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47 posts categorized "Fraud and Abuse"

August 26, 2013

Leverage: Preventable readmissions and a recent OIG advisory opinion

MM900323824Medicare's excess readmission penalty policy (up to a 1% ding in IPPS Medicare payments to hospitals that have excess readmissions for acute myocardial infarction, heart failure and pneumonia in FFY 2013, going up to 2% in 2014 -- and adding in measures for hip and knee replacements and acute episodes of COPD patients -- and 3% thereafter) has resulted in some hospitals experiencing multimillion-dollar pay cuts. Over the next couple of years, the potential exposure will triple, upping the ante from the relatively low stakes hospitals have faced thus far.

The excess readmission penalty program (if the penalties are high enough) will force hospitals to become enmeshed in post-discharge care to a degree not hitherto seen in the FFS world. This is of a piece with leverage exerted by other health reform innovations. For example, the cost and quality improvements called for in the ACO program will lead health systems to apply changes to management of all patients' care, not just Medicare patients' care (because running multiple parallel systems is impractical). In essence, by design or otherwise, various aspects of health reform and financial incentives attached to them require greater integration of effort across previously more-disjointed elements of the health care "system," as well as departures from the traditional FFS mode of thinking and acting.

Continue reading "Leverage: Preventable readmissions and a recent OIG advisory opinion" »

April 18, 2013

New OIG Self-Disclosure Protocol

The OIG released an updated self-disclosure protocol this week, about ten months after putting out a call for comments on the old protocol. The new protocol imposes some new burdens on the disclosing entity, such as a shorter timeline for internal investigations and reporting, and higher minimum fines.

According to the OIG, the benefits of working through the OIG self-disclosure program include lower fines (i.e., lower multipliers of damages than would otherwise be assessed) and an almost certain exemption from entering into a corporate integrity agreement. The OIG will work with DOJ so that if a False Claims Act issue is uncovered it may be dealt with through this mechanism; ordinarily, the SDP is applicable only to matters where Fraud and Abuse CMPs may be assessed by the OIG. Since health care fraud may implicate numerous federal regulatory structures administered by different agencies, it is important to remember that Stark-only (i.e., physician self-referral) violations (unlike those that are triggered by the same facts that trigger a Fraud and Abuse (i.e., anti-kickback) violation) should be disclosed through the physician self-referral disclosure protocol.

It is of course preferable to prevent fraud and abuse rather than disclose and remediate it. Health care providers should invest in compliance programs that include educational and audit components. But if all that doesn't work, there is at least some comfort in the availability of the self-disclosure protocol.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

November 26, 2012

Top Ten HHS Management and Performance Challenges

The OIG produces its list of Top Management and Performance Challenges (TMC) every year, and to no one's surprise, implementation of health reform tops the list this year.  The rest of the list includes a collection of fraud and abuse, quality of care and consumer protection priorities, plus a couple of interesting issues, such as protecting integrity and security of health IT systems and data and fostering an ethical and transparent environment.

ACA implementation efforts have come out from under wraps post-Election Day, and last week, HHS issued proposed rules on a number of health insurance issues (pre-existing condition nondiscrimination, essential health benefits and employment-based wellness programs) that must be in place before January 1, 2014.

A little more detail from the HHS presser; these rules include:

