anti kickback statute and stark law in managed care...
TRANSCRIPT
Presenting a live 90‐minute webinar with interactive Q&A
Anti‐Kickback Statute and Stark Law Compliance in Managed Care ContractsNavigating Safe Harbors and Physician Incentive Plan Rules, Limiting Civil Monetary Penalty Exposure
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, JULY 18, 2013
Today s faculty features:
J. Mark Waxman, Partner, Foley & Lardner, Boston
Donald H. Romano, Of Counsel, Foley & Lardner, Washington, D.C.
The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Tips for Optimal Quality
S d Q litSound QualityIf you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection.
If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-258-2056 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail [email protected] immediately so we can address the problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
Viewing QualityTo maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key againpress the F11 key again.
Continuing Education Credits FOR LIVE EVENT ONLY
For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:
• In the chat box, type (1) your company name and (2) the number of attendees at your locationattendees at your location
• Click the SEND button beside the box
If you have purchased Strafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form).
You may obtain your CLE form by going to the program page and selecting the appropriate form in the PROGRAM MATERIALS box at the top right corner.
If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.
Program Materials
If you have not printed the conference materials for this program, please complete the following steps:
• Click on the + sign next to “Conference Materials” in the middle of the left-hand column on your screen hand column on your screen.
• Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program.
• Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.
5
Anti-Kickback Statute and Stark Law Compliance in Managed Care Contracts: A Focus on the AKS Safe Harbors, Stark S Sa e a bo s, StaExceptions, and the PIP Rule
J Mark WaxmanJ. Mark [email protected]
Don RomanoDon [email protected]
©2012 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500
The Managed Care World
6
The Managed Care World
Given impetus by Federal programs in Given impetus by Federal programs, in particular the ACO/MSSP program and Medical Home demonstration projectsp j
Pushed along by Plans seeking to create their own “Accountable Care Organizations”g
Embraced by some states, most recently by Massachusetts, which will legislatively mandate bundled payments, tiered networks, and other “alternative payment methodologies”
©2012 Foley & Lardner LLP
Managed Care Str ct res
7
Managed Care Structures
Its own alphabet soup HMO PCCM Its own alphabet soup – HMO, PCCM, Coordinated Care Plans (MA Plans), IDS, IPAs, PPOs, etc. ,
But for analysis purposes, “follow the money” –– The Plan (Or the employer, ERISA Plan, Plan ( p y , ,
Sponsor, etc).– The First Tier Contractors– Second Tier Contractors– Downstream Contractors
©2012 Foley & Lardner LLP
What’s an MCO?
8
What’s an MCO? It is not defined, but it really is any entity in the change , y y y g
of payments to physicians by an entity downstream from the plan
CMS commentary: “The new exception [at 411.357(n)] y p [ ( )]is meant to cover all risk-sharing compensation paid to physicians by an entity downstream of any type of health plan, insurance company, HMO or…IPA provided the arrangement relates to enrollees and meets the the arrangement relates to enrollees and meets the conditions set forth in the exception. All downstream entities are included. We purposefully decline to define [an MCO] so as to create a broad exception with [an MCO] so as to create a broad exception with maximum flexibility.” 69 Fed. Reg., at 16114.
Note: It will not cover funds contributed to set up an IPA, PHO, to fund infrastructure.
©2012 Foley & Lardner LLP
IPA, PHO, to fund infrastructure.
First and Second Tiers
9
First and Second Tiers
First Tier Arrangements First Tier Arrangements– A first tier contractor means an individual or entity that has a
contract directly with a plan or other “eligible managed care organization” to provide for or arrange for items or services
Second Tier or Downstream Arrangements– Arrangements between the first tier contractor and those
“downstream” or at the same level, i.e. where both ,organizations have a contract with the first tier entity
– More specifically, a downstream contractor “means an individual or entity that has a subcontract directly or indirectly
ith fi t ti t t f it i th t d with a first tier contractor for items or services that are covered by the first tier contract”
©2012 Foley & Lardner LLP
Managed Care Payment Relationships; A Focus on
10
Hospital – Physician Arrangements
The variety we see—– Risk share (“gain share”) payments between a hospital and
physicians who refer Medicare business or between a Plan physicians who refer Medicare business, or between a Plan and physicians based on hospital costs
– Discounts offered to a risk bearing IPA by a hospital – Discounts offered to a hospital by physicians who want to be in
th h it l’ t k f d t ti the hospital’s network for managed care contracting purposes– Hospitals and physicians who divide funds from a “bundled
payment” – Subcapitation arrangements between a provider (e g a Subcapitation arrangements between a provider (e.g. a
hospital) and another type of provider (e.g. orthopedic surgeons
– And other arrangements, which may include P4P and quality bonus arrangements or thresholds thrown in
©2012 Foley & Lardner LLP
bonus arrangements or thresholds thrown in
A ke q estion for anal sis
11
A key question for analysis
What kind of Plan is at the top of the food chain? What kind of Plan is at the top of the food chain?– This will determine the applicability of AKS safe harbors, the
Stark exception, the SFR exception
There are many plans and in applying the various There are many plans, and in applying the various potential safe harbors, or exceptions, the greatest opportunity for flexibility occurs when the plan is a risk based plan such as a Medicare Advantage (MA) plan a based plan such as a Medicare Advantage (MA) plan, a competitive medical plan (CMP), a prepaid health plan or another type of plan that operates under a risk based contract with CMS or a State health care based contract with CMS or a State health care program
Initially for our purposes, we will assume that the Plan is a MA plan
©2012 Foley & Lardner LLP
is a MA plan
The Analysis Begins: The Anti-Kickback St t t
12
Statute
SSA Section 1128B – Criminal penalties SSA Section 1128B Criminal penalties (42 USC 1320a-7b)--”Knowingly and willfully solicits are receives …any
kickback or rebate directly or indirectly ”kickback …or rebate…directly or indirectly…”-- “…in return for referring…for the furnishing or
arranging for the furnishing any item or service for which payment may be made ”which payment may be made...
