October 26, 2018 

Daniel R. Levinson
Inspector General
Office of Inspector General
U.S. Department of Health and Human Services
Attention: OIG-0803-N
Cohen Building, Room 5541C
330 Independence Avenue, SW
Washington, DC 20201 

Submitted electronically via https://www.regulations.gov  

Re: Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP [OIG-0803-N]

Dear Inspector General Levinson,

On behalf of the National Association of Accountable Care Organizations (NAACOS), the largest association of accountable care organizations (ACOs) representing more than 6 million beneficiary lives through more than 370 ACOs, I am pleased to provide our comments on the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) request for information, as published in the Federal Register on Aug. 27, 2018, regarding the federal Anti-Kickback Statute (AKS) and Beneficiary Inducements Civil Monetary Penalties (CMP) law. NAACOS is an ACO member-led and member-owned non-profit organization that works on behalf of ACOs across the nation, including Medicare Shared Savings Program (MSSP), Next Generation Model, and commercial ACOs, to improve the quality of Medicare delivery, population health and outcomes, and healthcare cost efficiency. We share the administration’s goal to accelerate value-based transformation and appreciate the opportunity to provide our views on how modifications to the AKS and the Beneficiary Inducements CMP can further that goal. 

Our specific recommendations, as outlined below, include the OIG:

  • Being mindful of congressional intent to provide unique flexibility for ACOs;
  • Codifying the MSSP waivers to afford participants certainty and stability;
  • Modifying the MSSP waivers to clarify that ACOs can extend waiver protection to other models and provide latitude for technical violations;
  • Coordinating with other agencies regarding the application of MSSP waivers;
  • Maintaining the current role of ACO governing bodies in the waiver-approval process; and
  • Allowing in-kind remuneration as a beneficiary incentive for wellness and managing chronic diseases.

Introduction

As a federal statute with limited, complicated, and technical safe harbors, the AKS inherently creates a chilling effect on strategies to bring providers together. Criminal fines may be up to $25,000 per violation and carry a five-year prison term; civil or administrative remedies may include False Claims Act liability, civil monetary penalties of up to $50,000 per violation, and exclusion from the Medicare program. As a result, healthcare providers and their advisors have grown accustomed to analyzing any novel arrangement involving Medicare providers through the lens of the federal AKS. This may have been appropriate in a purely fee-for-service system, in which provider financial incentives might directly benefit from overutilization or inappropriate utilization of healthcare services. But, as HHS endeavors to transition Medicare reimbursement from volume- to value-based systems, providers should be empowered – not discouraged — to practice coordinated care that promotes better outcomes. In this letter, we discuss several areas where OIG can improve the functioning of the AKS and the Beneficiary Inducements CMP to support ACOs and other value-based models under its existing regulatory authorities.  

At the same time, OIG should be thoughtful and measured in its efforts to modernize the AKS and Beneficiary Inducements CMP. ACOs are built on the premise that tools like shared-savings payments coupled with objective quality measurement can incentivize positive changes in practice patterns, culture, and clinical integration. However, all of these positive effects are based on a formal program with clear oversight by OIG and other regulators, public transparency, and a publicized and well-understood methodology for achieving, calculating, and verifying savings. Furthermore, ACOs are held accountable for the total cost of care they provide, minimizing the threat of overutilization of services.

Unfortunately, not all of the value-based payment programs available in the market have these features. Since most Medicare physician payments continue to be based on a fee-for-service system, uncontrolled physician self-referral can still create overutilization, inappropriate utilization, and referrals otherwise based on financial, rather than clinical goals. These outcomes would seriously undermine HHS’s efforts to achieve the three-part aim of better care for individuals, better health for populations, and lower per-capita costs. Therefore, OIG should ensure that any efforts to modify the AKS and Beneficiary Inducements CMP carefully build on its existing, thoughtful efforts to expand the law while protecting Medicare beneficiaries, the program and the Trust Fund.

Recommendation 1: The OIG should be mindful of Congressional intent to provide unique flexibility for ACOs.