  • A proposed rule that, beginning in 2014, prohibits health insurance companies from discriminating against individuals because of a pre-existing or chronic condition.  Under the rule, insurance companies would be allowed to vary premiums within limits, only based on age, tobacco use, family size, and geography.  Health insurance companies would be prohibited from denying coverage to any American because of a pre-existing condition or from charging higher premiums to certain enrollees because of their current or past health problems, gender, occupation, and small employer size or industry. The rule would ensure that people for whom coverage would otherwise be unaffordable, and young adults, have access to a catastrophic coverage plan in the individual market.  For more information regarding this rule, visit: http://www.healthcare.gov/news/factsheets/2012/11/market-reforms11202012a.html.
  • A proposed rule outlining policies and standards for coverage of essential health benefits, while giving states more flexibility to implement the Affordable Care Act. Essential health benefits are a core set of benefits that would give consumers a consistent way to compare health plans in the individual and small group markets. A companion letter on the flexibility in implementing the essential health benefits in Medicaid was also sent to states.  For more information regarding this rule, visit http://www.healthcare.gov/news/factsheets/2012/11/ehb11202012a.html.
  • A proposed rule implementing and expanding employment-based wellness programs to promote health and help control health care spending, while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status.  For more information regarding this rule, visit: http://www.healthcare.gov/news/factsheets/2012/11/wellness11202012a.html

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

 

September 13, 2011

Health Care Compliance Association - Hot Tips from the US Attorney's Office at the New England Regional Conference

The Health Care Compliance Association's New England Regional Conference was held recently, and it was a day packed with useful information (and not just because I was one of the speakers).  I livetweeted the sessions (except my own), and I'd like to highlight the final session of the day, which featured Assistant U.S. Attorney Robert Trusiak, from the Western District of New York, and Carmen Ortiz, U.S. Attorney for the District of Massachusetts (who was in court earlier in the day for the sentencing of former Massachusetts Speaker Sal DiMasi -- third speaker in a row to go from the State House to the Big House -- but I digress).

While they always offer disclaimers, presentations by prosecutors offer a valuable glimpse of the government's perspective.

Trusiak emphasized that his only goal is to find the truth, and that he runs an active monitoring program, but that his office's agenda is mostly set by qui tam relators.  If relators (and/or members of his task force, which includes representatives from commercial payors and state and federal agencies, and meet with him regularly) identify potential issues with respect to a particular provider, his office will run down other issues relating to that provider.  Once one agency, such as the Department of Justice, is done with an investigation, prosecution or settlement negotiation, another agency (e.g., the OIG) may have the opportunity to pursue its own remedies.  Thus, a provider may be subject to criminal and civil sanctions arising from the same set of facts.

Ortiz emphasized that her office seeks to win the cooperation of targets of investigations; greater cooperation and disclosure to the U.S. Attorney's office will result in mitigation of fines and sentences. That cooperation may include waivers of statutes of limitations -- targets of investigations may waive the statute in order to have more time to produce information and present their cases informally, to convince the U.S. Attorney of the legitimacy of their practices, since the investigations are so time-intensive that time might otherwise run out (and the DOJ will simply bring the case they have prepared, without considering the other side of the story) without such an extension.

Both suggested that seeking criminal convictions for individual executives in cases of fraud by a corporate provider or supplier is a tactic reserved for the rare case where, per Ortiz, there is willful blindness to criminal activity or, per Trusiak, past sanctions imposed have not proven to be a sufficient deterrent.

Other tips included:

  • Review your compliance plan twice a year, just like your smoke detector batteries -- to account for statutory changes, enforcement priorities and changes on the ground in your organization -- and don't forget to train employees
  • Under changes to the False Claims Act in the ACA, if, for example, a RAC audit finds overpayments going back 36 months, the provider has an obligation to dig deeper (37 months back, and further, as appropriate) and come clean, or face liability for failing to investigate when it had reason to know of potential false claims
  • Don't forget to include nonemployed, privileged, docs in a hospital compliance program, becasue their noncompliance can expose a hospital to False Claims Act liability
  • Conduct internal surprise investigations, and run down any issues identified 
  • Come up with creative incentives for internal whistleblowing (i.e., to the compliance officer, not to the government) -- you need to create an environment conducive to sharing this sort of information internally; many qui tam relators say they tried to tell higher-ups in their organizations, but nobody would listen

It is critically important to have a proactive approach to compliance, since failure to prevent issues, or failure to nip them in the bud, can only cause more pain. 