-- “…in return for purchasing, leasing, ordering or arranging for or recommending …any good, facility service or item ”service or item…
-- “…for which payment may be made in whole or in part under a Federal health care program…”
©2012 Foley & Lardner LLP
Th AKS M d C S f H b
13
The AKS Managed Care Safe Harbors
42 CFR 1001.952 [“952”][All regulatory references are 42 CFR 1001.952 [ 952 ][All regulatory references are to 42 CFR 1001.952 unless otherwise noted] – A statement of what is NOT remuneration for purposes of Section 1128B (42 USC 1320 a-7(b))Section 1128B (42 USC 1320 a 7(b))
Discounts -- 952(h) and 42 USC 1320a-7(b)(b)(3)(A)
Increased coverage, reduced cost sharing amounts or reduced premium amounts offered by health plans –reduced premium amounts offered by health plans 952(l)
Price reductions offered to health plans – 952(m)
©2012 Foley & Lardner LLP
AKS M d C S f H b t
14
AKS Managed Care Safe Harbors, cont.
Price reductions offered to eligible Price reductions offered to eligible managed care organizatins (“EMCOs”) –952(t)952(t)
Price reductions offered by contractors ith b t ti l fi i l i k (“SFR”) t with substantial financial risk (“SFR”) to
managed care organizations – 952(u)
©2012 Foley & Lardner LLP
The most flexible safe harbor – The EMCO f h b 952(t)
15
EMCO safe harbor – 952(t)
The Eligible Managed Care Organization The Eligible Managed Care Organization (EMCO) is the most flexible (42 CFR 1001.952(t))( ))
Remuneration does NOT include any paymentsbetween an EMCO and a first tier contractor for “items or services” if three standards are met(1) A signed written agreement, for at least a year,
fspecifies the covered items and services, and no other claims to a federal health care program from the first tier contractor
©2012 Foley & Lardner LLP
C diti f EMCO fi t ti t
16
Conditions for EMCO first tier payments(2) No swapping(3) No shifting of costs to claim increased payments from a Federal
health care program
Items or services are: Health care items, devices, supplies or Items or services are: Health care items, devices, supplies or services OR those services reasonably related to the provision of such, including non-emergency transportation, patient education, social services (e.g. case management), UR, QA, but not marketing or pre-enrollment activitiesor pre enrollment activities
Thus, if part of the payment package includes any item or service listed, it will not be construed as a payment to induce referrals from the plan (e.g. we will provide non-emergency transportation to plan enrollees free obesity education take home supplies) it to plan enrollees, free obesity education, take home supplies), it will not run afoul of the AKS
If the arrangement includes a marketing component, it would not be within the safe harbor
©2012 Foley & Lardner LLP
EMCOs
17
EMCOs
EMCOs are EMCOs are—– Any Medicare Part C health plan that
receives a capitated payment and which has receives a capitated payment and which has its cost sharing approved by CMS
– Medicaid managed care organizations – Medicaid managed care organizations – PACE plans or Federally qualified HMOs
©2012 Foley & Lardner LLP
This means
18
This means…
Any payment arrangement between a provider Any payment arrangement between a provider and an MA plan directly, provided it is in writing, for a least a year, etc. is not a violation of the AKS AKS.
