By Kim H. Roeder and Sara Kay Wheeler
Excerpted from a new chapter written for the June 2016 quarterly report by Kim H. Roeder and Sara Kay Wheeler, partners with King & Spalding LLP[1], “A Compliance Officer’s Guide to the Stark Law and Regulations,” in The Health Care Compliance Professional’s Manual, published by Wolters Kluwer and HCCA.
Section 3302 of the Patient Protection and Affordable Care Act (“PPACA”) established the Medicare Shared Savings Program (“MSSP”) to facilitate provider cooperation in order to improve the value of care provided to beneficiaries. Under the MSSP, eligible providers, suppliers and hospitals may voluntarily form or join Accountable Care Organizations (“ACOs”) to coordinate care for Medicare fee-for-service beneficiaries. The goal is to improve quality and lower costs by providing seamless care to beneficiaries through cooperation and coordination among providers. The MSSP provides financial incentives to ACOs that lower the growth of health care costs while also meeting certain quality of care standards. The ACOs, in turn, incentivize the individual providers within their organizations to do the same. On November 2, 2011, CMS published final rules regarding the MSSP and the eligibility and payment of ACOs under the MSSP; these rules were thereafter amended in 2015.[1] In order to participate in the MSSP, an ACO must satisfy applicable requirements at 42 C.F.R. § 425, apply to CMS and be accepted.
Many industry stakeholders expressed concern to the OIG and CMS that the Stark Law, Anti-kickback Statute, and the civil monetary penalty statute (“CMP”) regarding inducements to beneficiaries and payments by hospitals to physicians to limit services impeded the necessary coordination of care for the ACO models. Accordingly, CMS and OIG published a joint rulemaking on November 2, 2011, waiving the application of the Stark Law, Anti-kickback Statute, the beneficiary inducement CMP, and the gainsharing CMP to ACOs formed under the MSSP.[2] These waivers were subsequently amended and published in 2015.[3] The agencies established the following five (5) waivers, three (3) of which waive the application of the Stark Law: (i) the ACO Pre-Participation Waiver; (ii) the ACO Participation Waiver; (iii) the Shared Savings Distribution Waiver; (iv) the Compliance with the Stark Law Waiver; and (v) the Waiver for Patient Incentives. The following three (3) waive the application of the Stark Law, among other laws, if the conditions for each waiver are met:
1. The ACO Pre-Participation Waiver. This waives the application of the Stark Law with respect to the start-up arrangements that pre-date an ACO’s participation agreement with CMS for participation in the MSSP. In sum, the requirements for qualification include:
· The parties must include, at a minimum, the ACO or at least one ACO participant of the type eligible to form an ACO. The parties may not include distributors, DME suppliers, home health suppliers or drug manufacturers or device manufacturers;
· The arrangement is undertaken in good faith to develop an ACO to participate in the MSSP and to submit a completed application for that year;
· The parties must be taking diligent steps regarding governance, leadership and management to develop the ACO to be eligible for a participation agreement that would become effective during the target year;
· The ACO’s governing body has made and duly authorized a bona fide determination that the arrangement reasonably relates to the MSSP’s purpose;
· The description of the arrangement must be publicly disclosed at a time, place and manner established by the Secretary, but the disclosure does not need to include the financial or economic terms of the arrangement; and
· The arrangement, governing body authorization and diligent steps to form the ACO must be documented and must identify the following:
· A description of the arrangement, including the parties, the date, the purposes the items, services, facilities, and/or goods covered, and the arrangement’s financial or economic terms;
· The date and manner of the governing body’s authorization and the basis for the determination; and
· A description of the diligent steps taken to develop the ACO.
· If the ACO does not submit an application for MSSP participation by the last available date for the target year, the ACO must submit a statement by that last target year deadline describing the reasons it was unable to submit an application.
2. The ACO Participation Waiver. This waives the application of the Stark Law with respect to any arrangement of the ACO, one or more of its participants or its providers/suppliers, or a combination of them. There are several requirements for qualification:
· The ACO must have entered into a participation agreement with CMS and remain in good standing;
· The ACO must meet the requirements of 42 C.F.R. § 425.106 and 425.108 regarding governance, leadership and management;
· The ACO’s governing body must have made and duly authorized a bona fide determination that the arrangement reasonably relates to the MSSP purpose;
· The description of the arrangement must be publicly disclosed at a time, place and manner established by the Secretary, but the disclosure does not need to include the financial or economic terms of the arrangement; and
· The arrangement and the governing body authorization and documented and identify the following:
o A description of the arrangement include the parties, the date, the purpose, the items, services, facilities, and/or goods covered, and the arrangement’s financial or economic terms; and
o The date, manner and basis of the governing body’s authorization.
3. The Shared Savings Distribution Waiver. This waives the application of the Stark Law with respect to distributions of shared savings of an ACO or the use of shared savings of an ACO. An ACO may qualify for this waiver if several requirements are met:
· The ACO must have entered into a participation agreement with CMS and remain in good standing;
· The shared savings must be earned by the ACO pursuant to the MSSP;
· The shared savings must be earned during the term of the participation agreement, even if the distribution or use occurs following the expiration;
· The shared savings must either be: (i) distributed to or among the ACO’s ACO participants, its ACO providers/suppliers, or individuals and entities that were its ACO participants or its ACO providers/suppliers during the year that the shared savings were earned by the ACO; or (ii) used for activities reasonably related to the MSSP purposes.
4. Compliance with the Stark Law Waiver. This waives the application of the federal anti-kickback statute[4] with respect to any financial relationship between or among the ACO, its ACO participants and its ACO providers/suppliers that implicates the Stark Law if the following conditions are met:
· The ACO must have entered into a participation agreement with CMS and remain in good standing;
· The financial relationship is reasonably related to the purposes of the MSSP; and
· The financial relationship fully complies with an exception under the Stark rules at 42 C.F.R. § 411.355 through § 411.357.
Although these waivers provide broad Stark Law protection, they only apply to ACOs participating in the MSSP and approved by CMS. They do not apply to commercial ACOs, any other ACOs not approved by CMS for participation in the MSSP or other integrated delivery models. Such arrangements must comply with the Stark Law and any other applicable laws.[5]
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