CMS and OIG Issue Final ACO Waivers

Saul Ewing Arnstein & Lehr LLP

On Thursday, October 29, 2015, the Centers for Medicare & Medicaid Services (“CMS”) and the Office of Inspector General (“OIG”) jointly issued a rule (the “Final Rule”) to finalize five (5) waivers of certain fraud and abuse laws for accountable care organizations (“ACOs”) in the Medicare Shared Savings Program (“MSSP”). The Final Rule was effective immediately upon publication in the Federal Register.  

The waivers give ACOs and ACO participants more flexibility to structure innovative arrangements to improve the delivery of care to Medicare beneficiaries through ACOs in the MSSP. In the preamble to the Final Rule, 80 Fed. Reg. 66726 (October 29, 2015), the OIG and the CMS stated that, “We are waiving application of these fraud and abuse laws to ACOs formed in connection with the [MSSP] so that the laws do not unduly impede the development and operation of beneficial ACOs, while also ensuring that ACO arrangements are not misused for fraudulent or abusive purposes that harm patients or Federal health care programs.”

The Final Rule, in large part, maintained and extended the waivers that had previously been put in place under the interim final rule (“Interim Rule”) from November 2011.  The waivers relate to certain provisions of the Physician Self-Referral Law (commonly referred to as the “Stark Law”), the federal Anti-Kickback Statute (“AKS”) and the beneficiary inducement prohibitions in the Civil Monetary Penalties law (“Beneficiary Inducements CMP”). In extending the waivers in the Final Rule, the CMS and the OIG stated, “information available… suggests that the waivers are adequately protecting beneficiaries and Federal health care programs while promoting innovative structures within the [MSSP].”

The following five (5) waivers were adopted in the Final Rule:

  1. A “pre-participation” waiver of the Stark Law and the AKS for ACO start-up arrangements;
  2. A “participation” waiver of the Stark Law and AKS that broadly applies to ACO-related arrangements during the term of the ACO’s participation in the MSSP;
  3. A “shared savings distribution” waiver of the Stark Law and AKS that applies to distributions and uses of shared savings generated by the ACO through the MSSP;
  4. A “compliance with the physician self-referral law” waiver of the AKS for arrangements that implicate the Stark Law and satisfy an existing Stark Law exception; and
  5. A “patient incentive” waiver of the Beneficiary Inducements CMP and the AKS for medically-related incentives offered by ACOs, ACO participants and ACO provider/suppliers to Medicare beneficiaries to encourage preventative care and compliance with treatment regimens.

The OIG and the CMS jointly issued the Final Rule because the CMS oversees administration of the Stark Law while the OIG is responsible for enforcing the civil monetary penalty provisions of the Stark Law and the OIG is responsible (along with the federal Department of Justice) for enforcement of the federal Anti-Kickback Statute.

In addition to making some clarifying changes to the Interim Rule waivers, one substantive change in the Final Rule is that none of the waivers will waive the provisions of the Civil Monetary Penalties law related to prohibitions on hospital payments to physicians to reduce services (the “Gainsharing CMP”). The CMS and the OIG stated this is because the Gainsharing CMP was amended since the passage of the Interim Rule such that it prohibits hospitals from knowingly making payments to induce physicians to reduce or limit ‘‘medically necessary’’ services. Previously, the Gainsharing CMP prohibition extended to medically unnecessary services. According to the CMS and the OIG, “Thus, a waiver of the Gainsharing CMP is no longer necessary to carry out the [MSSP], which, by its terms, promotes quality and patient care goals like fostering efficient medically necessary care, but not stinting on medically necessary care.”

In issuing the Final Rule, the CMS and the OIG specifically declined to extend the existing waivers or create new waivers applicable to ACO arrangements in the commercial sector. The agencies stated that they will “continue to monitor the development of ACOs and shared savings arrangements” in the commercial sector for possible future rulemaking.

Individuals and entities interested in utilizing a waiver do not need to take any specific action or apply to CMS or the OIG – the waivers are self-effectuating. However, a party considering this option should undertake careful prior legal analysis to ensure that any actions will explicitly comply with the terms of the applicable waiver(s).

The CMS and OIG cautioned that their issuing the waivers should not be interpreted to mean that they will not be monitoring ACO activity for fraud and abuse. The agencies stated, “As we made clear in the [Interim Rule], we will continue to monitor ACOs and the [MSSP] for fraud and abuse, including but not limited to: (1) Billing for medically unnecessary or upcoded services; (2) stinting on medically necessary services; (3) submitting false or fraudulent data; or (4) providing worthless or substandard care.”

Saul Ewing attorneys have previously written about the MSSP and ACOs:

HHS Announces Next Generation ACO Model of Payment

Medicare Shared Saving Program Interim Final Rule Extended

CMS Announces New Round of Advance Payment Model ACO Applications

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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