Dodg­ing an ACO chill­ing ef­fect

Reg­u­la­tors ease up on provider col­lu­sion warn­ings

Modern Healthcare - - THE WEEK IN HEALTHCARE - Joe Carl­son

Although the mam­moth CMS fi­nal rule guid­ing Medi­care ac­count­able care or­ga­ni­za­tions en­cour­ages close co­op­er­a­tion among health­care providers, a com­pan­ion set of rules from reg­u­la­tory agen­cies re­minds hos­pi­tals and doc­tors that too much col­lab­o­ra­tion is still il­le­gal.

How­ever, ex­perts say reg­u­la­tors have sig­nif­i­cantly di­aled back their warn­ings to providers about avoid­ing col­lu­sion and fraud in a new in­terim fi­nal rule and en­force­ment guid­ance state­ment last month on how an­titrust, kick­back and self-re­fer­ral laws will be en­forced against ACOS. The changes fol­low a del­uge of pub­lic com­ments sug­gest­ing how the older, stricter pro­pos­als would have a chill­ing ef­fect on the for­ma­tion of ACOS.

Crit­i­cally, the four agen­cies have nixed two sep­a­rate le­gal ap­provals re­quired un­der the draft rules gov­ern­ing the ini­tia­tive, which is of­fi­cially known as the Medi­care Shared Sav­ings Pro­gram in the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

The pro­posed rule, is­sued March 31, was widely panned as too re­stric­tive. The CMS and HHS’ in­spec­tor gen­eral’s of­fice would have re­quired po­ten­tial ACOS to seek spe­cific waivers to the strict fed­eral laws that would nor­mally work to pre­vent col­lu­sion among health­care providers, in­clud­ing the anti-kick­back statute, the Stark law, and the in­spec­tor gen­eral’s au­thor­ity to im­pose civil mone­tary penal­ties.

Mean­while, the Fed­eral Trade Com­mis­sion and the Jus­tice Depart­ment had pro­posed all ACOS per­form an in­ten­sive mar­ket anal­y­sis of whether the new or­ga­ni­za­tions would have too much mar­ket power to con­trol prices, in­clud­ing a manda­tory re­view by the agen­cies in cases where ACOS con­trolled more than 50% of any ser­vice line in their pri­mary ser­vice area.

Both re­quire­ments would have forced ACOS to seek pre-ap­proval from the govern­ment in or­der to be ap­proved as a Medi­care ACO.

The in­terim fi­nal rule—which will be­come fi­nal af­ter a 60-day pub­lic com­ment pe­riod— now says nei­ther pre-ap­proval is needed, though the agen­cies are re­tain­ing en­force­ment pow­ers to use on ACOS when needed.

“For there to be im­prove­ments in qual­ity of care and to get a han­dle on ris­ing costs, some co­or­di­na­tion among en­ti­ties that might other­wise com­pete in the mar­ket is go­ing to be re­quired and in­deed should be en­cour­aged,” said Chris Gor­don, a prin­ci­pal and an­titrust lawyer with Washington-based Squire San­ders. “What I see go­ing on is (reg­u­la­tors) try­ing to rec­og­nize that and en­cour­age it, while at the same time mak­ing sure the checks are still in place.”

A Medi­care ACO is de­signed to bring to­gether health­care providers from hos­pi­tals, physi­cians of­fices and else­where into a sin­gle or­ga­ni­za­tion that can co­or­di­nate and track pa­tient care more ef­fi­ciently than is done now and gen­er­ate sav­ings for the health­care sys­tem.

Many sim­i­lar or­ga­ni­za­tions and al­liances that pre-dated the re­form law also in­cluded pay­ers that would dis­trib­ute any sav­ings among the providers. The ACO rules laid out by the CMS don’t fo­cus on that pos­si­bil­ity since Medi­care is the payer that will be shar­ing the sav­ings, though the an­titrust rules specif­i­cally note that many providers say they in­tend for their Medi­care ACOS to also work with pri­vate pay­ers, which would trig­ger an­titrust li­a­bil­ity.

Even pro­po­nents of ACOS ac­knowl­edge that the or­ga­ni­za­tions will re­quire fed­eral reg­u­la­tors to tol­er­ate prac­tices that they other­wise dis­cour­age, such as con­sol­i­dat­ing mar­ket share and pay­ing doc­tors for re­fer­ral ac­tiv­ity. That’s why the re­form law, in ad­di­tion to pre­scrib­ing the cre­ation of ACOS, di­rected reg­u­la­tors to tell health­care providers ex­actly how they could avoid run­ning afoul of the law.

In con­junc­tion with the re­lease of the fi­nal rule Oct. 20, the FTC and Jus­tice Depart­ment re­leased their 18-page re­vised state­ment of an­titrust en­force­ment pol­icy for ACOS, of­fer­ing providers spe­cific ad­vice for how to be­have, es­pe­cially in cases where con­sol­i­dated mar­ket power could at­tract scrutiny.

The ef­fect, ob­servers say, was to put the bur­den of en­force­ment back onto the govern­ment, in­stead of forc­ing providers to prove up front that their plans were le­gal.

“They as­sume any pro­gram in the shared sav­ings pro­gram will gen­er­ate higher qual­ity and cost sav­ings for con­sumers,” said Christi Braun, a lawyer with Mintz Levin in Washington. “Un­less they have com­plaints from some­one like a pri­vate payer that the group is en­gaged in con­duct that is push­ing prices out of line, an ACO is not likely to be pros­e­cuted by the FTC or the DOJ.”

The state­ment says providers can ask for a 90-day, ex­pe­dited re­view of their ACO plans vol­un­tar­ily from a joint com­mis­sion and Jus­tice Depart­ment of­fi­cials, with pro­ce­dures sim­i­lar to the in­spec­tor gen­eral’s ex­ist­ing ad­vi­sory opinion process for po­ten­tial Stark and kick­back cases.

Mean­while, the CMS and HHS’ in­spec­tor gen­eral re­laxed the rules and broad­ened five spe­cific waivers in their 83-page in­terim fi­nal rule also re­leased Oct. 20. Robert Nauman, a se­nior as­so­ci­ate at Squire San­ders in Colum­bus, Ohio, said the waivers are likely to be­come more spe­cific over time.

“They in­tend to nar­row this as the pro­gram evolves, un­less they de­ter­mine that these pro­grams did not have the un­in­tended con­se­quence of con­tribut­ing to abu­sive re­la­tion­ships,” Nauman said. “I see this as at least an at­tempt to get out of the way a lit­tle bit to let this pro­gram de­velop.”

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