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

April 03, 2011

Accountable Care Organization (ACO) Regulations: First Look

ACO regulations and related federal issuances hit the street last Thursday, after several months of waiting -- from CMS, OIG, FTC, DOJ and IRS.  They cover the waterfront, ranging from the central regulation defining the structure and workings of the ACO, to  limited Stark self-referral ban and anti-kickback statute waivers in the fraud and abuse arena, to new frameworks for antitrust analysis, to rules governing joint ventures involving taxable and tax-exempt organizations. 

Update 11/12/2011:  The final ACO Regulations are out - follow the link to my thoughts (camel, not unicorn), links to all of the final regs and issuances, and to an archived webinar on the final ACO regs and what they mean for the health care marketplace.

I had the opportunity to discuss the proposed regs the day after they were issued on a special edition of the Blog Talk Radio show, ACO Watch, hosted by Gregg Masters (@2healthguru).  Gregg's guests included Mark Browne (@consultdoc), Vince Kuraitis (@VinceKuraitis), Jaan Sidorov (@DisMgtCareBlog) and yours truly (@healthblawg).  We are geographically diverse, and bring a variety of perspectives to the table.  I invite you have a listen -- we enjoyed the opportunity to discuss the rules, we all learned from each other, and we hope you enjoy the conversation as well.  (It runs about 90 minutes.)

Update 4/5/2011: For a collection of ACO analyses curated by Anita Samarth see: http://bit.ly/ACO-Analyses.

Here are a few points to consider as part of a first look at the ACO rules:

1.    The rules were worth the wait.  There are a lot of moving parts to coordinate, and the multi-agency effort really came together.  The CMS rule also retains a fair amount of flexibility.  Some requirements are very specific, but others much less so.  (For one example of specific guidelines, take a look at the eight-part definition of patient-centeredness; an  organization must satisfy all eight in order to be an ACO.  Other requirements have no detail at all, and CMS will look to applicants to explain how they meet the requirements, without giving any hints.)

2.    This is the Frankenstein regulation:  A Medicare beneficiary must sit on the board of the ACO, CMS must approve all marketing materials before they are used ....  These requirements may be traced back to origins in CMS demonstration project and Medicare Advantage policies, respectively, and illustrate the way in which CMS took a short statute and really put some meat on the bones.  Some may balk at the weight of the requirements limiting the options of an ACO.

3.    CMS has bootstrapped a law aimed at ACOs serving at least 5,000 Medicare beneficiaries each into a system of rules that effectively requires that commercial business be handled in an ACO-like manner.  This, among other infrastructure requirements (e.g., 50% of ACO docs must be meaningful users of EHRs), leads to the conclusion that there will be relatively few ACOs, at least initially.  CMS estimates 75-150 nationwide.  There are, of course, many unanswered questions about what a commercial ACO would look like.  One model I am familiar with -- here in the People's Republic of Massachusetts -- is the AQC, or Alternative Quality Contract offered by Blue Cross Blue Shield of Massachusetts to providers enrolled in its HMO Blue product.  One question is whether a slightly different financial model could apply to the commercial side of the house.  One model worth a close look is Jeff Goldsmith's proposed ACO model, which would treat primary care, emergency and diagnostic care, and episodes of specialty care in three distinct ways.

In brief, Goldsmith recommends risk-adjusted capitation payments for primary care, fee-for-service payments for emergency care and diagnostic physician visits, and bundled severity-adjusted payments for episodes of specialty care.  Primary care would be provided through a patient-centered medical home model, which would likely have a collateral effect of reducing the total volume of emergency care and diagnostic physician visits.  Specialty care would be provided through "specialty care marts," ideally more than one per specialty per market to maintain a little healthy competition.

A quick explanation of this approach to an intensivist over the weekend elicited a favorable response.

