Roadblock to Payment & Delivery Reform: the Program Integrity Laws
By Cybil G. Roehrenbeck, American Medical Association, Washington, DC1
Legal Barriers to Innovation
A clarion call resounds from Washington, DC and beyond: stakeholders must find innovative ways to improve the quality and reduce the cost of healthcare. Physicians and other providers are answering this call by leading new efforts to promote care coordination, incentivize value, and define positive outcomes. However, stakeholders that seek to lead and participate in this transformation of care delivery may encounter legal barriers that inhibit their work. In particular, federal and state laws governing program integrity are a barrier to fundamental delivery reform that must be addressed.
Many health law attorneys are familiar with the Ethics in Patient Referrals Act (or “Stark law”),2 the federal anti-kickback statute,3 the civil monetary penalties (“CMP”) law prohibiting hospital payments to physicians to reduce or limit services (the “gainsharing CMP”),4 and the CMP prohibiting beneficiary inducements.5 In a fee-for-service payment system, these “program integrity laws” can serve as a necessary check on inappropriate payment arrangements that are not in the best interest of the patient.
However, in the context of new payment and delivery arrangements that can improve quality and lower costs (e.g. bundling, gainsharing), these laws may be inappropriately triggered. For example, a physician who adopts a bundled payment arrangement in collaboration with a team of physicians and other providers may violate the federal anti-kickback statute. Or, a physician who seeks to provide services like care management, extended office hours, or telephone consultations, may implicate the CMP prohibiting beneficiary inducements.
In April 2012, the Government Accountability Office (“GAO”) issued a report that examined the barrier of the program integrity laws to delivery system innovation.6 The GAO concluded that federal regulators’ legal interpretation of the program integrity laws may “constrain the development of financial incentive programs that would align hospital and physician incentives to provide more cost-effective care.”7 The GAO report also noted that, while regulators have outlined some discrete exceptions to the program integrity laws, “constraints of existing exceptions and safe harbors make it difficult to design and implement a comprehensive program for all participating physicians and patient populations.”8
Waivers for New Initiatives
Groups like the American Medical Association (“AMA”), the American Hospital Association (“AHA”), and the Medical Group Management Association (“MGMA”) have advocated that the program integrity laws should be waived for innovative payment and delivery arrangements,9 which can promote quality, increase coordination, and reduce costs. In the context of the Medicare Shared Savings Program (“MSSP”) for Accountable Care Organizations (“ACOs”), the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services’ Office of Inspector General (“OIG”) agreed and issued broad waivers of the program integrity laws to foster the success of participants in the MSSP.10
Of note, the MSSP waivers cover payment and delivery arrangements made prior to participation in the MSSP, which will allow physicians and other providers to develop arrangements up front that are integral to ACO formation.11 The waivers also extend to arrangements “reasonably related to” the MSSP, which should facilitate care coordination.12 CMS/OIG also issued a “patient incentives” waiver of the CMP prohibiting beneficiary inducements, which gives ACOs the flexibility to encourage preventative care and patient compliance with treatment regimens.13
While these waivers were welcomed by stakeholders, they are limited to the MSSP, and cannot be relied on by physicians and other providers seeking to lead delivery reform efforts outside of that program. For example, these waivers do not extend to demonstrations sponsored by the Center for Medicare & Medicaid Innovation (“CMMI”).14, 15 CMS/OIG noted in the MSSP interim final rule that, “the Affordable Care Act includes separate authority for the Secretary to waive fraud and abuse laws for certain other demonstrations and pilot programs. Guidance regarding such waivers will be issued separately.”16
PPACA does authorize the waiver of the program integrity laws for CMMI demonstrations under Section 3021, but guidance regarding such waivers is still needed.17 For now, CMMI appears to be addressing the applicability of the program integrity laws through the CMMI program application process.18 In addition, CMMI has developed some preliminary guidance on what activities prospective applicants may engage in without running afoul of the federal program integrity laws. For example, CMMI’s Bundled Payments for Care Improvement initiative lays out requirements for gainsharing arrangements.19 While this information helps to cure the concerns of would-be participants in CMMI demonstrations, concrete assurances in the form of prospective, bright line waivers could spur greater confidence and participation.
