CMS Releases Final Rule on Accountable Care Organizations

On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS) released its final rule on Accountable Care Organizations (ACOs), also known as the Medicare Shared Savings Program (the “Program”), enacted as a part of the Patient Protection and Affordable Care Act of 2010 (aka Health Reform).  The Program is designed to encourage providers and hospitals to create networks that deliver efficient and collaborative care, and allows ACOs to receive a portion of the savings that they produce.

The proposed rule was met with criticism from many providers, hospitals, and trade groups.  In response, CMS adopted a relaxed version of the proposed requirements for ACOs.  Some key changes, include:

  • One-Sided Risk Model:  Under the proposed rule, all ACOs would have operated under a “two-sided” risk model where ACOs had the chance of losing money if they did not produce sufficient savings.  In the final rule, ACOs are allowed to participate in a “one-side” risk model, which will allow providers to participate in the program without risking a loss in the event that their ACO does not produce savings.  The final rule also allows ACOs to opt into a “two-sided” risk model in exchange for the opportunity to receive a greater share of savings.
  • Shared Savings:  The proposed rule originally required that the ACO provide a savings of at least 2% to receive the shared savings payments.  Under the final rule, ACO’s are eligible beginning with the first savings they create.
  • Prospective Beneficiary Assignment:  Originally, CMS intended to assign Medicare beneficiaries retrospectively based on where the beneficiaries received care during the previous year.  In the final rule, CMS sought to provide ACOs more certainty about their beneficiary population and thus implemented a “preliminary perspective assignment” of Medicare beneficiaries.  CMS will modify the beneficiary assignment lists at the end of each contract year in order to determine final assignments.
  • Reduction in Quality Measures:  The proposed rules required ACOs to track 65 performance measures; whereas the final rule requires ACOs to track only 33 measures.
  • Eliminating the Savings Threshold:  The proposed rule required ACOs to produce savings of at least two percent in order to be eligible for shared savings.  The final rule allows ACOs to share in savings beginning with the first savings that they produce.
  • Changes to ACO Organization and Governance: The final rules allows for more flexible ACO organization and governance requirements.  Under the final rule, ACOs are still required to be a legal entity, as recognized under state, federal, or tribal law.  ACOs must meet requirements for governance, leadership, and management. However, the final rule also allows CMS to consider an innovative ACO with a management or governance structure that does not meet the regulatory requirements.
  • Advanced Payment Model:  In attempt to remove some funding hurdles faced by small ACOs, CMS introduced an Advance Payment program that will allow a select number of rural and small physician-owned ACOs to receive up-front payments that the agency will later recoup from the savings that the ACOs produce.
  • Expanded Participation:  The final rule broadens participation to include RHCs and FQHC, as well as practices/organizations in which specialists provide primary care.
  • Relaxed EHR Requirements:  The final rule eases EHR burdens by no longer requiring EHR meaningful use compliance for participation in the Program.  Under the final rule, EHR is retained as a quality measure, but weighted higher than measures for quality scoring purposes.

CMS will begin to accept applications for the Program on January 1, 2012, with start dates on April 1, 2012 and July 1, 2012.

Portion of Schedule H of Form 990 Optional For Hospitals

On June 9th, 2011 the IRS announced that it was making Part V.B. of Schedule H of Form 990 optional for the 2010 tax year.

First the IRS asked all tax-exempt hospitals to wait until at least July 1, 2011 to file their 2010 returns instead of the usual May 15 deadline. The stated purpose for the requested delay was to allow the IRS additional time to finalize their forms as well as systems to be better prepared to receive the additional information required to be submitted by charitable hospitals.  Now the IRS announces (2011-37) that they are making the newly redesigned Schedule H Part V.B., which focuses on each facility’s (1) community health needs assessment practice, (2) financial assistance policies, (iii) billing and collection practice, and (iv) charges for medical care, optional for the tax year 2010.  However, just because it all of a sudden became optional and therefore allows tax-exempt hospitals more time to analyzed the new questions and better prepare for future disclosures, it DOES NOT alleviate the fact that tax-exempt hospitals still must demonstrate how they comply with Section 501(r)’s requirements or  otherwise risk losing their tax-exempt status.