This includes discounts, payments based on network configuration, payments based on
l t th t ti volume, payments that vary over time, payments that are based on quality, all of which are a part of the payments made for the provision of “items or services” will not constitute prohibited remuneration under the AKS
©2012 Foley & Lardner LLP
And f rthermore
19
And furthermore…. The payments from the EMCO do not have to be to a provider---
”Any first tier contractor for providing or arranging for items or services…”
The payments can be to a TPA, a management company or any other entity that is in the business of arranging for the provision of other entity that is in the business of arranging for the provision of items or services—provided they are licensed to accept the payments
Suggestion: To take best advantage of the EMCO exception— at a first tier level have the plan rep and warrant that it is a qualifying first tier level, have the plan rep and warrant that it is a qualifying EMCO and the payments it makes fall within the EMCO safe harbor; at a downstream level, similar reps and warranties from the first tier contractorIf other than MA plan business is involved (e g Medicaid) review If other than MA plan business is involved (e.g. Medicaid) review the law of the applicable state as well, as the exception will not supercede State law for non-Federal plan activities
©2012 Foley & Lardner LLP
At the second tier and downstream l l
20
levels….
Remuneration does not include ANY PAYMENT Remuneration does not include ANY PAYMENT between a first tier contractor and a downstream contactor (e.g. from an IPA to a hospital or the reverse) or between two downstream contractors to provide OR arrange for items or services so long as:for items or services so long as:– A signed written agreement, for at least a year,
specifying the covered items and services, and no claim on another programclaim on another program
– No swapping– No shift of financial burden
©2012 Foley & Lardner LLP
Do nstream contin ed
21
Downstream continued…
Condition 4: The EMCO—First Tier Agreement Condition 4: The EMCO First Tier Agreement does not involve– A cost based FQHC, HMO or CMP on a cost basis, or
non-risk based Federally qualified HMOnon risk based Federally qualified HMO Downstream includes those with direct or
indirectly with a first tier contractor (an individual or entity) This will include anyone in individual or entity). This will include anyone in the arrangement, including suppliers, ancillary providers, independent contractors with
t t ith tit th t it lf h contracts with an entity that itself has a contract with the first tier contractor to provider or arrange for provision of items or services
©2012 Foley & Lardner LLP
Do nstream fle ibilit as ell
22
Downstream flexibility as well
ANY PAYMENT is again covered ANY PAYMENT is again covered As long as it is for items or services that are
covered in the first tier arrangementg Suggestion: Downstream contractors should
verify that the services are covered by the First Ti t t A fi t ti t t th t t Tier contract. A first tier contract that carves out specialty services, high cost drugs, vision services will not protect hospital–physician p p p yarrangements downstream that involve the provision of those services (e.g. collateral arrangements)
©2012 Foley & Lardner LLP
arrangements)
Price reductions offered to health plans 952( )
23
--952(m)
Remuneration does not include a reduction in Remuneration does not include a reduction in price a contract health care provider offers to a health plan in accordance with a written pagreement for “the sole purpose of furnishing to enrollees items or services” which are covered by the Plan
Term not less than a year, items and services specified in advance,
Methodology specified in advance
©2012 Foley & Lardner LLP
E amples
24
Examples A 10% discount from billed charges for a one year g y
period for covered services provided by the hospital–Covered
A 10% discount from billed charges for a one year g yperiod for bundled services from a hospital with downstream contract with the physicians—Not covered
A 10% discount based on anticipated volume, which, if volume is not met within 3 months of the effective date, goes to 5% -- Covered
Anticipated volume does not appear as the parties d d h i i h expected, and the parties agree to terminate the
arrangement prematurely and enter into a new contract with different terms and conditions? Covered if no other factors at work? Likely not AKS violation?
©2012 Foley & Lardner LLP
other factors at work? Likely not. AKS violation?
The Disco nt Safe Harbor
25
The Discount Safe Harbor
Discounts -- 952(h) Discounts 952(h)– Remuneration does not include a discount that
meets the reporting obligations of the safe harbor– A MA plan need not report the discount unless
specifically required by its contract– Must be applicable to Medicare, Medicaid or other pp ,
Federal health care programs– Cannot be in cash
Cannot be part of a “swapping” arrangement– Cannot be part of a “swapping” arrangement– Cannot consist of a waiver of a co-pay, coinsurance
or deductible
©2012 Foley & Lardner LLP
Price reductions by contractors with SFR t MCO 952( )
26
to MCOs – 952(u)
More challenging than the EMCO safe More challenging than the EMCO safe harbor and, in some cases redundant
First tier application to – A qualified First tier application to – A qualified managed care plan if 5 standards are metmet– An agreement which is for at least a year,
signed by the parties, requiring QA program and specifies a methodology that is “commercially reasonable and consistent with [fmv]
©2012 Foley & Lardner LLP
with [fmv]
SFR Contractor safe harbor cont
27
SFR Contractor safe harbor cont. --If 1st tier contractor has an investment interest, cannot ,
be a kickback (circular criteria?)--First tier contractor must have substantial financial risk
(capitation, % of premium, DRG payments, ( p p p ybonus/withhold program [20/10 requirement on target payments], reasonable payments amounts resulting, etc., etc.
