CMS and OIG Finalize Waivers for ACOs in the Medicare Shared Savings Program


Effective October 29, 2015, the Centers for Medicare & Medicaid Services (“CMS”) and the Office of Inspector General (“OIG”) of the Department of Health & Human Services (“HHS” or “the Department”) finalized the waivers of certain fraud and abuse laws to specified arrangements involving accountable care organizations (“ACOs”) in the Medicare Shared Savings Program (“MSSP”).

The waivers apply to the physician self-referral law, the Federal anti-kickback statute, and the civil monetary penalties (“CMP”) law provision relating to beneficiary inducements. The waivers were originally published in an Interim Final Rule with comment period (“IFC”) on November 2, 2011, as part of a joint publication by CMS and OIG. With the IFC set to expire on November 2, 2014, CMS and OIG extended the effectiveness of the IFC and the timeline for publication of a final rule through November 2, 2015. CMS and OIG beat the clock again as they published their final rule finalizing the waivers on October 29, 2015, effective immediately.

The Waivers Remain Largely Unchanged

The final rule largely implements the five waivers as proposed in the IFC, with the following exceptions:

  • Due to legislative changes that occurred after publication of the IFC, the final rule does not finalize waivers of the CMP law provision relating to “gainsharing” arrangements, as CMS and OIG found it is no longer necessary to carry out the MSSP. At the time the IFC was published, hospitals were prohibited from knowingly paying physicians to induce them to reduce or limit services, including medically unnecessary services. The statute has since been amended so that hospitals are now prohibited from knowingly paying physicians to induce them to reduce or limit medically necessary services. Thus, waiving the gainsharing provision of the CMP was no longer necessary, since the MSSP “promotes quality and patient care goals, like fostering efficient medically necessary care, but not stinting on medically necessary care.”
  • In condition 4 of the pre-participation and participation waivers, “should” is changed to “must” so that the ACO governing body’s documentation must provide the basis for the determination that an arrangement is reasonably related to the purposes of the MSSP.
  • The term “home health supplier” is defined to mean a provider, supplier or other entity that is primarily engaged in furnishing home health services. This is particularly relevant for the pre-participation waiver since it excludes home health suppliers.
  • Certain technical or scrivener’s errors were corrected.

The Waivers are Necessary to Carry out the MSSP

Based on public input, the Department’s own analysis, and CMS’s experience over the last four years with the MSSP, the Secretary of HHS determined that the waivers are necessary to carry out the MSSP. The MSSP is a program implemented under the Affordable Care Act designed to achieve three goals: (i) better care for individuals, (ii) better health for populations, and (iii) lower growth in expenditures. The waivers help facilitate coordinated care arrangements and innovative integrated-care models that could otherwise be impeded or restricted by fraud and abuse laws, such as arrangements involving the provision of EHR systems, IT services, or free care management personnel. The five waivers included in the final rule are:

  • The ACO pre-participation waiver (applying to ACO start-up arrangements);
  • The ACO participation waiver (applying to ACO-related arrangements during the term of the ACO’s participation agreement);
  • The shared savings distributions waiver (applying to distributions and uses of shared savings payments);
  • The compliance with physician self-referral law waiver (applying when an existing exception to the physician self-referral law is met); and
  • The patient incentive waiver (applying to incentives offered to beneficiaries to encourage preventative care and compliance with treatment regimes).

Additional Guidance on Arrangements Not Protected by the Waivers

While the waivers remain mostly unchanged in the final rule, OIG and CMS did provide additional examples of arrangements that would not be considered “reasonably related” to the purposes of the MSSP, and therefore would not be protected by the waivers, including:

  • An arrangement whereby a physician, a physician practice, or other provider is required to pay a sum to receive ACO-related referrals (e.g., ‘‘pay-to-play’’ arrangements);
  • Medical directorships or personal service arrangements where referring physicians or other providers receive payments for no actual services performed;
  • Payments to induce a physician or other provider to stint on medically necessary care for beneficiaries; or
  • Free gifts, such as sporting event tickets, to referring ACO providers/suppliers or ACO participants.

CMS and OIG also emphasized the importance of following the procedural requirements for the waivers to apply. Although the waivers are self-implementing, the ACO’s governing body must make a bona fide determination that the arrangement is reasonably related to the purposes of the MSSP and must authorize the arrangement. According to the commentary, “[i]t is essential that an ACO have sufficient documentation to identify clearly the arrangement its governing body is considering, and to be able to point to the basis or bases for the decision that an arrangement is ‘reasonable related’ to the purposes of the [MSSP].” Although the guidance acknowledges that a written resolution would be a best practice, the form that this documentation should take is not specified.

The Future of MSSP ACOs and the Waivers

Although the IFC contained commentary suggesting that the waivers may be narrowed in the future, the final rule stated that “the waivers are adequately protecting beneficiaries and Federal health care programs while promoting innovative structures within the [MSSP].” However, CMS and OIG will continue to monitor ACOs and their shared savings arrangements, and may consider additional rulemaking if necessary.

This final rule demonstrates CMS and OIG’s commitment to the MSSP and redesigning care delivery models to promote accountability for the cost and quality of health care. These agencies recognize the need for flexibility within the current regulatory landscape in order to promote certain beneficial arrangements and activities, while still balancing protections for beneficiaries and Federal health care programs. With careful navigation, providers can continue to innovate and improve on delivering coordinated, efficient, and high quality care.

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