SHARED SAVINGS & INCENTIVE PAYMENT PROGRAMS Ellen V. Weissman Hodgson Russ LLP .

SHARED SAVINGS &

INCENTIVE PAYMENT PROGRAMS

Ellen V. WeissmanHodgson Russ LLP

www.hodgsonruss.com

© 2009 Hodgson Russ LLP 2

OVERVIEW

Legal Constraints In Structuring Federal State

Recent Developments 15 Favorable OIG Advisory Opinions Proposed Stark Exception

What Can You Do Now? Federal Health Reform???


FEDERAL LAWS

Civil Monetary Penalty Law (CMPL) Anti-Kickback Statute (AKS) Physician Self-Referral Law (Stark) Tax Exemption Laws Managed Care


CIVIL MONETARY PENALTY LAW

Prohibits: Hospitals Knowingly Making A Payment To A Physician To Induce A Reduction Or Limitation In Services To Medicare/Medicaid FFS Beneficiaries

Applies Even If Pay To Reduce Services That Are Not “Medically Necessary”

OIG Enforces, Issues Advisory Opinions


ANTI-KICKBACK STATUTE

Prohibits: Knowingly/Willfully Paying Or Receiving Remuneration To Induce Referrals Of Services Covered By Federal Health Programs

No Safe Harbor On Gainsharing – To Date OIG Enforces, Issues Advisory Opinions


STARK STATUTE : PHYSICIAN SELF-REFERRAL LAW

Prohibits: Physicians Referring Medicare & Medicaid Patients To Hospital For Inpatient And Outpatient Services If Financial Relationship With Hospital, Unless Within Exception

Proposed CMS Exception CMS Enforces, No Advisory Opinions


TAX EXEMPTION LAWS

Tax Exempt Hospitals May Not Pay Physicians If Would Constitute: Private Inurement Private Benefit Or Excess Benefit Transaction

IRS Guidance: Generally OK If “Reasonable Compensation”


MANAGED CARE

CMPL Is Not Applicable To Managed Care Medicare/Medicaid Managed Care Risk-

Based Payors Are Covered By Different Statutes

Allows “Physician Incentive Plans” If They Do Not Reduce “Medically Necessary” Services


MANAGED CARE, cont.

Stark Is Applicable (If Serve Medicare/Medicaid Enrollees)

Stark Exceptions: 42 CFR 411.355(c) – Protects Services Provided To

Enrollees Of Medicare/Medicaid MCOs 42 CFR 411.357(n) – Protects Risk-Sharing

Compensation Arrangements Between MCOs And Physicians, If No AKS Violation


MANAGED CARE, cont.

If Commercial Insurer, Flexibility In Structuring Unless: Induce Changes Re Medicare/Medicaid FFS

PatientsMeasure/Pay Based On All Patients Involve Dually Eligible Patients

See OIG Advisory Opinion No. 08-16.


STATE LAWS

Some States Have Laws That Apply To All Payors Including Medicare And Medicaid Managed

Care Payors/Beneficiaries Many State Statutes Have Different

Exceptions From Stark If Your Hospital Operates In A State With

An All-Payor Statute, Structure Carefully


WAIVER AUTHORITY

General CMS Authority: Waives Stark, But Not AKS or CMPL. See Robert Wood Johnson University Hospital v.

Thompson, 2004 U.S. Dist. LEXIS 8498 (D.N.J. Apr. 15, 2004)

Statutory Demonstration Projects: Waive Stark, AKS and CMPL: MMA of 2003 § 646 Deficit Reduction Act of 2005 § 5007


OIG GUIDANCE

Addresses CMPL And AKS Does Not Address Stark, Because OIG

Lacks Jurisdiction


OIG SPECIAL ADVISORY BULLETIN (1999) All Gainsharing Programs Violate CMPL No Authority To Issue Exception To CMPL Declines To Issue Advisory Opinions Has Since Issued 14 Favorable Opinions AHA/AAMC Recently Asked OIG To

Retract


OIG CONCERNS

“Stinting” On Patient Care “Cherry-Picking” Healthy Patients “Steering” Sicker Patients To Hospitals

Not In Program Disguised Payments for Referrals


OIG ADVISORY OPINIONS

15 Favorable Advisory Opinions 14 Shared Savings Programs 1 Pay For Performance Program

Shared Savings Programs: Product Standardization Or Substitution Use As Needed

All Contain Similar Elements OIG Finds CMPL Implicated, But Declines To Prosecute Due To Safeguards