4.    Also in the bootstrapping department, CMS has shifted the ACO from a "shared savings" approach to having ACOs share risk as well as the upside.  Of course, this makes a lot of sense; a number of commentators, including the HealthBlawger, had lamented the fact that risk sharing was left out of the statute.  CMS has used its general waiver and demo authority under the ACA to move the ACO into risk sharing.  The ACO may choose: share risk from day one, and enjoy a potentially higher percentage of the upside, or defer the risk sharing to year three.

5.    The retrospective nature of patient attribution and savings calculations mean that each ACO must treat every Medicare fee-for-service patient as if he or she is "theirs."  Patients have the right to decide whether they want their data shared with an ACO; if enough patients are spooked by health care data privacy and security issues, fewer and fewer will authorize the sharing from CMS to the ACO, and the ACO will have to drive by feel -- or base its management of Medicare beneficiaries on its management of its general patient population.

6.    Organizations that dominate their local markets may be the most successful as ACOs, but they may face the most involved antitrust review at the hands of the FTC/DOJ.

7.    Scoring on 65 quality metrics in 5 domains will help determine the amount of any shared savings to be paid to an ACO.  One domain, patient experience of care, links up nicely with the patient-centeredness threshhold requirement noted above.  (For private sector attention to patient experience, see what the Leapfrog Group is doing in this domain, using some of the same measures.)  While some may bristle at the number of metrics, it is worth noting that these metrics are all drawn from existing sets of measures.

8.    All in all, the regulations represent the first stage of realizing the ACO vision expressed by Don Berwick last fall: there is a field open to experimentation (albeit a field likely limited to large networks of significant means that can underwrite the up-front infrastructure costs), and the ACO rules sketched out in the statute and further delineated in the regulations will enable CMS to incentivize the provider community to help achieve the triple aim of better care for individuals, better health for populations and reduced per-capita costs.  

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

March 14, 2011

David Harlow quoted in AMA American Medical News story on daily deal websites

Groupon, LivingSocial and other daily deal websites are being used by health care providers -- though thus far mostly by those that are not covered by traditional commercial or governmental health insurance (e.g., dental, chiropractic, acupuncture services).  Read the American Medical News story on Groupon, where I was quoted, and please take a look at my blog post on the subject as well -- at the Mayo Clinic Center for Social Media blog -- entitled: Groupons for Health Care Services: No-Brainer or Legal Minefield?  In that post, I observed:

There are a number of legal issues, and their resolution will depend, in part, on where you are situated, since many of the relevant rules are state laws, which vary.  For example:

Groupon collects 50% of the price of the groupon as its fee; is that illegal fee-splitting under applicable state law?

Is the 50% fee an illegal kickback in exchange for a referral?  Are you subject to federal laws in this area in addition to any state laws?

Do provider agreements with third party payors prohibit the offering of discounts to plan subscribers?  (If you can get over the first two issues, you may need to screen out folks who are insured by carriers who limit your ability to discount or risk being in default under an agreement with your biggest customer.)

There is at least one more issue to consider, as well:  State laws on gift certificates and their requirements touching on expiration dates.  Two lawsuits filed in the last week or so -- one against Groupon, and one against LivingSocial -- allege that the relatively short life of the daily deal violates state gift certificate laws.  The plaintiffs' lawyers would like to see these cases certified as class actions.

Bottom line: With the proliferation of high-deductible health plans, and FSAs, HSAs and the like, the general public is becoming more price sensitive in paying for health care services; while health care providers need to become more creative in order to address this issue, they must also remember that they are subject to a tangled web of regulations above and beyond other consumer-facing businesses.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

December 21, 2010

David Harlow quoted in AMA American Medical News story on geolocation services

As health care providers continue to wonder whether and how they should add social media to their mix of communications tactics, new tools -- and new uses for those tools -- continue to sprout up. 

I'm quoted in the current edition of American Medical News in a story that looks at the question of whether and how health care providers should use geolocation services (e.g., Foursquare, Gowalla) as additional channels through which they may communicate with patients, colleagues and referral sources -- or through which they may encourage patients and others to communicate among themselves.