--Reimbursable items or services must be submitted directly to the Federal program in accordance with a valid assignment and payments must be “identical to payment arrangements [related to] other payment arrangements…[related to] other beneficiaries” for same items or services
ANDN i g hifti g th fi i l b d
©2012 Foley & Lardner LLP
--No swapping or shifting the financial burden
For do nstream contracts
28
For downstream contracts…
Must still be substantial financial risk at Must still be substantial financial risk at the downstream level [952(u)(ii)]P t t t l i l Payment arrangements must also involve a valid reassignment and identical
i b t f it reimbursement for same items or services
No swapping or burden shifting
©2012 Foley & Lardner LLP
A q alified managed care plan is
29
A qualified managed care plan is… Operates in accordance with a contract, agreement or statutory
demo authority approved by CMS or a State health care program Charges a premium and its premium structure is regulated by the
State Is an employer or welfare fund; OR Is an employer, or welfare fund; OR Is licensed in the State, contracts with an employer, union welfare
fund or company furnishing coverage and is paid a fee for administration of the plan which is at FMV
AND – Runs UR/QA programs and “treatment for Federal …beneficiaries ..is not different…
AND – Has population that matches up to Medicare beneficiary limits (10%/50%)ts ( 0%/50%)
©2012 Foley & Lardner LLP
Increased coverage, reduced cost sharing, or 30
reduced premiums – 952(l)
Applies to a plan that offers additional Applies to a plan that offers additional coverage of any item or service, or a reduction of the member obligation (e.g. reduction of the member obligation (e.g. copay or deductible) or a reduction in premium amounts attributable to items or services covered by the Plan, Medicare program or a State health care program
Plan definition is specific (952(l)(2)) Must fall within two categories of plan
©2012 Foley & Lardner LLP
Increased co erage etc
31
Increased coverage, etc…
Risk based plans Risk based plans –– Must offer same increased coverage,
reduced cost sharing or premium amounts reduced cost-sharing or premium amounts to all Medicare or State plan enrollees (absent approval(absent approval
Cost based plans –-- Same coverage etc requiredSame coverage etc. required-- May not claim costs as bad debt or
otherwise shift the burden
©2012 Foley & Lardner LLP
otherwise shift the burden
The ACO Safe Harbor
32
The ACO Safe Harbor
November 2 2011 – Interim final rule November 2, 2011 – Interim final rule
To address AKS Stark CMP Iss es To address AKS, Stark, CMP Issues
Designed to protect ACOs, ACO participants and ACO providers
Five waiver categories created
©2012 Foley & Lardner LLP
The Definitions
33
The Definitions
“Purposes of the SSP” Purposes of the SSP
S Start-up arrangements
ACO participant and ACO provider/supplierp / pp
©2012 Foley & Lardner LLP
ACO Pre participation ai er
34
ACO Pre-participation waiver
Protection during the one year period prior to Protection during the one year period prior to submission of the application
Provision of items, services, etc. to intended ACO participants
Diligent steps Existence of the ACO entity and its governing
bodyDocumentation of the arrangement Documentation of the arrangement
Description of the arrangement is publicly disclosed
©2012 Foley & Lardner LLP
disclosed
ACO Participation
35
ACO Participation
Participation agreement (“PA”) executed Participation agreement ( PA ) executed Arrangement “reasonably related to
”purposes…” Arrangement documented Waiver period: Date of the participation
agreement until 6 months following the g gexpiration of the PA
©2012 Foley & Lardner LLP
Shared Sa ings Distrib tions
36
Shared Savings Distributions
Distributions are earned during the Distributions are earned during the period of the PA
Distributed to or among ACO Distributed to or among ACO participants, providers, suppliers, participants during the year earned; ORparticipants during the year earned; OR
Used for activities reasonably related to the purposest e pu poses
Not made to induce reductions in medically necessary items or services
©2012 Foley & Lardner LLP
ed ca y ecessa y te s o se ces
Stark compliance
37
Stark compliance
Protects Stark compliant arrangements Protects Stark compliant arrangements from AKS and CMP exposure—i.e. if you fall within a Stark exception you won’t fall within a Stark exception, you won t have an AKS or CMP problem, as long as there is a PA there is a PA.
©2012 Foley & Lardner LLP
Patient Incenti es
38
Patient Incentives
Patients can receive items or services Patients can receive items or services from the ACO, its participants, providers, suppliers suppliers
For free or below FMV If there is a PA, a “reasonable
connection” between the items and services or care furnished, OR
Are preventive care items
©2012 Foley & Lardner LLP
p
The Stark La
39
The Stark Law
Physician may not refer: Physician may not refer:– Medicare patients– for “designated health services”– for designated health services– to an entity with which the physician or– an immediate family member has an immediate family member has – a “financial relationship”
…unless the arrangement satisfies the requirements of an applicable exception
©2012 Foley & Lardner LLP
Stark Does it e en appl ?
