, it is possible that various aspects of the arrangement will satisfy more than one available waiver. The evolution of an ACO may also eliminate the need for a particular waiver and require the need for another. For instance, it is likely for an arrangement with an initial need for an ACO Pre-Participation Waiver which pre-dates an ACO’s participation agreement to move on to an ACO Participation Waiver after a participation agreement with CMS is signed and the ACO becomes operational.

1. ACO Pre-Participation Waiver.9 This waiver covers a broad array of start-up arrangements and parties to the arrangement and must include, at a minimum, the ACO or at least one individual or entity that is eligible to form an ACO, as would meet the definition of the terms of the Shared Savings Program regulations.10 The waiver does not cover arrangements involving drug and device manufacturers, distributors, durable medical equipment (DME) suppliers, or home health suppliers based on CMS’ assessment that such entities have historically posed a heightened risk of fraud and abuse. Waivers from the physician self-referral law and federal anti-kickback statute are available provided that:

a.  There is good faith intent to develop an ACO that will participate in the Shared Savings Program starting in a particular year and a completed application to participate in the Shared Savings Program is submitted for that year.

b.  Diligent steps are taken to develop an ACO that would be eligible for a participation agreement between the ACO and CMS that would become effective during the target year, including meeting the requirements concerning the ACO’s governance, leadership, and management.11

c.  The ACO’s governing body has made and duly authorized a bona fide determination that the arrangement is reasonably related to the purposes of the Shared Savings Program.12

d. Documentation regarding the arrangement and the diligent steps taken towards development of the ACO are retained for at least 10 years following completion of the arrangement.

2.  ACO Participation Waiver.13 Covering a large scope of arrangements including start-up arrangements, this option permits the waiver of the physician self-referral law and federal anti-kickback statute with respect to any arrangement of an ACO, one or more of its ACO participants or its ACO providers/suppliers, or a combination thereof, provided that:

a. There is a participation agreement and the ACO remains in good standing under its participation agreement.

b. The requirements concerning the ACO’s governance, leadership, and management are met.14

c. The ACO’s governing body has made and duly authorized a bona fide determination that the arrangement is reasonably related to the purposes of the Shared Savings Program.15

d. Documentation regarding the arrangement, authorization by the governing body, and the diligent steps of development are retained for at least 10 years following completion of the arrangement.

3. Shared Savings Distribution Waiver.16 Tied to the distribution or use of shared savings earned by an ACO, waiver from the physician self-referral law and federal anti-kickback statute is available, provided that:

a. There is a participation agreement and the ACO remains in good standing under its participation agreement.

b. Shared savings are earned by the ACO pursuant to the Shared Savings Program.17

c. The shared savings are earned by the ACO during the term of its participation agreement.

d. The shared savings are used for activities that are reasonably related to the purposes of the Shared Savings Program, or distributed to or among the ACO’s ACO participants, its ACO providers/suppliers, or individuals and entities that participated during the year the shared savings were earned.

4. Compliance With the Physician Self-Referral Law Waiver.18 Any financial relationships between or among the ACO, its ACO participants, and its ACO providers/suppliers that implicate the physician self-referral law may seek waiver from the federal anti-kickback statute if:

a. There is a participation agreement and the ACO remains in good standing under its participation agreement.

b. The financial relationship is reasonably related to the purposes of the Shared Savings Program.

c. The financial relationship fully complies with a Stark Law exception.19

Although this waiver of the federal anti-kickback statute through the use of a Stark Law exception strays from the usual position of the government, whereby the fraud and abuse statutes are typically interpreted separately, this waiver was made available because of the safeguards in the Shared Savings Program and to facilitate the operation of participating ACOs.20

5. Waiver for Patient Incentives.21 Waiver from the Civil Monetary Penalty Law addressing inducements to beneficiaries and the federal anti-kickback statute is available with respect to items or services provided by an ACO, its ACO participants, or its ACO providers/suppliers to beneficiaries for free or below fair market value if:

a. There is a participation agreement and the ACO remains in good standing under its participation agreement.

b. There is a reasonable connection between the items or services and the medical care of the beneficiary.

c. The items or services are in-kind, such as a transportation voucher used by a beneficiary to travel to a medical appointment.

d. The items or service are preventive care items or services; or advance one or more clinical goals.22

Patient incentives can aid in coordination and continuity of care by facilitating beneficiaries in obtaining the proper and timely care from providers within the ACO. This waiver does not include financial incentives such as waivers of copayments or deductibles.