I've touched on this issue in recent presentations on health care social media, and have noted that even "checking in" on line at an STD clinic -- an activity discounted by Mark Scrimshire in the article -- is something that people will do for a badge -- check out this fall's MTV/Foursquare Get Yourself Tested campaign.  (Taking it to the next level, targeted sharing of STD test results is the idea behind start-up Qpid.me.)

Health care providers can leverage the general public's interest in using geolocation services in a variety of ways.  In the the article, Chris Boyer notes that his health system works to ensure that check-in data (addresses and phone numbers drawn from other online services) for each service location is accurate, but doesn't necessarily encourage check-ins.

There are no HIPAA issues raised by patients "checking in" on line, since it's a voluntary act by the patient, and doesn't really involve the provider.  Providers might decide to encourage check-ins (but not repeat visits -- we want to keep people healthy, right?) as a way to drive patients to links to targeted health information, or even, perhaps, coupons for coffee or something (as long as we don't bump up agianst limits on financial incentives ... though I think that would not be an issue under most circumstances.

Physicians and other providers could be encouraged to use geolocation services in ways that could promote crowing about adoption of best practices (hat tip to Nick Dawson) or achieving success in meeting targets for quality measures -- Be the first on your medical staff to become the mayor of the MRSA-free zone!  Get a badge for formulary compliance!

The possibilities are endless, and there are no deal-breaker regulatory restraints -- folks just need to be cognizant of the guardrails.

How would you like to see geolocation services used in health care? 

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

November 22, 2010

Health Care Reform: What Price Progress?

There's a lot of breast-beating going on out there regarding recent "shocking" behavior by many health care provider organizations.  Believe it or not, all across the nation, health care providers are seeking to affiliate/acquire/be acquired in the hopes of creating more efficient, more comprehensive provider networks, which can survive and flourish under new reimbursement regimes designed to squeeze inefficiencies out of the system in an effort to achieve the much-vaunted triple aim of providing high quality health care to ensure population health at a reasonable cost. 

This thread was picked up in Robert Pear's Sunday New York Times piece, Consumer Risks Feared as Health Law Spurs Mergers, which focuses on concerns that prices will go up as health care providers consolidate and gain greater market power.  

Clearly, some structural changes will be required in our health care "system" in order for efficiencies and savings to be realized by us all.  Since in this round of health reform we have not opted for a single payor system, or even a public option (remember the "Gummint out of my Medicare" comments at Obama town hall meetings?), we have to live with the consequences, i.e., continued involvement of market forces.  Thus, savings incentivized by changes in Medicare reimbursement policies will not be realized by the fragmented purchasers of health care services in the private sector unless they are able to adopt a mix of regulatory and market strategies to match those on the provider side (consider, for example, the fraud and abuse and anti-trust exemptions under discussion on the provider side for accountable care organizaitons, or ACOs).

In Massachusetts, we have seen the effects of having the provider market dominated by an 800-pound gorilla (higher prices for services that are not necessarily of higher quality, as documented by the state attorney general's report on the subject and other related state hearing testimony).  It will be very interesting to see what effect the new kid on the block (Cerberus' "Steward Healthcare," which is the new for-profit owner of the formerly Church-owned Caritas Health Care System) has on market dynamics here in the Bay State.  (See Paul Levy's recent take on Cerberus and Caritas, and some older HealthBlawg posts on Caritas -- more here.)  This is but one example of a provider-side strategy for dealing with new realities in the health care marketplace.  Payors may be able to gain firmer footing in their negotiations with provider networks (including dominant networks in their service areas) if they stand their ground.  Thus far, dominant provider networks have been able to cow payors into granting significant concessions, and the costs end up being passed along to the ultimate payors -- the employers and indivuduals who are the payors of ever-increasing premiums.  The reaction to the federales' move to global budgets and shared savings, ACOs and patient centered medical homes, cannot simply be ever-higher cost increases on the non-governmental-payor side.  It's unsustainable, and payors and providers need to work together to fashion a new reality.