40
Stark – Does it even apply? The Stark Law is implicated where there is a referral by p y
a physician to an “entity” with which the physician (or immediate family member) has a financial arrangement
“Entity” is defined at §411.351 as excluding “a health y § gcare delivery system that is a health plan (as defined at §1001.952(l) of this title), and other than any managed care organization (MCO), provider-sponsored organization (PSO) or independent practice association organization (PSO), or independent practice association (IPA) with which a health plan contracts for services provided to plan enrollees)”
Does include a health plan MCO PSO or IPA that employs a – Does include a health plan, MCO, PSO, or IPA that employs a supplier or operates a facility that could accept reassignment from a supplier with respect to any DHS provided by that supplier
©2012 Foley & Lardner LLP
Compensation exception for Risk Sh i A t (411 357( ))
41
Sharing Arrangements (411.357(n))
Compensation pursuant to a risk sharing Compensation pursuant to a risk sharing arrangement between and MCO or an IPA and a physician (either directly or indirectly through a
f fcontractor) for services provided to enrollees of a health plan (MA plan for example) does NOTconstitute a financial arrangement for Stark constitute a financial arrangement for Stark purposes
The conditions– Cannot be a violation of the AKS– Cannot violate a law governing billing or claims
submission
©2012 Foley & Lardner LLP
submission
What does this mean?
42
What does this mean?
There are no limitations in the regulations other There are no limitations in the regulations other than it must be for services provided to enrollees, and does not extend to supplies (bundles may not be included!)
Any type of compensation arrangement between and MCO or an IPA is coveredbetween and MCO or an IPA is covered
The normal Stark requirements will not apply— The normal Stark requirements will not applyFMV, written agreement requirements simply do NOT apply
©2012 Foley & Lardner LLP
And a service-based Stark Exception (411 355( ))
43
(411.355(c))
The prohibition on referrals does not apply to The prohibition on referrals does not apply to services furnished by an organization (or its contractors or subcontractors) to enrollees of
fspecified prepaid plans The plans are – MA plans, a demonstration
project which pays any organization on a project which pays any organization on a prepaid basis, other health care prepayment plans with CMS agreements
Does not extend to services provided to enrollees of any other plan or line of business which may be offered
©2012 Foley & Lardner LLP
which may be offered
The scope of the e ception
44
The scope of the exception
The prohibition on referrals is removed as the The prohibition on referrals is removed as the result of referrals between or among first tier, second tier or downstream providers as long as
f fthe referrals related to the provision of services to a qualifying plan
The existence of a risk sharing arrangement is The existence of a risk sharing arrangement is not required for the prohibition on referrals to be removed– Physicians can make referrals to hospitals without
those referrals being subject to the Stark rules as long as the patients are MA plan enrollees
©2012 Foley & Lardner LLP
g p p
The Stark Concl sion
45
The Stark Conclusion If an MA plan is involved, there will be no Stark p ,
prohibition on referrals or payments between participating hospitals, labs, ASCs and physicians who may hold a financial interest with those entities
This means that Stark requirements such as FMV in the financial relationships among those participating in the provision of services to enrollees of a MA plan need not be consideredbe considered
Thus, from a Stark perspective, the allocation of a risk pool or the sharing of a “gain share” arising from hospital and physician participation will not be hospital and physician participation will not be constrained by Stark
But—consideration must still be given to other potential issues arising from the AKS PIP rules and the CMPs
©2012 Foley & Lardner LLP
issues arising from the AKS, PIP rules and the CMPs
The CMP Statute Prohibitions – 42 CFR 1003 100 t
46
1003.100 et. seq.
Imposition of civil monetary penalties if a provider Imposition of civil monetary penalties if a provider “substantially fails to provide…required medically necessary items and services..”Or on persons that “ do not meet the req irements Or on persons that “…do not meet the requirements for physician incentive plans…”
Prohibits a hospital (or CAH) from knowingly making g ga payment, directly or indirectly, to a physician as an inducement to reduce or limit services to a Medicare or Medicaid beneficiary who is under the direct care yof the physician
This is what led to the gainsharing challenges.
©2012 Foley & Lardner LLP
OIG’s Implementation CMP Statute
47
OIG s Implementation CMP Statute
OIG has consistently maintained that the CMP Statute must be read as prohibiting even payments to physicians for reducing medically unnecessary services or for using device A g y y gor supply A instead of clinically equivalent device B or supply B
OIG initially hostile to idea of issuing advisory opinions on proposed gainsharing arrangements, but began issuing p p g g g , g gfavorable advisory opinions in 2001 and has issued 15 favorable opinions to date, including 4 in 2008 and 1 in 2009
©2012 Foley & Lardner LLP
2009
47
OIG’s Implementation CMP Stat te
48
OIG’s Implementation CMP Statute
In the typical arrangement covered by AO OIG In the typical arrangement covered by AO, OIG will conclude that some or all aspects of the arrangement would constitute an improper
Cpayment under the CMP statute but that it would not seek sanctions.
Product substitutions are found to implicate – Product substitutions are found to implicate the CMP Statute. Occasionally, some minor aspects of the arrangement may have no appreciable clinical significance, such as paying physicians to use reusable supplies.
©2012 Foley & Lardner LLP
E ample
49
Example
MCO organization pays a share of the surplus MCO organization pays a share of the surplus to physicians for meeting certain quality and cost containment targets. Included in the criteria is that the physicians order implantable devices from an approved list. The list of approved devices contains pacemaker devices approved devices contains pacemaker devices by different manufacturers, but does not contain an implantable cardiac defibrillator– Likely would violate the CMP Statute– Likely would not meet the Stark PIP exception (may
or may not meet another exception)
©2012 Foley & Lardner LLP
y p )
E ample
50
Example
MCO organization and Hospital offer MCO organization and Hospital offer Medicare and Medicaid enrollees free movie tickets when mammograms are movie tickets when mammograms are performed at Hospital (but not at other hospitals) hospitals)
May violate the beneficiary inducement i i f th CMP St t tprovisions of the CMP Statute
©2012 Foley & Lardner LLP
Ph sician Incenti e Plan R les
51
Physician Incentive Plan Rules CMP Statute originally prohibited payments by both hospitals and
Medicare managed care plans to induce physicians to reduce clinical services. It was subsequently amended to delete the reference to Medicare managed care plans
SS Act permits MA Plans to implement physician incentive plans, SS Act permits MA Plans to implement physician incentive plans, provided the PIP does not induce the reduction of medically necessary care to individual patients and does not place the physician at substantial financial risk for services not provided by the physician.the physician.
– If the plan places a physician or physician group at “substantial financial risk” for services not provided by the physician, the MA Plan must provides stop—loss protection for the physician or group that is “adequate and appropriate”p p y g p q pp p
PIP requirements apply to an MA Plan and ANY of its subcontracting arrangements that utilize a PIP in their in their arrangements with physicians.
©2012 Foley & Lardner LLP
Ph sician Incenti e Plans
52
Physician Incentive Plans
Stark Exception for PIPs Stark Exception for PIPs Permits compensation determined in any
manner (withhold, capitation, bonus or otherwise) that takes into account directly or otherwise) that takes into account directly or indirectly Volume or Value of Referrals– Protects also payments made by downstream
b t tsubcontractors Incorporates statutory requirement of no
inducement to limit medically necessary y yservices and requirements when placing physician or group at substantial financial risk (SFR)
©2012 Foley & Lardner LLP
(SFR)
PIP The Definitions
53
PIP – The Definitions A PIP is ANY compensation arrangement to pay a physician or
physician group that may DIRECTLY or INDIRECTLY have the effect of reducing or limiting the services provided to any plan enrollee
Risk threshold means the maximum risk if the risk is based on Risk threshold means the maximum risk, if the risk is based on referral services, to which a physician or physician group may be exposed under a PIP w/o being at SFR—This is set at 25%.
Referral services means any specialty, inpatient, outpatient, or lab services that the physicians order or arrange, but do not furnish directly
So if physicians are at risk for specialty services, e.g. specialty surgeons, hospital costs, outpatient surgical services, lab costs that THEY order or arrange, the PIP rules will potentially have application
©2012 Foley & Lardner LLP
application
The Basic R les
54
The Basic Rules
ANY PIP operated by an MA organization must ANY PIP operated by an MA organization must meet the following—– There may be no payments as an inducement to
limit services to any particular enrollee– If the PIP puts the physicians at SFR, FOR SERVICES
THAT THE PHYSICIANS DO NOT FURNISH THEMSELVES, the Plan must assure aggregated or per-patient stop loss protection
– The MA must furnish assurances that the The MA must furnish assurances that the requirements are met
– MA must inform beneficiaries about the arrangements
©2012 Foley & Lardner LLP
arrangements
SFR What is it?
55
SFR – What is it?
SFR occurs when risk is based on the use SFR occurs when risk is based on the use or costs of referral services and the risk exceeds the risk thresholdexceeds the risk threshold– This means that where risk is based on
quality targets the amounts are not quality targets, the amounts are not considered.