The MSSP is the only permanent program authorized by Congress as an alternative payment model. The OIG should bear this in mind as it develops additional flexibility under the AKS, particularly if these flexibilities extend to other kinds of payment models. The MSSP allows Medicare patients to be attributed to providers, for performance to be assessed on quality and cost measures, and for the Centers for Medicare & Medicaid Services (CMS) to calculate payments based on these metrics. Importantly, the MSSP also includes a number of established protections to ensure that collaborative relationships between physicians and other entities are truly intended to achieve beneficial policy goals. For example, all participants in ACOs undergo thorough advance screening by the OIG and law enforcement agencies. Most importantly, ACOs and their participants do not earn federal shared savings payments unless they actually succeed at reducing the costs of care and meeting patient quality benchmarks.  

Further, the MSSP has continued to satisfy Congress’s intent here, with a track record of meaningfully improving quality and reducing Medicare spending. ACOs have grown into a major part of the delivery system, with more than 10.5 million beneficiaries attributed to ACOs (or nearly a fifth of the Medicare population).1As HHS determined, MSSP ACOs achieved a net spending reduction of over $1 billion in the first three years of the program, with the overwhelming majority of ACOs also improving their performance on quality measures.2This number is based on CMS’s own benchmarking methodology, which likely understates the true savings generated by individual ACOs compared to their own historic costs.3  

Moreover, CMS has relied heavily on the operational infrastructure of the MSSP to influence virtually all of its other quality payment initiatives. For example, the attribution methodology used in the ACO model has been used in several models operated by the Center for Medicare and Medicaid Innovation (CMMI) models as well as the Medicare Quality Payment Program.

Recommendation 2: The OIG should codify the MSSP waivers to afford participants certainty and stability.

In 2011, HHS issued joint waivers of the AKS, Stark Law, and Civil Monetary Penalty Law.4Since HHS first issued these waivers, they have become an essential tool to support the goals of the MSSP. Physicians, hospitals, and other ACO participants could not establish the kinds of relationships necessary to truly redesign care processes, without the flexibility afforded by the waivers. Unfortunately, HHS has also created serious uncertainty about the long-term viability of these waivers. As part of its efforts to modernize the AKS, the OIG should take the opportunity to confirm that the flexibilities of the waivers will remain a permanent part of the program.  

The creation of an ACO requires a large initial capital investment to establish the required infrastructure, engage necessary care coordinators and other personnel, fund care redesign processes, and establish new incentives. At the same time, during this start-up period, ACOs often lack visibility into the reasoning behind administrative changes, shifts in policy focus, and modifications in MSSP administrative priorities. Regulatory uncertainty can make it difficult for prospective ACO entities to justify the capital requirements to develop an ACO. Unfortunately, through its public statements regarding the waivers, HHS has introduced exactly this kind of regulatory uncertainty regarding the permanence of the fraud and abuse waivers. 

HHS did not initially establish the waivers through formal notice-and-comment rulemaking, which carries the highest degree of legal protection under the Federal Administrative Procedure Act. Instead, it has issued a series of notices published in the Federal Register. While HHS has committed to using notice-and-comment procedures if it changes the waivers, its choice of this less-formal structure has created industry concern that the waivers could be reversed at any time. HHS’s own statements have introduced additional uncertainty to the process. In the initial notice establishing the waivers, HHS warned that: “We plan to narrow the waivers . . . unless the Secretary determines that information gathered through monitoring or other means suggests that such waivers have not had the unintended effect of shielding abusive arrangements.”5This language strongly suggested that HHS would narrow or eliminate these essential protections unexpectedly, based on any isolated finding of an improper relationship. While HHS slightly softened this statement in updated waivers issued in 2015, it also reiterated that: “[s]hould we identify specific areas of fraud or abuse resulting from arrangements covered by the waivers, or if we determine that the risks of fraud and abuse associated with waiving our laws for certain arrangements outweigh the benefits associated with the Shared Savings Program, we may propose to revise these waivers or take other appropriate action to address our concerns.”6 These statements create significant uncertainty for ACOs, ACO participants, ACO professionals, and prospective ACO participants. 