Payors that sought to block or modify the ACA now don't want to see it repealed -- the uncertainty would be bad for business.  Providers are largely focused on structural changes (such as the consolidations described in the Robert Pear piece), but must also focus, as Kent Bottles wrote recently, on the cultural changes necessary to enable a more collaborative approach to delivering care in the face of new provider organizational structures, reimbursement systems, and quality metrics.  This is, of course, a requirement in any endeavor involving significant change, and I would add to Kent's recommended reading list John Kotter's writings on change management (highlighted again for me recently at a session I attended at the Annual Healthcare Internet Conference).  Any organization, or group of entities, considering development of an accountable care organization, or ACO, must dig deep into this reading list, and into this approach to thinking about change management.

In the short term, health reform's cost controls focus on ratcheting down fee schedules.  In the long term, however, it's all about moving away from fee-for-service medicine.  This will require broader thinking on the part of both providers and payors, and an openness to collaboration at levels previously unseen.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

 

November 08, 2010

OIG Issues "Roadmap for New Physicians" - A Guide to Avoiding Fraud and Abuse - and Some Thoughts on its Context

In October, the Office of Inspector General issued a report on Fraud and Abuse Training in Medical Education, finding that 44% of medical schools reported giving some instruction in the anti-kickback statute and related laws, even though they weren't legally required to do so. (As an aside, do we really live in such a nanny state? Over half of all medical schools don't teach their students anything about this issue -- because nobody's making them -- even though it is an issue that looms large in the practice of medicine.)  On a more positive note, about 2/3 of institutions with residency programs instruct participants on the law, and 90% of all medical schools and training programs expressed an interest in having dsome instructional materials on the subject of the anti-kickback statute, physician self-referrals (Stark) rules and the False Claims Act.

So in November, the OIG released a Roadmap for New Physicians - A Guide to Avoiding Fraud and Abuse, available on line and as a PDF.  It is a good 30-page primer on the subject.  While some of the examples given are specific to newly-minted physicians, anyone in the health care industry would benefit by reading it.  The document offers a window into the thinking of the OIG, its perspective on the wide range of issues summarized within, and is a good touchstone for any individual or organization seeking to structure a relationship that needs to stay within the bounds of these laws.

Of course, since so much may be changing under the Affordable Care Act, this document may be ripe for revision next year.  For example, the Accountable Care Organization regulations are due to be released in draft form before year-end, and they are expected to include new proposed exceptions and/or safe harbors under these rules.  (Though based on some recent news reports of internal disputes on implementation, one wonders whether the ACO rules will be issued in a timely fashion.)  As payment methodologies move further in the direction of value-based purchasing encompassing bundled and global payments with quality incentives, and provider organizations move further in the direction of the ACO and the patient-centered medical home, the fraud and abuse and self-referral rules, intended as a brake on bad behavior in the context of fee-for-service medicine, become less relevant -- and even become an impediment -- to new systems of care and new systems of financing of that care.

Well, following the recent midterm elections, we are now all entering a period of uncertainty, living up to the supposed Chinese curse: "May you live in interesting times."  (A related supposed Chinese curse: "May you come to the attention of those in authority."  Hmm.)

