Category — Hospitals

On April 10, 2012, the Centers for Medicare & Medicaid Services (CMS) announced 27 organizations selected to participate in the Medicare Shared Savings Program. 

As required by the Affordable Care Act, CMS established the Medicare Shared Savings ACO program.  Under this program, ACOs are charged with improving care coordination for Medicare fee-for-service beneficiaries.  ACOs that participate in the program have the opportunity to share in Medicare cost savings they achieve.  In some circumstances, CMS holds ACOs accountable for failing to achieve cost savings (i.e., by making ACOs partially responsible for costs above established benchmarks). 

Additional Medicare Shared Savings Program participants are expected to be announced later this year.  For additional information about the program, please refer to the CMS Medicare Shared Savings Program website.

On February 14, 2010, CMS issued a Proposed Rule to implement the Affordable Care Act’s requirement that any person who receives a Medicare or Medicaid overpayment report and return the overpayment within 60 days of the date on which the overpayment was identified or the date of any corresponding cost report due, if applicable.  The Proposed Rule would apply only to Medicare Part A and Part B providers and suppliers.  CMS plans to issue further guidance for other stakeholders, including Medicaid managed care organizations and Prescription Drug Plans.  CMS proposes to require providers to report and return overpayments identified within ten years of the date the overpayment as received.

Under the Proposed Rule, CMS will consider a provider to have identified an overpayment if it has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.  CMS provided several examples of reckless disregard or deliberate ignorance, including a provider’s failure to make a “reasonable inquiry” when it experiences a “significant increase in Medicare revenue and there is no apparent reason” to be of the existence of an overpayment. 

CMS proposes to require providers and suppliers to report and return overpayments through existing reporting processes that Medicare Administrative Contractors (MAC) currently administer.  Under the proposed “self-reported overpayment refund process,” Medicare providers and suppliers would report overpayments using forms that each MAC makes available on its website.  CMS stated that it plans to develop a uniform reporting form in the future. 

Comments on the proposed rule are due by April 16, 2011.

On November 14, 2011, the Supreme Court announced that it will hear challenges related to the Affordable Care Act (ACA) during its spring term. The Court has chosen to address four specific issues with respect to legal challenges of the health reform law:

(1) the constitutionality of the law’s requirement that all individuals purchase insurance (i.e., the Minimum Essential Coverage provision, also referred to as the individual mandate);

(2) whether the Anti-Injunction Act, a law which requires individuals to refrain from suing the federal government for the imposition of a tax until after the tax has been paid, bars a pre-enforcement challenge to the individual mandate until 2014 when the provision goes into effect;

(3) the constitutionality of the law’s Medicaid expansion requiring states to provide coverage to all adults under 65 with household incomes below 133 percent of the poverty level; and

(4) the issue of severability, as the Court must determine whether the law must be struck down in its entirety if one of the provisions is found unconstitutional, or whether that provision may be removed while the remainder of the ACA remains intact.

An extraordinary five-and-a-half hours for oral arguments have been granted: two hours on the constitutionality of the individual mandate, 90 minutes on the issue of severability, one hour on whether the Anti-Injunction Act bars some or all of the challenges to the insurance mandate, and one hour on the constitutionality of the Medicaid expansion.  Observers speculate that the arguments will be held in March and a decision may be issued by the Court by late June, well in advance of the 2012 Presidential election.

The Centers for Medicare & Medicaid Services (CMS) published the Accountable Care Organization (ACO) final rule in the Federal Register on Wednesday, November 2.  CMS also published the notice regarding the ACO “Advance Payment Model” and the interim final rule with comment period regarding fraud and abuse waivers applicable to certain arrangements involving ACOs.  The deadline for submitting comments to CMS on the fraud and abuse waiver interim final rule is 5:00 pm on January 3, 2012.

Click here to see Akin Gump’s updated analysis of the ACO final rule, which includes new discussions of the Statement of Antitrust Enforcement Policy jointly issued by the Federal Trade Commission and Antitrust Division of the Department of Justice and the guidance for tax-exempt ACO participants issued by the Internal Revenue Service.

Click here to see Akin Gump’s preliminary analysis of the Medicare Shared Savings Program final rule. We anticipate that the final rule will be published in the Federal Register on November 2nd. In addition, the final rule indicates multiple areas where the Centers for Medicare & Medicaid Services (CMS) anticipates releasing subregulatory guidance. We will provide additional information as it becomes available.

On October 20, 2011, the Centers for Medicare & Medicaid Services (CMS) released a final rule on the creation of Accountable Care Organizations (ACOs).  The final rule implements provisions of the Affordable Care Act that require the Secretary of Health and Human Services (HHS) to establish a Medicare Shared Savings Program, and follows from a proposed rule issued by CMS on April 7, 2011.  CMS received approximately 1,320 public comments on the ACO proposed rule.  According to the agency, the final rule includes “significant modifications” from the proposed rule that are intended “to reduce the burden and cost for participating ACOs.”  These modifications include: 

• greater flexibility in eligibility to participate in the Shared Savings Program;
• multiple start dates in 2012;
• establishment of a longer agreement period for those starting in 2012;
• greater flexibility in the governance and legal structure of an ACO;
• simpler and more streamlined quality performance standards;
• adjustments to the financial model to increase financial incentives to participate;
• increased sharing caps;
• no down-side risk and first-dollar sharing in “Track 1”;
• removal of the 25 percent withhold of shared savings;
• greater flexibility in timing for the evaluation of sharing savings (claims run-out reduced to 3 months);
• greater flexibility in antitrust review;
• greater flexibility in timing for repayment of losses; and
• additional options for participation of Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs).

