Widening the scope of legal protections for fast-growing Medicare managed-care plans, providers, insurers and regulators late last week signed an enforcement proposal that would exempt healthcare organizations that share risk from federal kickback laws.
If a regulation based on the agreement takes effect, it would mark the first time that risk-sharing organizations have been clearly exempted from kickback enforcement efforts, said D. McCarty Thornton, chief counsel to HHS' inspector general's office, who signed the agreement on behalf of the federal government.
Although federal prosecutors never sued, Thornton said, any managed-care plan that negotiates a discount with a provider in return for increased Medicare volume technically has violated kickback statutes.
The 1972 Medicare anti-kickback statutes barred any form of remuneration to induce the referral of Medicare or Medicaid patients, but the inspector general's office had not actively prosecuted violations.
In a 1996 health insurance reform law, Congress instructed HHS to create the exemption for risk-sharing organizations. Thornton said it would take about three months for a regulation to be published and implemented.
In the final draft of the proposal, federal regulators backed off a provision that provider groups said would prevent physician-hospital organizations from entering direct contracts with employers.
About 40% of Medicare beneficiaries who receive care on a fee-for-service basis are members of employer-paid plans as retirees or employees.
PHOs that contract with employer plans that include Medicare beneficiaries among their enrollees would be considered within the newly proposed legal "safe harbor" for risk-sharing organizations.
That would be the case only if the PHO was paid on an at-risk basis by a health plan. It would not cover an instance where a PHO owns an interest in a plan that is billing Medicare on a fee-for-service basis.
In such a case, the inspector general's office said, PHO members technically would be at risk for meeting utilization goals. But because the plan still would bill Medicare on a fee-for-service basis, PHO members, which are also investors, could see a rise in their income with increased referrals within the PHO.