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

 

October 06, 2010

ACO Workshop: The Feds commit to making Accountable Care Organizations work with safe harbors, waivers

Don Berwick kicked off the day-long Accountable Care Organization (ACO) Workshop and Listening Session, co-hosted by the FTC, CMS and the OIG, with a short, stirring speech that touched on his Triple Aim for health care: better care for individuals, better health for populations and reduced per-capita costs.  He committed the government to interpreting applicable statutes "wisely, so as not to impede the development of ACOs."  That sums up the reason this workshop was so eagerly anticipated.  Health care providers are extremely eager to become ACOs - though the term has yet to be fully defined - yet are extremely concerned about the potential to have specific ACO arrangements identified as illegal by the FTC, the OIG or CMS because the arrangements violate antitrust law, Stark, anti-kickback or anti-fraud and abuse laws, or may be subject to civil monetary penalties.  The health reform legislation authorized these agencies to develop waiver programs and safe harbors in order to implement the ACO concept, and proposed rules doing so will have to be issued this fall in order to have these systems up and running next year, as called for by the law.  Berwick's commitment to make this as pain-free as possible was echoed by FTC Chairman Jon Leibowitz and HHS Inspector General Dan Levinson.  Check out the live-tweeting transcript of the day's events. (Audio of the day's proceedings should be posted in the near future.)

So, this leaves just a few questions:

  • What is an ACO and why are they given special status under the law?
  • Why are waivers or safe harbors needed if ACOs are authorized by the Federal health reform law?
  • What waivers or safe harbors are likely to be proposed in the next month or so?
  • Will these waivers and safe harbors protect ACO activity where the payor is a commercial payor, rather than a federal health care program payor?

What is an ACO and why are they given special status under the law?

The health reform law, now known by its acronym PPACA or ACA (Patient Protection and Affordable Care Act, or simply Affordable Care Act), authorizes (among many other demo and pilot programs) the establishment of a shared savings program known as the ACO program, in Section 3022 (codified as Title XVIII, Section 1899). See CMS Shared Savings (ACO) FAQ for details.  At its core, the law requires that an ACO must:

1) Have a formal legal structure to receive and distribute shared savings
2) Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
3) Agree to participate in the program for not less than a 3-year period
4) Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
5) Have a leadership and management structure that includes clinical and administrative systems
6) Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
7) Demonstrate it meets patient-centeredness criteria, as determined by the Secretary. 

The ACO provision in the ACA has garnered a disproportionate amount of attention, likely because of the opportunity for shared savings and the opportunity for hospitals to more closely ally their affiliated physicians.  However, the point was made time and again at the workshop that the goal of the program is to improve patient care and the patient experience -- without that guidepost at the core, the exercise won't work.

Aside from large IDS's seeking to use the ACO program as a means to protect and potentially grow market share and margin (after all, "no margin, no mission"), why would hospitals want to get involved?  Hospital reimbursement is on the line here: about 70% of costs -- and potential savings -- are on the hospital side of the equation, and much of the control over those costs lies with physicians.  If they are not already employed physicians, the sharing of savings means the hospital will be sharing with the physicians, and not vice versa.  Despite this apparent disincentive, past experience has shown that strong physician-led initiatives can bring hospitals into the fold.  Two examples: the Medicare Physician Group Practice Demonstration Project (an ACO precursor) and the Grand Junction, Colorado experience: a physician-led arrangement initially targeted by the FTC as a price-fixing scheme, eventually resolved through a settlement agreement, and now seen as a national model of collaboration, aligned incentives, cost-effectiveness, and quality improvement.

Why are waivers or safe harbors needed if ACOs are authorized by the Federal health reform law?

The general idea is to get providers across the continuum of care to band together, work on reducing costs and improving quality, continue to be paid on a fee-for-service basis by CMS, and then retrospectively look at system-wide savings (e.g., avoided readmissions) and share those savings around.  Sharing those savings around outside of an integrated delivery system raises a host of potential antitrust, fraud and abuse (anti-kickback), Stark and CMP issues, and the statute authorizes the development of waiver programs and safe harbors in order to make it all work.  It's really a square peg-round hole problem, because the policy basis for making illegal this sort of sharing is grounded on fee-for-service, retrospective reimbursement systems.  Prospective payment, particularly bundled payments for episodes of care, eliminates the potential for the harm these rules protect against (over-provision of care due to financial incentives), yet they are still on the books.  For example, we want physicians to share in the hospital savings experienced as a result of an avoided readmission which would not be eligible for separate reimbursement; this opportunity will incentivize them to work harder to prevent the readmission.  Under current rules, however, a payment by the hospital, directly or indirectly, to the physician, tied to that savings, is impermissible.