In connection with the ACO final rule, CMS and the HHS Office of Inspector General released an interim final rule with comment period establishing waivers of the Physician Self-Referral Law (“Stark law ”), the Anti-Kickback Statute, and certain civil monetary penalty law provisions to specified arrangements involving ACOs.  The Federal Trade Commission and Antitrust Division of the Department of Justice also issued a “Statement of Antitrust Enforcement Policy” regarding ACOs and the Internal Revenue Service issued a notice concerning tax-exempt organizations.    

Simultaneously, the Center for Medicare & Medicaid Innovation announced an ACO advanced payment model.  This model is intended for organizations, including rural and physician-led ACOs, in need of capital to make the necessary investments to coordinate care.  Additional information is available at http://www.innovations.cms.gov/documents/payment-care/APACO_Solicitation_10_20_11_Compliant1.pdf.

We will provide additional updates on the contents of the ACO final rule and related documents shortly.

On October 17^th, the Innovation Center announced a new initiative – the Innovation Advisors Program.  Innovation Advisors will support the Innovation Center in testing new models of care delivery, use their knowledge and skills in their organization in pursuing the three-part aim, work with local organizations and groups to drive delivery system reforms, and gather new ideas for possible testing or diffusion by the Innovation Center.  The Innovation Advisors Program consists of face-to-face national and regional meetings, training sessions, seminars, presentations by subject matter experts and individual coaching.  Innovation Advisors will partake in a dialogue between their home organization and the Innovation Center.  A fellowship stipend of up to $20,000 is available to support the activities of individuals selected for the program.  The Applications are due November 15th.  Additional information, including the application, is available at http://www.orise.orau.gov/IAP/index.html.  It is anticipated that CMS will select approximately 200 individuals to participate in this program.

Today, the Office of Management and Budget (OMB) received the long-awaited Medicare Shared Savings Program: Accountable Care Organization (ACO) final rule.  Observers speculate that this means that the rule could be made publicly available very soon.  The Affordable Care Act requires that the ACO program be established no later than January 1, 2012.

In a recent report, the Treasury Inspector General for Tax Administration (TIGTA) audited Internal Revenue Service (IRS) efforts to implement the Affordable Care Act (ACA) tax provisions. The report found that:

The IRS has revised Form 990 Schedule H to require hospitals to report on their financial assistance policies and community health benefits as required to maintain tax-exempt status under the ACA.  The ACA requires the IRS to review at least once every three years the community benefit activities of tax-exempt hospitals subject to these new exemption requirements and the IRS expects to complete reviews of the activities of 1,700 hospitals by the end of calendar year 2011 out of the approximately 5,100 hospitals subject to the new tax-exemption requirements.  

Also, in consultation with the Department of Health and Human Services (DHHS), the IRS is required to provide annual reports to Congress on (i) the levels of charity care, bad debt expenses, and unreimbursed costs for services provided under government programs by private tax-exempt, government-owned, and taxable hospitals and (ii) costs incurred by private tax-exempt hospitals for community benefit activities.  The TIGTA report indicates that the IRS is starting to collect some of this information for private tax-exempt hospitals from the revised Form 990 Schedule H, but the IRS is exploring the need to enter into a memorandum of understanding with DHHS to help clarify data responsibilities regarding the preparation of this report.  The TIGTA report does not mention that such a memorandum of understanding may be needed because the IRS currently does not have any mechanism to collect such data with regard to government-owned and taxable hospitals.

On August 23, 2011, the Center for Medicare & Medicaid Innovation (Innovation Center) announced a new initiative regarding bundled payments for care improvement.  The new bundled payment models combine payments for physician, hospital, and other provider services into a single, predetermined payment amount for all services furnished to a beneficiary during a defined episode of care.  The Innovation Center offers four different payment models for interested applicants.  Akin Gump has put together a Comparison of Bundled Payment Models Chart comparing some of the features of each of these models.  Further detail is available in the full request for applications (RFA), available at the Innovation Center website: http://innovations.cms.gov/documents/payment-care/Request_for_Applications.pdf.

Important Dates

Entities interested in applying for any of these models should note the following program deadlines:

Model 1

• Interested organizations must submit a non-binding letter of intent by September 22, 2011
• Applications must be submitted to the Innovation Center by October 21

Models 2-4

• Interested organizations must submit a non-binding letter of intent by November 4, 2011
• Organizations who want to be considered for receipt of data must submit a Research Request Packet containing specific information about their study design (including how they will use data to construct an episode definition and develop care episode redesign protocols) by November 4, 2011
• Potential applicants must also submit a Data Use Agreement by November 4, 2011
• Applications must be submitted by March 15, 2012