Anti Kickback Statute and Stark Law in Managed Care...

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


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.


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”


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


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


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…”


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)


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)


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


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


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


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


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


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


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


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)


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


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?


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


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]


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


--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


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%)


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


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


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


The Definitions

33

The Definitions

“Purposes of the SSP” Purposes of the SSP

S Start-up arrangements

ACO participant and ACO provider/supplierp / pp


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


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


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


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.


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


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


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


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


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


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


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


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


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.


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


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.


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)


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


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.


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)


(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


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


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


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%


-.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”


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


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


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?


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


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)


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


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


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


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


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


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


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)


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)


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)


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)


Anti Kickback Statute and Stark Law in Managed Care...

Documents

Transcript of Anti Kickback Statute and Stark Law in Managed Care...