“ACOs are premised on collaboration and integration, innovation, and contributions from all participants—often in-kind—towards success of the overall operation,” AHA Executive Vice President Richard Pollack wrote in June 2 comments to HHS. “The Stark law is premised on keeping providers at arm’s length, suspicion of remuneration, rigorous and detailed formalities, and strict liability.”
The waiver ideas were issued March 31 along with an overall framework for the organizations, as well as guidance on how they would fit within the landscape of antitrust and tax laws (April 4, p. 6).
The CMS and HHS’ inspector general’s office suggested ACOs be exempt from the Stark law restrictions on physicians making referrals to hospitals with which they have a financial relationship; the anti-kickback statute’s prohibition against paying physicians for referrals; and the federal civil monetary penalties for hospitals that pay physicians to reduce patient care.
However, in each case the waivers would apply only to financial payments that were part of the “shared savings” from increased efficiency from ACOs—not to in-kind payments such as the sharing of staff and resources, and not for any start-up expenses incurred before the benefits of increased efficiency begin to take effect.
Those omissions garnered some of the most critical commentary from healthcare providers.
David Glaser, a shareholder in the law firm Fredrikson & Byron in Minneapolis, also noted that the waivers would not apply to the efficiencies made on behalf of commercially insured patients in the ACOs—only Medicare and Medicaid beneficiaries. Glaser said that like many healthcare lawyers, he stayed up late and tried to read all of the government’s various ACO proposals when they were publicly released in March. And by the time morning came, he had one conclusion: “I thought, why would you do this?”
The AHA and other organizations urged HHS regulators to scrap the current proposal and create a blanket “ACO Waiver” that would preempt the Stark law and provide wide-ranging and longer-lasting protections for hospitals and physicians that form ACOs.
America’s Health Insurance Plans, however, said in comments to HHS that anything beyond the currently proposed waivers would give providers avenues to covertly shift more costs from Medicare and Medicaid patients onto private payers. Officials for the trade group wrote that if HHS allowed a loan between a hospital and a physician to qualify for protection as in-kind financial contribution to the start-up costs of an ACO, that loan could be used to induce improper conduct in other contexts—such as the physician’s non-ACO patient referrals in commercial plans.
John Kirsner, a partner in the law firm Squire Sanders in Columbus, Ohio, said he agreed with the AHA that the waivers should extend beyond just the direct payments for efficiency improvements. “From my standpoint, the waivers were not broad enough, only applying to a distribution of shared savings,” he said. “The moment you get beyond shared savings, you are back to the Stark analysis.”