The risk threshold is 25% of potential The risk threshold is 25% of potential payments
©2012 Foley & Lardner LLP
SFR Appl ing the definition
56
SFR– Applying the definition
Arrangements which cause SFR (if panel Arrangements which cause SFR (if panel size is below 25,000)
Withh ld >25%– Withholds >25%– Withholds < 25% if there is also downside
risk so total exposure is >25%risk so total exposure is >25%– Bonuses > 33% or potential payments minus
the bonusthe bonus– Withholds + bonuses > 25% (Withhold % =
75(Bonus %) + 25%
©2012 Foley & Lardner LLP
-.75(Bonus %) + 25%
Capitation for PIP determinations
57
Capitation for PIP determinations
Capitation=$payment/patient/time period Capitation $payment/patient/time period without regard to the volume of services provided – Services may be the physicians, or referral services,
or all medical services– Example: Payment is based on a % of premium with Example: Payment is based on a % of premium with
a sharing of a “surplus pool”. % of premium is not capitation; analysis under bonus measurement
SFR for capitation SFR for capitation—Min/max differential > 25%Min/max “not clearly explained”
©2012 Foley & Lardner LLP
Min/max not clearly explained
Stop loss req irements
58
Stop loss requirements
The MA plan must ensure that the physicians The MA plan must ensure that the physicians who bear SFR have:a. Aggregate stop loss equal to 90% of the amount by which the costs of referral services amount by which the costs of referral services exceed 25% of potential payments; orb. If on a per-patient stop loss basis, in
d ith CMS l b d l iaccordance with CMS rules based on panel size
Pooling of populations (Medicare Medicaid Pooling of populations (Medicare, Medicaid, commercial), subject to specific rules for pooling (422.208(g)), e.g. comparability of risks
©2012 Foley & Lardner LLP
EXAMPLE 1
59
EXAMPLE 1
Physician Practice enters into a risk/ capitation Physician Practice enters into a risk/ capitation arrangement with the MA plan (and is at risk for hospital services). Hospital gives Physician Practice discount in exchange for volume guarantee– Discount can be protected by discount safe harbor
(1001.952(h))– Discount can be protected by EMCO safe harbor (1001.952(t))– Stark does not apply to discount to group practice as Hospital
is not a DHS entity in this arrangements ot a S e t ty t s a a ge e t Moreover discount is excepted from being a “financial
relationship” under Stark
©2012 Foley & Lardner LLP
EXAMPLE 1A
60
EXAMPLE 1A
Same as 1 but discount is only on Same as 1 but discount is only on managed care business and not on FFS businessbusiness– Swapping concerns?
©2012 Foley & Lardner LLP
EXAMPLE 1B
61
EXAMPLE 1B
Group has full risk arrangement with Plan Group has full risk arrangement with Plan Hospital gives Group Discount on FFS and agrees to
share with physicians a percentage of savings Discount can be protected by discount safe harbor
(1001.952(h), or EMCO safe harbor (1001.952(t)), or price reductions to health plans (1001 952(m))price reductions to health plans (1001.952(m))
Payments to Physicians can comply with Stark
©2012 Foley & Lardner LLP
EXAMPLE 2
62
EXAMPLE 2
Hospital contracts with MA Plan to give Hospital contracts with MA Plan to give discounted rates– Discount can be protected by discount safe Discount can be protected by discount safe
harbor (1001.952(h), or EMCO safe harbor (1001.952(t)), or price reductions to health
l (1001 952( ))plans (1001.952(m))– Stark does not apply to discount to MA Plan
because no financial arrangement between because no financial arrangement between hospital and physicians (and MA Plan is not DHS entity)
©2012 Foley & Lardner LLP
EXAMPLE 3
63
EXAMPLE 3
MA Plan establishes 3 Funds Part A Part B and Part D MA Plan establishes 3 Funds, Part A, Part B and Part D, Plan pays Hospital and other providers on a
percentage of premium basis Plan pays 60% of surplus to physicians, 10% to
Hospital and retains the remaining 30% Discount EMCO and Price Reductions to Plans Safe Discount, EMCO and Price Reductions to Plans Safe Harbors Potentially Applicable
PIP payments to Physiciansp y y
©2012 Foley & Lardner LLP
EXAMPLE 3A
64
EXAMPLE 3A
Same as 3 but Plan pays 100% of surplus to physicians Same as 3 but Plan pays 100% of surplus to physicians No limit on how much Plan can pay Physicians under
