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July 12, 2013

Taking advantage of Medicare ACO waivers

Daily Briefing

Since its launch last year, the Medicare Shared Savings Program (MSSP) has offered participating hospitals and physicians a series of waivers to shield them from the legal risks associated with ACO formation. Affording protection from fraud and abuse and antitrust enforcement, the waivers were designed to facilitate provider involvement by allowing a variety of organizational arrangements that ordinarily may be prohibited.

Yet, CMS and the HHS's Office of Inspector General (OIG) have suggested that these waivers may be narrowed in the future, potentially exposing applicants to increased liability in the MSSP. At the same time, applicants must be careful to meet all compliance requirements to capitalize on the existing exemptions.

The Advisory Board spoke with Mike Segal from the firm Broad & Cassel to supply insight on strategies for taking advantage of Medicare ACO waivers, possible legal pitfalls, and the future regulatory environment.

1) What waivers are available for hospitals and physician groups participating in the MSSP?

There are five waivers available: the Pre-Participation Waiver, the Participation Waiver, the Shared Savings Waiver, the Compliance with Stark Law Waiver, and the Patient Incentive Waiver. 

The Pre-Participation Waiver enables an ACO participant or provider, like a hospital, to fund ACO development for the benefit of the ACO participants, including referring physicians, without the risk of liability under certain federal fraud and abuse laws, including Stark Law, anti-kickback statutes, gainsharing, and beneficiary inducement civil monetary penalties.

The Participation Waiver can be used to allow an ACO participant or provider/supplier to undertake certain actions for the ACO that might otherwise implicate the federal fraud and abuse laws. The Shared Savings Waiver essentially allows for shared savings received by the ACO to be applied in virtually any manner, including distributions to outside parties. The Compliance with Stark Law Waiver protects arrangements meeting a Stark Law exception from liability under the anti-kickback laws or gainsharing civil monetary penalties. Finally, the Patient Incentive Waiver allows an ACO to offer to its beneficiaries certain non-monetary preventive items or services.

2) What steps should ACOs take to ensure protection for its participants through these waivers?

The requirements to satisfy the waivers are contained in the interim final rule published on Nov. 2, 2011, in Vol. 76, No. 212, of the Federal Register.  The interim rule provides that the Waivers are self-implementing.  There is no application required or advisory opinion given.

The requirements to use the Pre-Participation Waiver and the Participation Waiver are virtually the same. In each case, the ACO's governing body must review the proposed arrangement for which the waiver relates and must make a bona fide determination that the arrangement is reasonably related to the purposes of the MSSP, which essentially means the "triple aim" of providing high quality care for a Medicare beneficiary population at a lower cost.  The arrangement must be documented and contain certain minimum provisions. This documentation must be retained for at least 10 years after the completion of the arrangement. Finally, for transparency purposes, a description of the arrangement, and the fact that it is being utilized, must be posted on the ACO's public website.

The other three waivers do not require governing body approval, any particular documentation, or publication.  The Shared Savings Waiver requires either that (in the case of distributions to outside parties) the distributions be used in a manner reasonably related to the purposes of the MSSP, or that they be distributed among the ACO's participants and providers/suppliers during the year earned (received) by the ACO. However, when such distributions are made by a hospital to a physician, they cannot be made to knowingly induce the physician to reduce or limit medically necessary items or services. Compliance with Stark Law Waiver is pretty mechanical, but it is necessary that the financial relationship, once again, be reasonably related to the purposes of the MSSP.

Under the Patient Incentives Waiver, ACO participants or providers/suppliers may provide items or services to Medicare beneficiaries for free or below fair market value, provided that: (1) the items and services are reasonably related to the beneficiary’s medical care; (2) the items and services are in-kind; and (3) they are either for preventive care or advance certain clinical goals, including adherence to a treatment, drug regime, or follow-up care plan, or in the management of a chronic disease or condition.

Consistent with the general proposition of an ACO that the patient is free to obtain healthcare services from any provider or supplier that is enrolled in the Medicare plan, the Patient Incentives Waiver does not allow gifts to beneficiaries to induce them to remain in the ACO or to utilize providers/suppliers in the ACO.

3) How can an ACO utilize these Waivers to provide services which advance the cause of population health management?

The key is for the purposes of the arrangement for which the Waiver is sought be reasonably related to the triple aim. The interim rule only provides one example of an arrangement that it would look upon favorably. There it says that "…arrangements with specialists or nursing facility staff members to engage in care coordination for ACO beneficiaries or implement evidence-based protocols could be reasonably related to the purpose of the Shared Savings Program even if the arrangement were to reflect a likelihood that the patient might be referred to or within an ACO."

I have used that example as the basis for creating several ACO waivers for clients, such as cancer or nursing home coordination agreements where outside parties have provided the ACO with the services of care navigators to assist in providing more coordination consistent with the purposes of the triple aim.

4) Do you envision CMS narrowing the scope of waivers for future MSSP participants?

This could certainly happen. The interim rule is supposed to be just that—an interim final rule, to ultimately be replaced by a final rule. That has not yet happened.

CMS was clearly nervous about potential misuse of the waivers.  It states in the interim rule, "[W]e intend to closely monitor ACOs entering the program in 2012 through June 2013.  We plan to narrow the waivers established in this [interim final rule] unless the Secretary determines that information gathered through monitoring or other means suggests that such waivers have not had the unintended effect of shielding potential abusive arrangements….Modifications to the waivers would apply to future ACO applicants beyond June 2013 and to ACOs that renew their participation agreements."

To date CMS has made no further pronouncements regarding creating a final rule, or narrowing the waivers. Thus, while the possibility of reducing the scope of the waivers is clear, there is nothing definitive.

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