What waivers or safe harbors are likely to be proposed in the next month or so?

Federal officials at listening sessions are notoriously tight-lipped, so not much was said about what to expect, other than proposed regulations are expected to come out this fall.  However, all were keen to emphasize that they want to eliminate the regulatory impediments to ACOs, and welcome further comments from the public.

As a whole, the regulated community is eager to have greater certainty, in the form of new regulated guidance; however, some would prefer to simply be guided by what's out there already: advisory opinions, guidelines, regulations, etc., that lay out safe harbors.  For example, the joint DOJ-FTC healthcare antitrust guidelines provide that clinical integration -- even in the absence of full merger or acquisition, or direct employment of physicians by a hospital -- will keep providers out of antitrust hot water even iof they are collaborating in ways otherwise prohibited.  At the other end of the spectrum, some folks would prefer to have the federales get broad authority to issue blanket waivers without establishing super-specific criteria.

Establishing criteria for waivers or safe harbors will be somewhat difficult, because the definition of an ACO is a little slippery. The financial arrangement at its core can be simply a shared savings arrangement, but it might also veer into other territory: underwriting patient expenses such as transportation costs or home monitoring device costs, or the payment of a physician group's up-front capital expenses by a hospital in order to kick-start the process (all potentially illegal inducements under current law).

Many of the comments were directed at ensuring that a particular type of arrangement or organization does not escape the feds' notice, so that they can all be written into waiver or safe harbor language.   

Will these waivers and safe harbors protect ACO activity where the payor is a commercial payor, rather than a federal health care program payor?

The rules at issue are all Federal health program rules -- except for the FTC antitrust rules, which apply across the board. 

A number of forum participants suggested that a rule of reason analysis under the antitrust laws (rather than "per se" analysis) would be needed in order to address market power issues in each unique ACO situation.  It seems to me that such an approach would be throwing away the current opportunity to craft a set of guidelines focused not only on ACOs but on other provider arrangements likely to come down the pike under other ACA demo and pilot authority.  This opportunity should be seized by the other agencies as well -- not just the FTC. 

Final thoughts

Will providers actually come together to form ACOs?  The jury is still out.  There is certainly a lot of noise being made, but the long-term key from both a policy and business perspective is that the efforts of the provider organizations must be to make themselves more patient-centered.  Berwick's emphasis on this point was striking, and he illustrated it with an anecdote from his days of practicing as a pediatrician at Harvard Community Health Plan, where systems were in place to support a patient-clinician partnership at a very high level, suggesting that HCHP was an ACO long ago.  In current-day Massachusetts, Blue Cross Blue Shield of MA has rolled out its Alternative Quality Contract to  a quarter of its provider network; half of the docs involved are in small practices.  While it has taken some years for the AQC program -- another proto-ACO program -- to get off the ground, it is significant because it has allowed for the agglomeration of small practices into a larger whole for purposes of the contract, thus perhaps lighting the way for ACO participation by organizations other than IDS's.

So is this deja vu all over again? Have we stepped back in time a couple of decades to re-experience managed care failures of an earlier era?  Certainly, some rpoviders see the ACO structure as a way to increase market share, margin and bargaining power -- and it's a no-downside financial deal.  As noted above, it cannot be only that.  There are significant costs and potentially difficult negotiations ahead as providers across the continuum work with the regulators to hash out the final status of the ACO landscape, and then deal with integrating themselves into one or more ACOs with a laser focus on patient-centered care.  That focus should yield benefits up and down the line: for patients, providers and ultimate payors in both the public and private sectors.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting