26 AE Summer 2012

care, while also allowing thoseproviders to share in the savingsrealized in the process. Under theACA, ACOs are designed to beaccountable for all care covered forpatients under Medicare Parts A andB, including eyecare. This createsopportunities for eyecare profession-als to be involved in ACOs, alongwith hospitals and other physicians.

The Patient Protection andAffordable Care Act (ACA)required the Centers forMedicare and MedicaidServices (CMS) to establish

a shared savings or accountable careorganization (ACO) program byJanuary 1, 2012. The ACO concept iscentered on making healthcare prac-titioners and providers accountablefor the cost and quality of patient

Feds Sweeten ACO Pot withBroad Fraud and Abuse Waivers

Running the Practice Legal

Robert M. Portman, JD, and Christina A. Hughes, JD

Background On October 20, 2011, followingwidespread rejection of its proposedrules, CMS released its final ACOrule. On the same day, in conjunc-tion with the Department of Healthand Human Services Office of theInspector General (OIG), CMS issuedan interim final rule setting forthwaivers to the federal fraud and

AE Summer 2012 27

abuse laws for ACOs. OIG and CMShave jointly issued the waiversbecause they cover both the federalanti-kickback statute (under theOIG’s jurisdiction) and the Starkphysician self-referral law (underCMS’s jurisdiction). Under the inter-im final rule, there are five newwaivers from physician self-referral(i.e., Stark law), kickback, gainshar-ing, and beneficiary inducement pro-hibitions for ACOs engaged in cer-tain activities. Two of these waiverswere previously issued with the pro-posed ACO rule; three additionalwaivers have been added by the finalrule.

RationaleThe waivers are a necessary part ofthe ACO initiative. While on thewhole, the ACO demonstrationsappear likely to spur more interest inintegrated healthcare delivery, theflexibility to work around the anti-kickback, physician self-referral, andpatient inducement prohibitionsmay be essential to actually achiev-ing the desired clinical and financialintegration. While failure to qualifyfor a waiver does not necessary meanan arrangement is illegal, each indi-vidual arrangement (of which thereare potentially many in formingACOs) would need to be analyzedbased on the facts and circumstancesto ensure the ACO and its partici-pants are not exposed to unnecessaryliability.

Function and purposeThe five waivers will not be codifiedin the federal regulations. Thewaivers do not protect against anyself-referral prohibitions under statelaw, so it is possible that an ACO fit-ting under the federal waiver mightstill present compliance risk understate law. Nonetheless, the fivewaivers are designed to allow partiesto develop ACOs relatively unhin-dered by the federal fraud and abuselaws.

Types and descriptionThe five different waivers are theShared Savings Distribution waiver,the Compliance with the PhysicianSelf-Referral Law waiver, the ACOPre-Participation waiver, the ACOParticipation waiver, and the PatientIncentive waiver. Two of the waivers—the Shared Savings Distributionwaiver and the Compliance with thePhysician Self-Referral Law waiver—are essentially the same as previouslyproposed, but the other threewaivers are new under the interimfinal rule.

The first two waivers—SharedSavings and Physician Self-ReferralLaw—are relatively narrow in scopeand are limited in application to distributions of the shared savingsamong the ACO participants or toentities outside of the ACO, but onlyif closely related to achieving qualityand savings goals. Under the SharedSavings Distribution waiver, thesavings to be distributed must beearned by the ACO, during the termof the applicable participation agree-ment. However, care must be takento ensure that any distributionsmade directly from a hospital to aphysician or physician group are notmade in such a way as to knowinglycause the physician to reduce orlimit the availability of medicallynecessary items or services to benefi-ciaries. This means that the formulaused to determine the distributioncannot be based on factors such asshortened length of stay or decreaseduse of medical supplies.

The Physician Self-ReferralLaw waiver is very straightforward,though also very limited in scope. Inessence, to the extent that a particu-lar arrangement entered into by anACO complies with the requirementsof an exception under the Stark lawand regulations, then the arrange-ment will similarly be immunizedfrom liability under the anti-kick-back and gainsharing prohibitions.

The ACO Pre-Participation andParticipation waivers are designedto provide seamless coverage toACOs. They operate nearly identical-ly, with the ACO Pre-Participationwaiver applying to prospectiveACOs, their participants andproviders/suppliers, and the ACOParticipation waiver applying toACOs that have successfully com-pleted the application process andentered into a participation agree-ment with CMS. Both waivers havenearly identical requirements andcover the same sorts of financialarrangements.