Staying in Shape

Once an ACO has found the right fit and selects the appropriate waivers, it must take steps to stay in shape to ensure that it continues to function within the confines of the waiver requirements. The need for each waiver may also change throughout the development of the ACO. The self-implementing nature of the waivers creates a scenario where an ACO may grow increasingly comfortable that it is continuously meeting the requirements of its chosen waivers, risking non-compliance and backlash from the federal government. CMS and the OIG will continue to watch these arrangements closely to ensure that beneficiaries as well the Medicare program are insulated from potential fraud and abuse. As such, ACOs should monitor compliance through the creation of a “Waiver Audit Checklist” that is reevaluated periodically along with the ACO’s corporate compliance program. Such a task should be charged to the compliance officer who can work in conjunction with legal counsel to review the components of the arrangement, better complete the checklist and amend any policies and procedures, if necessary. Depending on the waiver selected, this checklist may include questions such as:

  1. Have any diligent steps of ACO development occurred since the ACO selected its waiver?
  2. Have all of these steps been properly documented?
  3. Does the ACO remain in good standing under its participation agreement?
  4. Are shared savings being used for activities reasonably related to the purposes of the Shared Savings Program or being distributed to participating individuals/entities?
  5. Is the financial relationship reasonably related to the purposes of the Shared Savings Program? Which purposes?

Conclusion

Continued compliance is one of the greatest challenges for ACOs because of the potential impact of violating a statute regarding fraud and abuse. This challenge is only heightened by the fact that the onus is on the ACO to implement the various waiver requirements and that available waivers require no special procedures. Many of the waivers have overlapping elements, such as requiring that an arrangement be reasonably related to the purposes of the Shared Savings Program. In such circumstances, ACOs should make sure that their arrangement is related to one enumerated purpose, at the very least. Although the ultimate goal of the waivers is to provide a platform for the development of integrated care delivery systems in a less restrictive environment, it can be a daunting task for a party to discern which waiver is necessary in order to move forward with an arrangement. ACOs with the most likelihood of success in being protected by a waiver will be those that not only choose the right fit, but have the foresight and mechanisms in place to stay in shape to mitigate fraud and abuse liability down the road.

