Inpatient Gainsharing as Part of a Medicare ACO
Inpatient Gainsharing as Part of a Medicare ACO
We have written about the distinction between shared savings (used in ACOs and Bundled Payments) and gainsharing 6 essential differences between gainsharing and shared savings programs: Under shared savings, Medicare gives back a portion of the money it has saved through reduced payments to providers. Gainsharing, on the other hand, is a tool that enables providers to respond to the challenge of cost reduction by becoming more efficient. As many of our clients have pointed out, the AMS Gainsharing Program has proven to be an effective strategy to achieve the physician engagement that is critical to the success of an ACO. They have told us that implementing an ACO requires profound change in the culture of health care institutions and provider practice: To succeed over time, providers must make daily decisions based on efficiency and effectiveness, not on volume – of patients, procedures or services. So gainsharing can provide the foundation of, and the stepping stone to, other initiatives, like an ACO.
ACOs that fail to transform their internal thinking to one based on “performance” and “bottom line results”, will not be able to survive, much less compete. We have discussed how CMS recognizes that gainsharing can be used in a shared savings program (Centers for Medicare and Medicaid Services, 2011, p. 67381), but there have always been questions regarding how a hospital – not the ACO – can implement gainsharing. An article entitled “Medicare ACO Participation Waiver of Fraud and Abuse Laws: How It Works and Why ACOs Should Use It”, written by Charles Buck and Patrick Healy of McDermott Will and Emery LLP, appeared in the December 2014 edition of Connections, a magazine published by the American Health Lawyers Association. We thought the article contained information useful to readers of this blog – specifically, hospitals that are participating in a Medicare ACO, or those that may be contemplating one.
The article points out that 74% of ACOs implemented under the Medicare Shared Savings Program have generated no shared savings so far. In both Medicare demonstrations and in commercial projects, however, large-scale gainsharing programs have succeeded in transforming decision-making related to inpatient operations to an approach based on performance. While only a portion of the ACO business strategy involves inpatients, the dollars are significant and represent a considerable opportunity for cost reductions. This holds the potential to provide a starting point, a foundation on which to build change.
Because it has now been well tested, the large-scale gainsharing programs (e.g. all DRGs, all inpatient costs) can be implemented quickly, and incentive payments made to physicians at 6-month intervals—the kind of catalyst required to refocus minds, change strategies, and engage physicians. ACOs typically are primary care oriented, and the hospitalists, surgeons and specialists are not included or engaged. But these physicians are critical to achieving hospital cost reductions—a key component to any successful ACO. Adding an inpatient component not only expands the pool of physicians included in any initiative, but can provide the catalyst to drive further change which will ultimately help the ACO to achieve its objectives.
We agree with Attorneys Buck and Healy, the article authors, that the Participation Waiver created for Medicare ACOs presents a great opportunity for the hospital to focus on inpatient initiatives and utilize gainsharing to meet the common goals of the hospital and the ACO. So we posed some questions to them to better understand how gainsharing might work in a Medicare ACO. Here is what they had to say:
What is the Medicare ACO Participation Waiver and which laws does it waive?
McDermott, Will and Emery LLP (MWE): The Medicare ACO Participation Waiver is a self-executing waiver of several restrictive federal health care fraud and abuse laws that apply to certain arrangements among any combination of an ACO participating in the Medicare Shared Savings Program (“MSSP”) or Pioneer ACO program, its participating providers, and certain other non-participating providers.
Specifically, the Participation Waiver waives the federal civil monetary penalties law provisions addressing hospital payments to physicians to reduce or limit services (the “Gainsharing CMP”), the federal Stark Law (the “Stark Law”), and the federal anti-kickback law (the “Anti-Kickback Law”) with respect to any arrangement of the ACO, one of more of its ACO participants, or one or more “outside providers and suppliers,” such as specialist physicians or post-acute care facilities, that do not participate in the ACO but have a role in coordinating and managing care for ACO patients, if the relevant Waiver requirements are satisfied. Once the Wavier requirements are satisfied for a particular arrangement, the Participation Waiver is self-implementing— no special action, such as applying for an individualized waiver, is required. See our article linked to above for a detailed discussion of the requirements.
What are examples of the types of programs that can be implemented under the Participation Waiver?
(MWE): Medicare ACOs can use the Participation Waiver to protect an arrangement among the parties noted above for which the ACO’s governing body has made a bona fide determination that the arrangement is “reasonably related” to the enumerated purposes of the MSSP and Pioneer ACO program. Such purposes are: (a) promoting accountability for the quality, cost, and overall care for a Medicare patient population; (b) managing and coordinating care for Medicare fee-for-service beneficiaries through a MSSP or Pioneer ACO; and (c) encouraging investment in infrastructure and redesigned care processes for high-quality and efficient service delivery (i.e., cost reduction) for patients, including Medicare beneficiaries.
In our experience, ACOs typically use the Participation Waiver to protect straightforward arrangements that would otherwise violate technical aspects of the strict-liability Stark Law, such donation of electronic health records and other information technology infrastructure, where such donations would not otherwise meet the technical Stark Law requirements governing donation of EHR hardware and software. However, as we note in our article, the Participation Waiver could be employed in more creative ways to better align the financial incentives of the ACO and its participating providers in a manner that encourages the delivery of more efficient, high-quality care.
Could the Participation Waiver help protect a hospital and physicians from regulatory risks that might otherwise exist with respect to a hospital gainsharing program?
(MWE): Yes, for properly structured arrangements. As the gainsharing community is aware, the OIG has historically been suspicious of gainsharing programs. The OIG routinely found in advisory opinions that gainsharing programs violate the Gainsharing CMP but that, with sufficient safeguards built into the programs, it would exercise its discretion not to impose sanctions against the requestors of the opinion. The OIG also expressed some concern that gainsharing programs could violate the Anti-Kickback Law if the programs were used to disguise illegal remuneration by encouraging physicians to admit more Medicare or Medicaid beneficiaries to the hospital.
As AMS has noted previously, in order to generate shared savings under shared savings programs such as the MSSP, providers must reduce utilization and/or shift care to lower reimbursement settings. By contrast, gainsharing programs focus on reducing costs, not directly on impacting utilization. For this reason, gainsharing programs might not directly promote shared savings under the MSSP or Pioneer ACO program. But there are several reasonable arguments that gainsharing programs could directly relate to the purposes of the MSSP or Pioneer ACO program and help Medicare ACOs achieve the statutory goals. For example, by incenting specialists, hospitalists, and surgeons to move the patient out of high-cost modalities efficiently (e.g., reducing ICU days, readmissions, and potentially avoidable admissions), and coordinate with the primary care physician to ensure the patient receives approve post-acute care, gainsharing programs directly promote accountability for the quality and cost for Medicare beneficiaries, and foster the provision of coordinated care to the beneficiaries.
Promoting these two goals permits the Participation Waiver to apply to all Medicare fee-for-service beneficiaries—not just those assigned to the ACO. Gainsharing programs would need to encourage investment in infrastructure and redesigned care processes intended to achieve cost-reductions (while maintaining or enhancing quality) in order for the Participation Waiver to apply to all patients, rather than only to Medicare fee-for-service beneficiaries. Application of the Participation Waiver is highly fact-specific and one would need analyze the terms of a particular arrangement to determine if it qualifies for protection and the scope of that protection. We believe that if structured properly, gainsharing programs operating in tandem with the MSSP or Pioneer ACO program have meaningful potential.
Additional information about the Participation Waiver is found in the article; which is referenced above.