The ACO Pre-Participation waiv-er is particularly important because itapplies to “start-up” arrangementsentered into in connection with theformation of an ACO. The exemp-tion permits ACO participants toprovide facilities, services, andgoods, or to pay for these items, inconnection with the formation of anACO, without incurring compliancerisk under the anti-kickback statute,the Stark law, or the GainsharingCivil Monetary Penalty (CMP). Forexample, because of the waiver, ahospital or health system may nowpay the organizational costs of form-ing an ACO, even though it willresult in a financial benefit to physi-cians that might otherwise triggerthe Stark or anti-kickback laws. Thewaiver comes, however, with a limit-ed window of opportunity. It willprotect parties forming an ACO onlyfor a period of 1 year prior to thedue date of the ACO’s application toparticipate. If the prospective ACOfails to submit its application ontime, then the waiver expires unlessthe ACO submits a request for anextension, explaining the reasons forthe delay. The Secretary of Healthand Human Services may grant aone-time, 1-year extension at its solediscretion to allow parties to contin-ue with the ACO formation arrange-ments until the next target date.

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28 AE Summer 2012

any person from offering a benefit toa Medicare beneficiary that mightsteer business to a particularprovider. (The CMP statute’s “prohi-bition against beneficiary induce-ments” is similar to the anti-kickbacklaw, except that it is targeted directlyat patient incentives.) The waiverwill allow ACOs to offer patients pre-ventive care items and services, orother items or services that promoteadherence to patient care plans orchronic care management programs.The incentives may only be “in-kind,” that is, financial incentivessuch as cash or coupons are not pro-tected by the waiver.

ImplementationThe waivers are effective immediate-ly and are self-implementing. There

The Pre-Participation waiver alsorequires the governing body of theprospective ACO to carefully docu-ment the terms of and reasons forthe support arrangement in its min-utes or similar records. These docu-mentation requirements should bereviewed carefully. Lastly, the Pre-Participation waiver contains arequirement for public disclosure ofthe arrangement (excluding thefinancial terms), but OIG/CMSintend to provide the details of thisrequirement at a later time.

The third new (PatientIncentive) waiver will allow ACOs tooffer incentives to patients toencourage cost-effective care. Absentthe waiver, these incentives mightrun afoul of a prohibition containedin the CMP statute that precludes

Running the Practice Legal

is no need to apply for a waiver.OIG/CMS indicated that they maynarrow (or even eliminate) thewaivers in the future, and theysolicited comments on a wide rangeof issues regarding potential addi-tional requirements for the waiversas well as any additional categoriesof arrangements that should be pro-tected through a waiver. Those com-ments were due by January 3, 2012,and no responses to the submittedcomments have yet been released.

It is important to note, however,that the decision from the SupremeCourt on the validity of the ACAmay have significant impact on theACO demonstrations as the requiredfunding for the program stemmedfrom that legislation. In the mean-time, to the extent that hospitalsand other healthcare professionalscontinue to work on forming andimplementing ACO projects, thewaivers, as set forth in the interimfinal rule, should remove compliancerisk as a significant impediment tosuch efforts. AE

continued from page 27

To the extent that hospitals and other healthcare professionals continue to work on forming and implementing ACO projects, the waivers, as set forth in the interim final rule, should remove compliance risk as a significant impediment to such efforts.

Medicare Incentive Programs: ASOA MediaCenter

• Web seminar recordings on eRX, PQRS, and EMR/Meaningful Use are nowavailable in the ASOA MediaCenter (www.asoa.org).

• ASOA members can access all of these important programs for free throughthe ASOA MediaCenter with their ASOA login/password. Non-members canreceive access by purchasing these seminars individually for $150.00 perseminar.

The three-part series on Medicare Incentive Programs was developed byASCRS•ASOA and presents an overview of the CMS EMR/Meaningful UseIncentive, e-Prescribing, and PQRS programs, including details on how eligibleprofessionals (EPs) can maximize bonus payments and avoid penalties nowand in the future.

Robert M. Portman, JD(rob.portman@ppsv.com), andChristina A. Hughes, JD, MPH,(christina.hughes@ppsv.com),are healthcare attorneys withthe Washington, D.C. law firm,Powers Pyles Sutter & Verville,PC. PPSV is also legal counselfor ASCRS•ASOA.