PIP rules
©2012 Foley & Lardner LLP
E ample 4
65
Example 4
Plan contracts with TPA to manage Plan contracts with TPA to manage physician servicesPl TPA t f th Plan pays TPA a percentage of the premiums for TPA to manage the network
d H it l t i t t t and Hospital enters into agreement to share with the TPA what it gets from the PlPlan
©2012 Foley & Lardner LLP
E ample 5
66
Example 5
Hospital has contract with MA Plan and Hospital has contract with MA Plan and gets a share of savings in reduction of length of stay or alternatively a reduction length of stay or alternatively a reduction in pharmacy costsH it l h i i t i ti i Hospital pays physicians to incentivize savings
©2012 Foley & Lardner LLP
Official G idance
67
Official Guidance 1. Managed Care Safe Harbors
54 FR 3088 (Jan. 23, 1989) – proposed safe harbor for “Discounts” (1001.952(h)) 56 FR 35952 (Jul. 29, 1991) – final rule establishing “Discounts” safe harbor 57 FR 52723 (Nov. 5 1992) – Interim final rule establishing safe harbors for 57 FR 52723 (Nov. 5 1992) Interim final rule establishing safe harbors for
“Increased coverage, reduced costsharing amounts, or reduced premium amounts offered by health plans” (1001.952(l)) and “Price reductions offered to health plans” (1001.952(m))
59 FR 37202 (Jul. 21, 1994) – proposed clarification to “Discounts: safe harbor61 FR 2122 (J 21 1996) fi l l i i g th th g d f 61 FR 2122 (Jan. 21, 1996) – final rule, revising the three managed care safe harbors published in the Nov. 5, 1992 final rule
64 FR 63504 (Nov. 19, 1999) -- safe harbors for “Price reductions offered to eligible managed care organizations” (1001.952(t)) and “Price reductions offered by contractors with substantial financial risk to managed care organizations” (1001.952(u))
64 FR 63518 (Nov. 19, 1999) – final rule clarifying “Discounts” safe harbor
available at http://oig.hhs.gov/fraud/docs/safeharborregulations/getdoc.pdf
©2012 Foley & Lardner LLP
Official G idance
68
Official Guidance
Advisory Opinions discussing managed care safeAdvisory Opinions discussing managed care safeharbors AO –00-04 (1001 952(t)) AO 00 04 (1001.952(t)) AO-- 98-05 (1001.952(m))
There are no reported cases that mention1001.952(l), (m), (t), or (u). There are no cases ( ), ( ), ( ), ( )that discuss 1001.952(h) in the context of a managed care arrangement
©2012 Foley & Lardner LLP
Official G idance
69
Official Guidance
2 Stark Preamble Language 2. Stark – Preamble Language –Definition of “Entity”
66 FR 856 912-14 (Jan 14 2001) (Phase I 66 FR 856, 912 14 (Jan. 14, 2001) (Phase I final rule)
69 FR 16054 , 16067, 16082 (Mar. 26, 2004) 69 FR 16054 , 16067, 16082 (Mar. 26, 2004) (Phase II final rule)
©2012 Foley & Lardner LLP
Official G idance
70
Official Guidance
2 Stark Preamble Language2. Stark – Preamble Language411.355(c) (service based exception)
57 FR 8588 8597 (M 11 1992) ( d l ) 57 FR 8588, 8597 (Mar. 11, 1992) (proposed rule) 60 FR 41914, 41950-51 (Aug. 14, 1995) (final rule) 63 FR 1659, 1696-98, 1711-12 (Jan. 19, 1998) (proposed rule) 63 FR 34968, 35003-35004 (Jun. 26, 1998)(interim final rule) 66 FR 856, 859, 911-15 (Jan. 14, 2001) (Phase I final rule) 69 FR 16054 16067 16081-82 16114 (Mar 26 2004) (Phase 69 FR 16054, 16067, 16081 82, 16114 (Mar. 26, 2004) (Phase
II final rule) 72 FR 51012, 51035 (Sept. 5, 2007) (Phase III final rule)
©2012 Foley & Lardner LLP
Official G idance
71
Official Guidance
2 Stark Preamble Language 2. Stark – Preamble Language --411.357(n) (managed care exception)
66 FR 856 912 14 (J 14 2001) (Ph I fi l l ) 66 FR 856, 912-14 (Jan. 14, 2001) (Phase I final rule) 69 FR 16054,16067, 16082, 16114 (Mar. 26, 2004) (Phase II
final rule) 72 FR 51012, 51060 (Sept. 5, 2007) (Phase III final rule)
©2012 Foley & Lardner LLP
Official G idance
72
Official Guidance
2 Stark – Preamble Language --2. Stark – Preamble Language --411.357(d)(2)) (PIP exception) 63 FR 1659 1669 1712 (Jan 19 1998) (proposed 63 FR 1659, 1669, 1712 (Jan. 19, 1998) (proposed
rule) 69 FR 16054, 16068, 16089-91 (Mar. 26, 2004)
(Ph II fi l l )(Phase II final rule) 72 FR 51012, 51046-47 (Sept. 5, 2007)
There are no reported cases that mention 411.355(c), 411.357(n) or 411.357(d)(2)
©2012 Foley & Lardner LLP