In the same 2015 rule, HHS refused requests to codify the waivers as a permanent part of the Code of Federal Regulations.7It cited a number of reasons, including the fact that other waivers (such as waivers of Medicaid rules under Section 1115 of the Social Security Act), are not typically codified, and that it would be administratively complex to codify both Stark Law and AKS provisions. We request that the agency reconsider this determination, particularly in light of its acknowledgement that it would engage in notice-and-comment rulemaking to alter the waivers.8We believe these provisions of the fraud and abuse laws are not comparable to the Section 1115 waivers, in part because they modify (but do not replace) existing and complex program integrity structures for wholly federal programs. While the Medicaid waiver relate to state flexibility under a joint federal-state program, the ACO waivers directly impact the overall federal fraud and abuse regulatory regime that would otherwise apply to Medicare ACOs. Further, if HHS finds it administratively burdensome to codify the Stark Law and AKS provisions, we request that OIG should at a minimum codify the AKS provisions. This is because the Stark Law is a strict liability statute, such that many arrangements might immediately violate the law if the waivers were revoked – regardless of the parties’ good faith intent to work towards the goals of the MSSP.  

Alternatively, in light of HHS’s long experience in operating the MSSP waivers, the OIG should also simply adopt the provisions of the waivers as permanent safe harbors under the AKS. The OIG has the statutory ability to create new regulatory safe harbors under the AKS to protect financial relationships that do not pose a risk of program or patient abuse. The agency has used this authority many times.9 Given the positive track record of compliance with the waivers, the OIG should use the waivers as the basis of a new regulatory exception (or a group of exceptions) for ACO financial arrangements.  

By codifying the AKS provisions of the waivers, HHS would assure ACOs of the permanence and reliability of the waivers, regardless of any underlying programmatic changes or other considerations. This would represent a simple, concrete action that the agency could take to provide much assurance that it remains committed to the success of the MSSP.

Recommendation 3: The OIG should modify the MSSP waivers to clarify that ACOs can extend waiver protection to other models and provide latitude for technical violations.

The OIG should build on its extensive efforts in developing and applying the MSSP ACO waivers as it considers further expansions to the AKS. The agency already has the regulatory authority necessary to fix two longstanding issues with the waivers that may be limiting participants’ ability to engage effectively.  

Since HHS finalized the MSSP ACO waivers, they have become powerful tools to help ACOs encourage various types of providers to work together. However, they have important limitations. Most importantly, the waivers are only available for financial relationships connected to the MSSP (e.g., relationships that are either “reasonably related to the purposes” of the MSSP or based on shared savings earned by an ACO). However, we are concerned that the waivers may not extend to many other kinds of arrangements involving ACOs. 

The two broadest ACO waivers protect arrangements that are “reasonably related to the purposes of the Shared Savings Program.” But in the waivers, HHS stated that arrangements “that are unrelated to the Shared Savings Program are not covered by the term ‘purposes of the Shared Savings Program.”10 At the same time, the agency observed, “[a]rrangements that involve care for non-Medicare patients as well as Medicare beneficiaries are eligible for the waiver.”11This set of statements creates ambiguity that makes it difficult for ACOs to understand how to leverage their existing, redesigned Medicare care models for other purposes (including participation in Medicaid and Medicare Advantage models). ACOs are consistently the first movers among providers to adopt a population health perspective for healthcare delivery, integrate data into patient care operations, and develop new ways to incentivize better care. Each of these factors could be extremely valuable for patients covered by other payers. Unfortunately, CMS’s existing statements create confusion about MSSP’s participants to use their current models to succeed in other contexts. HHS could easily address this uncertainty by clarifying that MSSP ACOs can use the relationships they have already put in place to enter into agreements with Medicaid, commercial, or non-governmental payers.  

Similarly, we are concerned that the waivers continue to create potential pitfalls for technical violations. Avoidance of certain technical violations creates an enormous compliance challenge for entities participating in Medicare. To a large degree, the ACO waivers are designed to minimize the opportunities for such technical non-compliance, by establishing a flexible approach in which the ACO’s governing body is primarily responsible for determining whether an arrangement should be waived. However, certain statements made in HHS’ most recent reauthorization of the waivers in 2015 appear to open the door for new kinds of technical violations. 

