December 2011 ACO Special Edition

ACO - Marketing Under Final Regulations

By Robert H. Schwartz, Butzel Long, Bloomfield Hills, MI

AuthorSection 1899 of the Patient Protection and Affordable Care Act of 2010 (“PPACA”) is silent with respect to marketing activities of Accountable Care Organizations (“ACO”s). The Proposed Rule, however, released on April 7, 2011, pointed to Section 1899(b)(2)(H) of PPACA regarding the requirement that an ACO demonstrate it meets “patient-centeredness criteria”1 specifically requiring that marketing materials be submitted to CMS for approval prior to use. The Final Rule released on October 19, 2011 and effective January 3, 2012 relies on the same criteria, but modifies the Proposed Rule in several significant respects, including the elimination of the requirement that CMS approve marketing materials in advance.

Proposed Rule

The Proposed Rule recites that not only must the ACO provide care coordination, but to be “truly patient centered”2 the ACO must not engage in activities that would prevent a beneficiary from using the full range of benefits of the Medicare fee-for-service program. Misleading or confusing communications would “not be patient centered”3 as they would restrict the beneficiary or caregiver about other choices and limit the ability of beneficiaries to be involved in their own care.

Final Rule

As with the Proposed Rule, the Final Rule uses the “patient-centeredness criteria” as a foundation to address the marketing issue,4 but also points to the need to have patient engagement and transparency as methods of ensuring the protection of beneficiaries.5

Under the Final Rule, marketing materials, communications and activities are defined in Section 425.20 to include, but not be limited to:

“… general audience materials such as brochures, advertisements, outreach events, letters to beneficiaries, web pages, data sharing opt out letters, mailings, social media, or other activities conducted by or on behalf of the ACO, or by ACO participants, or ACO providers/suppliers participating in the ACO, when used to educate, solicit, notify or contact Medicare beneficiaries or providers and suppliers regarding the Shared Savings Program. The following beneficiary communications are not marketing materials and activities: certain information materials customized or limited to a subset of beneficiaries; materials that do not include information about the ACO, its ACO participants, or its providers/suppliers; materials that cover beneficiary-specific billing and claims issues or other specific individual health regulated issues; educational information on specific medical conditions (for example, flu shot reminders), written referrals for health care items or services, and materials or activities that do not constitute “marketing” under 45 CFR 164.501 and 164.508(a)(3)(i)(6).6

Significant Changes from Proposed Rule

The Proposed Rule required that all marketing materials7 be submitted for approval by CMS prior to being used. The Final Rule softens this requirement by permitting the use of marketing materials five days after submission to CMS provided the ACO certifies compliance with the marketing requirements and CMS does not disapprove of the marketing materials and activities.8 Marketing materials are deemed approved after expiration of the initial five-day review period; however, CMS may issue written notice of disapproval after the expiration of the five-day review period.9 No limit on when notice of disapproval may be given is specified in the Final Rule.

This change in the marketing regulation is a softening of the Proposed Rule requiring prior approval by CMS. There is still a significant issue which is not addressed in the Final Rule as to what happens if CMS disapproves of the marketing material after the five day period and the materials have been used, or are in use.

Further, the Final Rule requires that marketing materials and activities must meet all of the following:

  • Use template language developed by CMS, if available;
  • Not be used in a discriminatory manner or for a discriminatory purpose;
  • Comply with §425.304(a) regarding beneficiary inducements;
  • Not be materially inaccurate or misleading.10


An ACO that fails to comply with the marketing regulation either because the materials were not submitted for approval or violated instructions from CMS is subject to penalties under Section 425.216 and termination under Section 425.218.11

Because of the possibility of the above-cited severe sanctions, ACOs will need to be cautious in the dissemination of their marketing materials. For some guidance, ACOs may want to look at the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”) which also provided for marketing restrictions.12


Despite the lack of direction in PPACA, CMS is attempting through the Final Rule to restrict what ACO marketing will, or will not be allowed. Questions remain regarding the timing for certain actions which may be resolved in future rulemaking.


CMS Release 1345-P, 76 Fed. Reg. 19528 (April 7, 2011).


CMS Release 1345P, 76 Fed. Reg. 19551.


Id. at 19551.


CMS Release 1345-F, 76 Fed. Reg. 67945 (November 2, 2011).


76 Fed. Reg. at 67945.


CMS Release 1345-F, 76 Fed. Reg. 67974.


A change that should be noted from the definition of “Marketing” in the Proposed Rule is the inclusion of social media.


Id. at 67981.


Id. at 67982.


Id. at 67982.

11 Id. at 67982.

CMS Release 4131-F, 76 Fed. Reg. at 54208 (2008). MIPPA amended titles XVIII and XIX of the Social Security Act amending various provisions of the Medicare Statute. Section 103 established new statutory prohibitions and limitations for Medicare Advantage (“MA”) Plans and Medicare Prescription Drug (“PDP”) Plans on certain sales and marketing activities. For example, MIPPA specifically prohibits any unsolicited means of direct contact with beneficiaries promoting or selling MA or PDP plans, cross selling of non-health related products and providing meals. It also prohibits sales and marketing activities in healthcare settings excluding common areas and at educational events. MIPPA limits the following: the scope of discussion during an appointment set with a beneficiary to discuss an MA plan or PDP is limited to what was agreed upon with the beneficiary in advance; the ability to use names and logos of co-branded network providers on plan membership and marketing materials; the value of gifts and promotional items provided to beneficiaries; and the compensation paid by plans to agents for selling MA and Part D products. Agents and brokers must be trained and tested. There are also MA marketing requirements before marketing materials can be distributed along with guidelines for certain MA organization marketing. Plans and CMS are to collaborate and share information with the states in advance. Section 42 CFR §422.2262 requires the review of marketing materials. Section 42 CFR §422.2264 sets forth the CMS guidelines for review of marketing materials for MA plans. Section 42 CFR §422.2266 provides for “deemed approval”. Part 423 of the CFR describes the Part D marketing requirements including guidelines for review, deemed approval, standards, licensing of marketing representatives and employer group retiree marketing.

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