It is important to note that only a portion of Schedule H is optional and that all tax-exempt hospitals must still complete section A and C of Part V, in addition to the other parts of Schedule H.  The optional section is Part V.B., which specifically deals with Facility Policies and Practices.

Finally, the announcement continues to invite the public to comment on how to improve the clarity and reduce the burden of reporting the information related to these additional requirements.

If you have further questions regarding Schedule H of the Form 990 please contact Monica Langfeldt.

CMS Releases Proposed Rules for Accountable Care Organizations

On March 31, 2011, CMS released its proposed rules for public review and comment relating to Medicare payments for health care providers participating in Accountable Care Organizations (ACOs).  Under the proposed rules, health care providers participating in ACOs would be eligible to receive additional Medicare payments based on meeting certain specified quality and savings requirements in addition to receiving traditional Medicare fee-for-service payments under Medicare Parts A and B.

The proposed rules are available here and will be published in the Federal Register on April 7, 2011.  A fact sheet published by CMS which provides a summary of proposed rules is available here.  If you would like further information about ACOs, please contact Dave Schoolcraft or Elana Zana.

New CMS Rules Require Equal Visitation Rights

The Center for Medicare & Medicaid Services (CMS) issued new rules today that require participating hospitals to have policies that allow patients to choose the visitors who are allowed by their bedside, including same-sex domestic partners. 

 According to the White House’s press release, the new rules will:

  • Require hospitals to explain to all patients their right to choose who may visit them during their inpatient stay, regardless of whether the visitor is a family member, a spouse, a domestic partner (including a same-sex domestic partner), or other type of visitor, as well as their right to withdraw such consent to visitation at any time. 
  • Require hospitals have written policies and procedures detailing patients’ visitation rights, as well as the circumstances under which the hospitals may restrict patient access to visitors based on reasonable clinical needs.
  • Specify that all visitors chosen by the patient must be able to enjoy “full and equal” visitation privileges consistent with the wishes of the patient.
  • Update the Conditions of Participation (CoPs), which are the health and safety standards all Medicare- and Medicaid-participating hospitals and critical access hospitals must meet, and are applicable to all patients of those hospitals regardless of payer source.

The rules will take effect 60 days after publication.  The new rules can be found here.

New Stark Disclosure Rule Regarding CT, MRI and PET Services

On Tuesday, November 2nd, CMS issued the 2011 Physician Fee Schedule Final Rule.  Embedded in the over 2000 pages of the rule was the amendment to the Stark in-office ancillary services exception.  CMS finalized the rule, required by PPACA (the Healthcare Reform Act), regarding the requirement of physician groups to provide notice of other “suppliers” of CT, MRI and PET services. 

The final rule did not expand the PPACA list of services, and limited the disclosure requirement only to CT, MRI and PET advanced imaging services.  This disclosure requirement applies to all in-office referrals that are categorized as “radiology and certain other imaging services” by the list of CPT/HCPCS Codes (defined in §411.351).  CMS noted that a request by a radiation oncologist for radiation therapy or ancillary services necessary for, and integral to, the provision of radiation therapy is not a “referral” under §411.351, if certain other criteria are satisfied.  The disclosure requirement would therefore not apply if the request is not a “referral.” 

 CMS has also removed CPT code 77014 (computed tomography guidance for place of radiation therapy fields) from the CPT/HCPCS Codes because the service is always integral to, and performed during, a nonradiological medical procedure. 

The disclosure notice should be written in a manner that can be reasonably understood by the patient and must include the following: 

  1. Must be in writing;
  2. Delivered to the patient at the time of the referral;
  3. Must contain a list of 5 alternative suppliers that can provide the same services;
  4. These suppliers must be located within a 25 mile radius of the referring physician’s office;
  5. The list should include the supplier’s name, address and telephone number.

The rule does allow an exception for providers practicing in areas where less than 5 suppliers are located within a 25 mile radius.  Those providers should list all of the suppliers within the area.  Hospitals are not considered suppliers, but may also be listed (CMS recommends that rural providers list hospitals). 

