• AHLA Releases Option Paper to Waive Medicare Fraud and Abuse Provisions to Establish ACOs
  • November 9, 2010 | Authors: Virginia Alverson; Edgar C. Morrison
  • Law Firms: Jackson Walker L.L.P. - Dallas Office ; Jackson Walker L.L.P. - San Antonio Office
  • The American Health Lawyers Association (AHLA) this week delivered an Options Outline paper to the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) detailing possible proposals to waive selected provisions of the fraud and abuse laws in an effort to facilitate development of ACOs. 

    The Patient Protection and Affordable Care Act of 2010 (PPACA) created the Medicare Shared Savings Program, more commonly referred to as Accountable Care Organizations (ACOs). The National Committee for Quality Assurance defines ACOs as provider-based organizations that take responsibility for meeting the health care needs of a defined population with the goal of simultaneously improving health, improving patient experience, and reducing per capita costs.

    However, the implementation of ACOs could potentially violate certain fraud and abuse laws currently in place.  To facilitate the establishment of ACOs, the PPACA grants the Secretary of Health and Human Services the authority to waive certain provisions of the fraud and abuse laws under the Social Security Act or other provisions of the Medicare law.  The AHLA, a non-partisan non-advocacy educational organization, published the paper in an effort to assist regulators in identifying possible waivers that might facilitate the development of ACOs.

    Secretary May Waive Five Laws

    The PPACA specified five provisions of the Social Security Act that the Secretary of HHS may waive in order to allow the creation of an ACO program.  Those laws are the following:

    • Civil Monetary Penalty Law Prohibition on Payments to Reduce or Limit Care. A hospital may not knowingly make a payment, directly or indirectly, to a physician as an inducement to reduce or limit services provided to a Medicare or Medicaid beneficiary.

    • Beneficiary Inducement. Persons may not provide remuneration to a Medicare or Medicaid beneficiary where the person knows or should know that the remuneration is likely to influence the beneficiary to order or receive a service from a particular provider, practitioner or supplier where the item may be covered under the Medicare or Medicaid programs.

    • The Stark Law. A physician may not refer Medicare patients for certain designated health services to an entity with which the physician or an immediate family member has a financial relationship, unless an exception applies. An entity receiving a prohibited referral may not bill the Medicare program for the resulting items and services.

    • The Anti-Kickback Statute. Persons may not knowingly offer or receive, directly or indirectly, overtly or covertly, in cash or in kind, any remuneration to induce or influence the furnishing, arrangement, purchase, leasing, or ordering of items or services for which payment may be made under a federal health care program.

    • Prohibitions Against Charging or Collecting More Than the Medicare Allowable. If a provider accepts assignment, Medicare will directly pay the fee schedule amount for the services, and the beneficiary will be responsible for paying the coinsurance and any remaining deductible. Collectively, the fee schedule payment and coinsurance/deductible are referred to as the "allowed amount." By accepting assignment, the provider agrees to accept the "allowed amount" as "payment in full" for the services.

    AHLA identified examples of fraud and abuse laws that, if not waived, could be implicated by an ACO and outlined some of the regulatory questions that arise in the development of ACOs. Some of the questions include: (1) Can a hospital fund the cost of developing the legal and operational infrastructure of an ACO if physicians who refer to that hospital will be members of the ACO, have an active role in governance and are entitled to a portion of the ACOs shared savings? (2) Can the ACO pay primary care physician members a per patient per month management fee for overseeing the delivery of care to the beneficiaries attributed to that ACO? (3) Can the ACO offer Medicare beneficiaries cash or other remuneration to induce the beneficiaries to seek care from providers affiliated with the ACO?

    Other laws, including the antitrust laws, are also implicated by the development of ACOs.  The AHLA paper, however, focuses on just these provisions of the Social Security Act, as stipulated by the PPACA. The AHLA "options" include everything from maintaining the status quo (i.e., no waivers) to individual statute waivers, blanket waivers, and waivers upon request, similar to anti-kickback statute advisory opinions. The paper pointedly takes no position or makes any recommendations on which choice the Secretary should make, but tries to provide an even-handed "Pros and Cons" assessment of the possibilities.

    With the recent election results, the possibility exists of significant changes to this year's Health Reform legislation. ACOs, however, present a market-oriented approach that likely will survive any modifications to the law.  If so, HHS will have to provide sufficient clarity regarding the applicability of these laws to providers to enable them to justify the risk of participating in ACOs.