For example, HHS states that the waivers will not cover arrangements “unless all criteria for the applicable waiver are met,” and provides the example that “an ACO that fails to have its governing body properly make and authorize a bona fide determination that an arrangement is reasonably related to the purposes of the Shared Savings Program, which is required for the pre-participation and participation waivers, would not have the protection of the waiver unless and until the ACO meets the requirements in this final rule.”12This hypothetical scenario raised by HHS potentially creates liability based on unintentional and immaterial delays in obtaining governing body approval. We urge HHS to reconsider this interpretation and instead confirm that it will consider the intent of the parties and their good faith efforts to comply with the waiver standards before imposing any AKS or CMP liability.  

These modifications to the MSSP ACO waivers are entirely within HHS’s regulatory authority. They represent powerful ways to provide added flexibility to ACOs and improve the operation of the MSSP, without engaging in wholesale rewriting of the law. As a result, we ask the agency to implement these relatively simple – though important – modifications to the waivers.

Recommendation 4: The OIG should coordinate with other agencies regarding the application of MSSP waivers and other fraud and abuse rules related to ACOs.

We appreciate that the OIG is taking action to address the barriers created by the AKS and Beneficiary Inducements CMP for ACOs and other entities participating in value-based payment arrangements. But the AKS and other fraud and abuse laws, such as the Stark law, do not operate in a vacuum. While we recognize that HHS does not have direct legal authority over these distinct governmental entities, its position carries persuasive weight because it is the primary operator of Medicare value-based payment models. As a result, we urge HHS to pursue a strategy of coordinating its AKS modifications with similar efforts to reduce regulatory burden elsewhere.  

Within the federal government itself, several additional regulatory regimes create limitations for ACOs. As it considers any modification to the AKS, OIG should continue its tradition of working with CMS to consider modifications or clarifications to the Stark Law to parallel any improvements to the AKS. Further, we request the OIG expand its focus to collaborate with other federal agencies, such as the Internal Revenue Service (IRS), to address the regulatory barriers created by these entities for coordinated care. For example, IRS regulations continue to limit the ways that non-profit entities (including many hospitals) can work with for-profit entities (including most physician practices, post-acute care providers, and vendors). Under current IRS guidance, non-profit entities that are part of ACOs (including MSSP ACOs) may threaten their tax exempt status by engaging in “private benefit” – including by helping their for-profit ACO partners enter into value-based arrangements with commercial payers.13This limits the growth of value-based payment, as it keeps ACOs from leveraging their existing investment in care redesign to treat patients covered under commercial contracts. OIG has the opportunity to use its leadership in creating value-based payment models to drive change across the federal government.  

OIG also has the opportunity to work to reduce barriers outside the federal government. Many states continue to have anti-kickback laws – state-level restrictions that mirror the federal AKS. Most of these have not been updated with more recent developments, including interpretive changes, regulatory clarifications, and additional exceptions. Others claim to parallel the AKS because they cite various sections of the statute or regulations (although even this is ambiguous in the ACO context, since the waivers are not codified in regulatory text). HHS has traditionally remained silent on these state-level provisions, claiming that it has no authority to preempt state law. Whether or not this is true, the agency has relationships with appropriate regulators throughout state governments and should reach out to states to encourage voluntary efforts to modernize these state-level barriers limiting integrated care. We ask the agency to take this simple step to reduce regulatory burden.

Recommendation 5: The OIG should maintain the current role of ACO governing bodies in the waiver-approval process.

To help mitigate the risk of fraud and abuse, an ACO’s governing body is required to make a bona fide determination that certain care coordination arrangements for which waiver protection is sought is reasonably related to the purposes of the MSSP and to dully authorize the arrangement. This determination is one of several requirements an ACO must meet in order for care coordination arrangements to be protected by these waivers. The OIG also clarified these safeguards in its 2015 final rule updating MSSP waivers. NAACOS agrees an ACO’s governing body plays an important role in the waiver process and appreciates the OIG’s interest in how the process is working, how it could be improved or applied to other APMs and coordinated care arrangements. NAACOS members suggest CMS and the OIG offer ways to avoid inadvertent technical violations, for example, if regulators determine an ACO’s public disclosure isn’t sufficiently detailed. Otherwise, ACOs have expressed little or no displeasure with governing bodies’ role in waivers, signaling the process is smooth, not burdensome yet playing its role in preventing the potential for fraud and abuse.

