Category — Health Sectors

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.

On October 7, 2011, the Institute of Medicine (IOM) released a report setting forth the methodology it recommends that the Department of Health and Human Services (HHS) use to determine the essential health benefits package.  The Affordable Care Act requires plans participating in the insurance exchanges to, at minimum, provide coverage for a  defined set of benefits, known as essential health benefits.  While the statute provides a set of ten broad categories of services to be included in the benefits package, HHS asked the IOM to recommend a process by which the Secretary could define and update the essential health benefits.  In its report, the IOM concluded that the federal government should consider cost as a factor in deciding what benefits should be included.  Although HHS is not bound by the IOM recommendations, Secretary Sebelius said in a statement that HHS would consider IOM’s report and anticipates issuing its proposed rule on the benefits package “soon.”   Before publication of such rule, however, HHS plans to hold a series of listening sessions to gain input from relevant stakeholders.  The IOM report is available through the IOM web site: http://www.nap.edu/catalog.php?record_id=13234

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.

On September 28, 2011, the U.S. Department of Justice (DOJ) petitioned the Supreme Court to decide the constitutionality of the individual insurance mandate in the Affordable Care Act (ACA). The DOJ is petitioning for review of the 11th Circuit decision issued by a three-member panel on August 12, 2011, which struck down the individual insurance mandate as unconstitutional under the Commerce Clause while upholding the remainder of the ACA. DOJ petitioned the Supreme Court in lieu of requesting a hearing by the 11^th Circuit en banc, and well in advance of the 90-day deadline for appeal. The effect of the DOJ’s timing, should the Supreme Court accept the petition, will be to push the decision in advance of the 2012 Presidential election. Twenty-six states have filed a joint petition for certiorari requesting that the entire law be struck down.

On September 28, 2011, the Center for Medicare & Medicaid Innovation announced a request for applications for the Comprehensive Primacy Care initiative, a program focusing on improving collaboration between public and private health payers in the primary care arena.  The initiative will test two models: 1) a service delivery model that promotes care coordination and 2) a payment model that would pay selected primary care practices monthly care management fees for their Medicare fee-for-service beneficiaries; providers may then share in any Medicare savings generated by the model while still receiving compensation from private insurers.   CMS anticipates that five to seven models will be tested across the country.  The Innovation Center is accepting letters of intent from public and private payers through November 15, 2011.  All final application must be received before January 17, 2012. 

 Solicitation – http://innovations.cms.gov/documents/pdf/cpc_initiative_solicitation.pdf

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.

Earlier this week the House Ways and Means Committee minority staff released a list of Medicare issues for the Super Committee’s consideration.  The list identifies more than $500 billion in potential savings from the Medicare program, achieved through a variety of cuts across a number of health care industries.  In addition, the document contains brief discussion regarding anticipated proposals relating to the Affordable Care Act. 

The Super Committee had its first meeting on Thursday, September 8, where the Committee adopted rules governing the hearings and proceedings going forward.  The Super Committee’s next hearing is scheduled for September 13.