CMPL SAFEGUARDS

Credible Medical Evidence Supports Each Performance Measure/Target

Targets Based On Hospital’s Patient Population Compared To Regional/National Norms

All Supplies/Devices Remain Available If Needed For Particular Patient

Floors Below Which Cannot Earn Incentive Independent Review; Termination Of Physicians Written Disclosure To Patients


AKS SAFEGUARDS

Pools Of 5 Or More Physicians On Active Medical Staff Per Capita Payment Limits On Amounts To Be Earned Re-Basing If Multi-Year Limited Duration (1-3 Years) Monitor Admissions For Changes


OIG ADVISORY OPINION 08-16PAY-FOR-PERFORMANCE Private Insurer Pays Bonus To Hospital Hospital Pays 50% of Bonus To Physicians

2 Data Reporting Targets 4 Quality Targets – CMS Specifications Manual For

Nat’l Hospital Quality Measures CMPL Implicated Because Measure

Performance Using All Inpatients OIG Issues Favorable Opinion Due To

Safeguards


PROPOSED STARK EXCEPTION

Proposed 7/7/08 In MPFS 2009 Shared Savings & Incentive Payment Programs 16 Sections, Over 40 Requirements Requirements Similar To OIG Advisory Opinion

Elements CMS Reopened Comment Period to 2/17/09

Sought Comments On 55 Issues One vs Two New Exceptions?


COMMENTS BY AHA/AAMC

Proposed Exception Is Too Complex, Burdensome, Narrow, Inflexible

Instead, Adopt Broad Principles:Credible Medical Evidence Supports TargetsMonitoring Inappropriate ActionsReward Individual Physician’s ContributionsMaintain Documentation Of Design/PaymentsLegally Binding Written Agreement


Proposed Exception Too Narrow Instead: Restructure To Address

Programs Designed To Reduce Operational

Bottlenecks Responsible Physicians Direct Protections for Quality of Care and

Against Self-Referral vs Micromanagement

COMMENTS BY NJHA


COST FINDING

CMS: Current Cost Less Acquisition Cost Problem: CMS Proposal Doesn’t Work

For Programs Targeting Operational Improvements Or Quality

Alternative: Use APR DRGs With Severity Of Illness Adjustment


PHYSICIANS/PAYMENT

CMS: Requires Pool Of At Least 5 Physicians And Per Capita Payment

Problem: Artificial Groups; Diffuses Incentive Alternative: Pay Individual Physicians

Responsible For Managing A Case To Reward Individual Performance; Address Concerns Relating To Abuse Directly Rather Than Indirectly


RE-BASING TARGETS

CMS: If Multi-Year Program, Must Re-Base Targets At End Of Year To Avoid “Duplicate” Payment/Disguised Payment For Referral

Alternative: Reward Maintaining Good Performance As Well As Improvement; Important To Incentivize Physicians To Spend Time On Non-Billable Activities Such as Discharge Planning


QUALITY PROTECTIONS

CMS: Micromanagement, such as requiring access to same supplies/devices available before program and no limits on new technology

Alternatives: Add Severity Of Illness Adjustment Best Practice Norms Based On Community Practice

Compared To Regional Data Committee Monitors “Outliers”; Can Withhold

Incentives Or Terminate Physician


SELF-REFERRAL PROTECTIONS

CMS: Currently On Medical Staff, plus Many Indirect Protections

Alternative: Direct Protections Such AsMust Have 10+ Admissions At Par Hospital If Dual Privileges, Cap Incentives At Prior

Year Volume At Participating Hospital, Adjusted for Normal Practice Growth


CURRENT OPTIONS

If No Medicare/Medicaid FFS BeneficiariesFlexibility In Structuring A ProgramDetermine Whether To Include Managed Care

BeneficiariesDetermine Whether State Laws Apply


CURRENT OPTIONS

If Medicare/Medicaid FFS BeneficiariesUse Existing Safe Harbors/ExceptionsFollow Design Features Approved In OIG

Advisory OpinionsParticipate In CMS Demonstration Project


THE FUTURE

CMPL: Will Congress modify to allow incentive programs allowed by Managed Care statute?

Stark: New Exceptions May Be Added & Existing Exceptions May Be Modified AKS: Will HHS Heed The Call Of The

AHA/AAMC To Issue A Regulatory Exception? Demonstration Projects: Reports To

Congress Due Soon; Will They Prompt Changes?

Federal Healthcare Reform:???

SHARED SAVINGS & INCENTIVE PAYMENT PROGRAMS Ellen V. Weissman Hodgson Russ LLP .

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