Recommendation 6: The OIG should allow in-kind remuneration as a beneficiary incentive for wellness and managing chronic diseases.

Congress authorized in the 2015 Bipartisan Budget Act an ACO Beneficiary Incentive Program which CMS outlined in a recently proposed regulation around MSSP. Risk-bearing ACOs are eligible to provide incentive payments to eligible beneficiaries who receive qualifying services. CMS proposes a $20 payment limit, updated annually consistent with the consumer price index and rounded to the nearest dollar, and made no later than 30 days after the service.

NAACOS supports implementation of the Beneficiary Incentive Program but also recommends HHS and CMS make available an optional, initial readiness review for ACOs who intend to use the incentive. This would ensure that ACOs’ communications to beneficiaries along with training materials to providers, care coordinators and staff are in compliance and ACOs are able to make timely payments. HHS should provide ACOs with template language to notify beneficiaries about their new incentive programs, given longstanding concerns about compliance with fraud and abuse laws. HHS and CMS should also allow ACOs to advertise the new Beneficiary Incentive Program. If appropriate, materials would have to be reviewed by CMS prior to use to avoid concern about materials being misleading.

Furthermore, NAACOS recommends allowing for in-kind remuneration as a beneficiary incentive for wellness and managing chronic diseases, specifically for adherence to treatment plans and management programs that promote the health and wellness of beneficiaries. Promoting patient adherence to treatment regimens and chronic disease management programs improves quality of care, care coordination, and patient engagement by promoting community and individual awareness of health risks and resources, while provide valuable beneficiary education. Ultimately, these programs are worthwhile because they could substantially reduce the cost of health care over time. As such, the beneficiary inducement waiver should be revised to specifically allow organizations to provide incentives for beneficiaries to receive preventive services. ACOs are currently allowed to provide preventive care services and items as the incentive, but since ACOs cannot waive co-pays, this element becomes nearly impossible to utilize in the real world.

Conclusion

On behalf of the member ACOs of NAACOS, thank you for the opportunity to share our views on the AKS and Beneficiary Inducements CMP, and the MSSP waivers specifically. We share the administration’s goal to remove unnecessary obstacles to care coordination and applaud HHS for its continued work on transforming the healthcare system into one that better rewards value. We believe waivers have already proven effective in promoting care coordination while maintaining appropriate safeguards against fraud and abuse. 

Sincerely,

Clif Gaus President & CEO

1Compare CMS, Medicare Shared Savings Program Fast Facts, https://www.cms.gov/Medicare/Medicare-Fee-for- Service-Payment/sharedsavingsprogram/Downloads/SSP-2018-Fast-Facts.pdf(January 2018), with CMS, Fast Facts (July 2018), https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/CMS-Fast- Facts/index.html.

2 HHS Office of Inspector General, Medicare Shared Savings Program Accountable Care Organizations Have Shown

Potential for Reducing Spending and Improving Quality, OEI-02-15-00450 (August 2017), https://oig.hhs.gov/oei/reports/oei-02-15-00450.pdf.

3 See e.g., Michael E. Chernew, Christopher Barbey, J. Michael McWilliams, Savings Reported By CMS Do Not Measure True ACO Savings, Health Affairs Blog, June 19, 2017;

4 76 Fed. Reg. 67992.

5 76 Fed. Reg. 68008.

6 80 Fed. Reg. 66471.

7 Id.

8 Id.

942 U.S.C. § 1395nn(b)(4). See also 42 C.F.R. §§ 411.357(j)-(y).

1076 Fed. Reg. 68002.

11 Id. Emphasis added.

12 80 Fed. Reg. 66741.

13 See e.g., IRS Notice 2011-20; PLR 201615022.