In the final rule, CMS removed the requirement that the physician group obtain the signature of the patient on the disclosure form.  CMS recommends that the physician be able to document or otherwise establish that he/she has complied with the disclosure requirement.  The disclosure notice must be provided at the time of the referral, which means that providing the notice at the initial visit will not suffice.  The disclosure requirement applies to all services furnished on or after January 1, 2011.

If you would like more information or assistance in drafting a disclosure notice please contact Don Black or Elana Zana.

Health Reform includes Changes in the Stark Self-Referral Act

Earlier this week the Congress passed the Patient Protection and Affordable Healthcare Act, otherwise known as Health Reform.  Included in the Act were instructions to CMS to make changes to the regulations implementing the Stark Self-Referral Act (the “Stark Law”).  These changes will have a direct effect on the financial relationships between physicians and DHS entities such as hospitals. 

 General Overview of the Stark Law

Unless an exception applies, the Stark Law, 42 U.S.C. § 1395nn, prohibits a physician from making a referral to an entity for the furnishing of designated health services (“DHS”) that would otherwise be covered by Medicare if the physician (or an immediate family member) has a financial relationship with the entity.  Further, entities may not submit a claim or bill any payor for DHS furnished pursuant to a prohibited referral.  State Medicaid programs may not receive federal funds for DHS rendered pursuant to referrals that would be prohibited if the services had been covered by Medicare. 

The exceptions are organized into three categories: (i) exceptions for certain services (known as the general exceptions); (ii) exceptions for certain ownership and investment interests; and (iii) exceptions for certain compensation arrangements.  The exceptions typically require contracts between the parties which set out, among other provisions, that any compensation paid between the parties does not take into account the volume or value of referrals or any other business generated between the parties, is based on fair market value, is set in advance, is in writing, and is for at least a one-year term.

New Changes

Section 6409 – Medicare Self-Referral Disclosure Protocol

This section requires that HHS implement a disclosure protocol for actual and potential Stark law violations. This protocol, termed the self-referral disclosure protocol (“SRDP”) must be developed within six months and the instructions must be posted on the CMS website.  The SRDP instructions shall include the name of the specific person or office to whom the disclosures should be made and the implication of the SRDP on any corporate integrity agreements and corporate compliance agreements. 

Importantly, HHS is authorized to reduce the amount due for any violations under the Stark Law.  In evaluating whether to reduce the amounts owed, HHS may consider the following factors:

1)      Nature and extent of the improper or illegal practice;

2)      Timeliness of self-disclosure;

3)      The cooperation in providing additional information; and

4)      Such other factors as HHS deems appropriate. 

HHS is also required to submit a report to Congress on the implementation of the SRDP which shall include the number of providers making disclosures, the amounts collected, the types of violations reported, and such other necessary information to evaluate the impact of the SRDP. 

Section 6001 – Limitation on Medicare Exception to the Prohibition on Certain Physician Referrals for Hospitals

Section 6001 modifies the Stark Law exception that allows physicians to hold an ownership interest in hospitals.  This detailed section limits the expansion of physician owned hospitals, increases disclosure requirements related to physician ownership and provider agreements (including the names of the physicians and the extent of the ownership interest) to patients, on the hospital website, hospital advertising, and in annual statements to HHS, and expands requirements regarding physician ownership in the hospitals. 

Section 6003 – Disclosure Requirements for In-Office Ancillary Services Exception to the Prohibition on Physician Self-Referral for Certain Imaging Services

This section amends the in-office ancillary services exception by requiring a physician making a referral for MRI, CT or PET services (or other services designated by HHS) to inform the patient in writing, at the time of the referral, that these services may be obtained from a person or entity other than the referring physician, a physician within the group practice, or an individual directly supervised by that physician or a physician in the group practice.  In addition, the physician must provide the patient with a list of providers who furnish these services in the area in which the patient resides.  The effective date of the amendment if for services furnished on or after January 1, 2010 (unclear how this applies retroactively).

For more information about Stark or if you have questions please contact Don Black.