Other Legal Barriers
Another example of the barrier of the program integrity laws on delivery system reform is the looming 2013 expiration of the both the electronic health record (EHR) exception to the Stark law and the EHR safe harbor from the federal anti-kickback statute. Without these exceptions, these laws may be implicated when physicians and other providers work together through the use of EHRs to coordinate care. Groups like the AMA have noted that “an important part of EHR adoption is ‘knowing what the rules are’ in advance, because EHR adoption can be time consuming and expensive,” and advocated that “physicians who seek to adopt EHRs and utilize them in innovative delivery models should be assured that their systems will not run afoul of the program integrity laws when those protections expire after 2013.”20
Another issue that remains to be addressed is the impact of state program integrity laws on new delivery arrangements. At least 37 states have enacted an anti-kickback statute and at least 34 states have enacted a statute prohibiting self-referral.21 Some of the state laws mirror the federal anti-kickback statute and Stark Law, while others differ considerably.22 These laws largely remain in place, and, if not addressed, could thwart delivery reform. In the context of the MSSP, while CMS/OIG issued waivers of the federal program integrity laws, they did not address state program integrity laws.23 It will be interesting to see how state legislative efforts to reform healthcare payment and delivery address the barrier of state program integrity laws.
As our healthcare delivery system evolves, we must decipher how our current federal and state laws may inhibit or facilitate positive advancement in healthcare delivery. To the extent that our body of law needs to be viewed through a new lens, we should do so now, both to foster quality and cost containment, and to alleviate the anxiety of prospective leaders. In the area of program integrity law, it is clear that greater flexibility is needed to allow appropriate and reasonable care arrangements that can bring significant value to patients.
The views expressed herein are the author’s own and are not necessarily those of the American Medical Association. Cybil G. Roehrenbeck is Washington Counsel for the American Medical Association. Cybil focuses on legal issues regarding healthcare delivery innovation and fraud and abuse compliance. She received her BA and JD from the University of Virginia and the University of Georgia, respectively. She may be reached at firstname.lastname@example.org.
|2 ||42 U.S.C. 1395nn|
42 U.S.C. § 1320a-7b(b)
42 U.S.C. 1320a–7a(a)(5)
Government Accountability Office. Implementation of Financial Incentive Programs under Federal Fraud and Abuse Laws (GAO-12-355). Available at http://www.gao.gov/products/GAO-12-355.
Id. at 37.
Id. at 36.
See American Medical Association. June 3, 2011 Letter to Daniel R. Levinson and Donald Berwick, MD. Available at http://www.ama-assn.org/resources/doc/washington/aca-comment-letter-3june2011.pdf. See also American Hospital Association. June 2, 2011 Letter to Daniel R. Levinson and Donald Berwick, MD, MPP. Available at http://www.aha.org/advocacy-issues/letter/2011/110602-cl-cms-1345-nc2.pdf. See also Medical Group Management Association. June 1, 2011 Letter to Daniel R. Levinson and Donald Berwick, MD. Available at http://www.mgma.com/WorkArea/DownloadAsset.aspx?id=1366448.
Centers for Medicare & Medicaid Services, Office of Inspector General. Medicare Program; Final Waivers in Connection with the Shared Savings Program. 76 Fed. Reg. 67992. Available at http://www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27460.pdf .
|11 ||Id. at 67993.|
Id. at 68002.
Id. at 68001.
|14 ||The Center for Medicare & Medicaid Innovation (CMMI) is charged with fostering health care transformation by finding new ways to pay for and deliver care that improve care and health while lowering costs. The Center identifies, develops, supports, and evaluates innovative models of payment and care service delivery for Medicare, Medicaid and Children’s Medicaid (CHIP) beneficiaries. See http://www.innovations.cms.gov/.|
American Medical Association. February 27, 2012 Letter to Daniel R. Levinson. Available at http://www.ama-assn.org/resources/doc/washington/safe-harbors-and-fraud-alerts-letter-27feb2012.pdf.
Centers for Medicare & Medicaid Services, Office of Inspector General. Medicare Program; Final Waivers in Connection with the Shared Savings Program. 76 Fed. Reg. 67993. Available at http://www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27460.pdf.
Pub. L. 111-148. Patient Protection and Affordable Care Act (“PPACA”). March 23, 2010.
See Bundled Payments for Care Improvement initiative Request for Application, the Centers for Medicare and Medicaid Innovation, at 24 – 24. Available at http://www.innovations.cms.gov/Files/x/Bundled-Payments-for-Care-Improvement-Request-for-Applications.pdf.
|20 ||American Medical Association. February 27, 2012 Letter to Daniel R. Levinson. Available at http://www.ama-assn.org/resources/doc/washington/safe-harbors-and-fraud-alerts-letter-27feb2012.pdf.|
|21 ||See American Medical Association. June 3, 2011 Letter to Daniel R. Levinson and Donald Berwick, MD. See also Kaiser Family Foundation. State Health Care Fraud Laws, 2009. Available at http://www.statehealthfacts.org/comparemaptable.jsp?ind=790&cat=4.|
|23 ||Centers for Medicare & Medicaid Services, Office of Inspector General. Medicare Program; Final Waivers in Connection with the Shared Savings Program. 76 Fed. Reg. 67993. Available at http://www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27460.pdf.|
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