  1. Patient Protection and Affordable Care Act, Section 3022, https://www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27461.pdf; Center for Medicare & Medicaid Services, Shared Savings Program, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram/ (Eligible providers, hospitals, and suppliers may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization (ACO) and are rewarded for lowering their growth in healthcare costs while meeting performance standards on quality of care and putting patients first. Integration is crucial in the Shared Savings Program, which promotes financial arrangements and coordination of care between and among providers.).
  2. Patient Protection and Affordable Care Act, Section 1899(f), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  3. Patient Protection and Affordable Care Act, Section 1899, https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  4. ACOs, ACO participants, and ACO provider/suppliers participating in the Shared Savings Program have the option to choose from the ACO Pre-Participation Waiver, ACO Participation Waiver, Shared Savings Distribution Waiver, Compliance with the Physician Self-Referral Law Waiver, and Waiver for Patient Incentives. It should be noted that the final rule no longer provides a waiver for the Civil Monetary Penalty Law prohibiting hospital payments to physicians to induce reduction or limitation of services, which included medically unnecessary services (42 U.S.C. § 1320a-7a(b)(1) and (2)). The law has since been amended to prohibit hospitals from inducing physicians to limit or reduce medically necessary services, eliminating the need for a waiver.
  5. Limitation on certain physician referrals, 42 U.S.C. § 1395nn, https://www.gpo.gov/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXVIII-partE-sec1395nn.pdf (prohibiting physicians from referring Medicare patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician’s immediate family has a financial relationship. Some of the contemplated financial arrangements in the Medicare Shared Savings Program do not fit within the available exceptions to this law).
  6. Criminal penalties for acts involving federal healthcare programs-Illegal remunerations, 42 U.S.C. § 1320a-7b(b), https://www.gpo.gov/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXI-partA-sec1320a-7b.pdf (prohibiting the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal healthcare program business. Some of the financial arrangements contemplated in the Medicare Shared Savings Program, which include distributions made to providers within a network for savings related to coordinated care, do not fall within the available safe harbor protections).
  7. Civil monetary penalties-Improperly filed claims, 42 U.S.C. § 1320a-7a(a)(5), https://www.gpo.gov/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXI-partA-sec1320a-7a.pdf (making it illegal for any person to offer or transfer remuneration to any individual covered by a federal healthcare program that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part…under such program. Providers participating in the Medicare Shared Savings Program may provide certain items and services to beneficiaries for less than fair market value to encourage coordinated care within a network which, on its face, implicates this law).
  8. 76 Fed. Reg. 67992 (Nov. 2, 2011).
  9. 80 Fed. Reg. 66742, § IV(1) (Oct. 29, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  10. Definitions, 42 C.F.R. § 425.20, https://www.gpo.gov/fdsys/pkg/CFR-2012-title42-vol3/pdf/CFR-2012-title42-vol3-sec425-20.pdf.
  11. Shared governance, 42 C.F.R. § 425.106, http://www.ecfr.gov/cgi-bin/text-idx?SID=d55d562f3d470c7f3a81fb72f8912aa4&mc=true&node=se42.3.425_1106&rgn=div8; Leadership and management, 42 C.F.R. § 425.108, http://www.ecfr.gov/cgi-bin/text-idx?SID=d55d562f3d470c7f3a81fb72f8912aa4&mc=true&node=se42.3.425_1108&rgn=div8.
  12. Shared governance, 42 C.F.R. § 425.106(b)(3), http://www.ecfr.gov/cgi-bin/text-idx?SID=d55d562f3d470c7f3a81fb72f8912aa4&mc=true&node=se42.3.425_1106&rgn=div8.
  13. 80 Fed. Reg. 66743, § IV(2) (Oct. 29, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  14. Id. at 9.
  15. Id. at 10.
  16. 80 Fed. Reg. 66743, § IV(3) (Oct. 29, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  17. Financial and Beneficiary Assignment Methodology, Centers for Medicare & Medicaid Services, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Financial-and-Assignment-Specifications.html (to qualify for shared savings, an ACO must meet or exceed a prescribed Minimum Savings Rate (MSR), meet the minimum quality performance standards, and otherwise maintain eligibility to participate in the Shared Savings Program).
  18. 80 Fed. Reg. 66743, § IV(4) (Oct. 29, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  19. General exceptions to the referral prohibition related to both ownership/investment and compensation, 42 C.F.R. § 411.355, http://www.ecfr.gov/cgi-bin/text-idx?rgn=div6&node=42:2.0.1.2.11.10#se42.2.411_1355; Exceptions to the referral prohibition related to ownership or investment interests, 42 C.F.R. § 411.356, http://www.ecfr.gov/cgi-bin/text-idx?rgn=div6&node=42:2.0.1.2.11.10#se42.2.411_1355; Exceptions to the referral prohibition related to compensation arrangements, 42 C.F.R. § 411.357, http://www.ecfr.gov/cgi-bin/text-idx?rgn=div6&node=42:2.0.1.2.11.10#se42.2.411_1355.
  20. 76 Fed. Reg. 68006, § V(E), https://www.gpo.gov/fdsys/pkg/FR-2011-11-02/html/2011-27460.htm.
  21. 80 Fed. Reg. 66743, § IV(5) (Oct. 29, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-10-29/pdf/2015-27599.pdf.
  22. Id. (including management of a chronic disease of condition, or adherence to a treatment regime, drug regime, or follow-up care plan).

Article co-written by Reema Sultan, Esq.

Reprinted with permission from the American Bar Association’s Health eSource.  All rights reserved. 2016

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