Federal Register, Volume 76 Issue 67 (Thursday, April 7, 2011)

[Federal Register Volume 76, Number 67 (Thursday, April 7, 2011)]
[Notices]
[Pages 19655-19660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7884]

Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 /
Notices

[[Page 19655]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1345-NC2]

Office of the Inspector General

RIN 0938-ZB05

Medicare Program; Waiver Designs in Connection With the Medicare
Shared Savings Program and the Innovation Center

AGENCY: Centers for Medicare & Medicaid Services (CMS) and Office of
the Inspector General (OIG), HHS.

ACTION: Notice with comment period.

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SUMMARY: Section 1899(f) of the Social Security Act (of the Act), as
added by the Affordable Care Act (ACA) authorizes the Secretary to
waive certain fraud and abuse laws as necessary to carry out the
provisions of section 1899 of the Act (the Medicare Shared Savings
Program). This notice with comment period describes and solicits public
input regarding possible waivers of the application of the Physician
Self-Referral Law, the Federal anti-kickback statute, and certain civil
monetary penalties (CMP) law provisions to specified financial
arrangements involving accountable care organizations (ACOs) under the
Medicare Shared Savings Program. In addition, section 1115A(d)(1) of
the Act, as added by section 3021 of the ACA, authorizes the Secretary
to waive the same fraud and abuse laws, among others, as necessary
solely for the purposes of carrying out the provisions of section 1115A
of the Act with respect to the testing of certain innovative payment
and service delivery models by the Center for Medicare and Medicaid
Innovation. This notice with comment period also solicits public input
regarding that separate waiver authority.

DATES: To assure consideration, public comments must be delivered to
the address provided below by no later than 5 p.m. on June 6, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1345-NC2.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
By regular mail. You may mail written comments to the
following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1345-NC2, P.O.
Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
By express or overnight mail. You may send written
comments to the following address ONLY: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-1345-
NC2, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-
1850.
By hand or courier. If you prefer, you may deliver (by
hand or courier) your written comments before the close of the comment
period to either of the following addresses:

a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.

(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)

b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Comments received by CMS will be shared with OIG.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Neal Shah (410) 786-1167 or Troy
Barsky (410) 786-8873, for general issues and issues related to the
Physician Self-Referral Law. James A. Cannatti III (202) 619-0335, for
general issues and issues related to the anti-kickback statute or civil
monetary penalties.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

I. Medicare Shared Savings Program: Background

A. Introduction

This notice with comment period seeks public comment on proposed
waivers of sections 1128A(b)(1) and (2), 1128B(b)(1) and (2), and
1877(a) of the Social Security Act (of the Act) in the specific
circumstances described below, as necessary to carry out the provisions
of section 1899 of the Act (as added by section 3022 of the Patient
Protection and Affordable Care Act (Pub. L. 111-148), as amended by the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152)
(collectively, the ``Affordable Care Act'')). We seek to address
application of these fraud and abuse laws to accountable care
organizations (ACOs \1\) formed in connection with the Medicare Shared
Savings Program \2\ so that the laws do not unduly impede development
of beneficial ACOs, while also ensuring that ACO arrangements are not
misused for fraudulent or abusive purposes that harm patients or
Federal health care programs. Elsewhere in this issue of the Federal
Register, the Centers for Medicare & Medicaid Services (CMS) published
a proposed rulemaking

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setting forth proposed requirements for ACOs under the Medicare Shared
Savings (hereinafter referred to as the Medicare Shared Savings Program
proposed rule). Section 3022 of the Affordable Care Act describes the
Medicare Shared Savings Program as a program to promote accountability
for a patient population, coordinate items and services under Parts A
and B, and encourage investment in infrastructure and redesigned care
processes for high quality and efficient service delivery. As described
in the Medicare Shared Savings Program proposed rule, the Medicare
Shared Savings Program is designed to achieve three goals: better
health, better care, and lower cost. CMS's expectation is that ACOs
will help foster a new approach to delivering care that reduces
fragmented or unnecessary care and excessive costs for Medicare fee-
for-service beneficiaries and other patients.
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\1\ For purposes of this notice with comment period, the terms
``ACO,'' ``ACO participants,'' and ``ACO providers/suppliers'' have
the meanings ascribed to them in the Medicare Shared Savings Program
proposed rule.
\2\ We note that some ACOs may also operate under arrangements
with private payers. We address waivers as they might relate to how
ACOs distribute payments from private payers in section III. of this
notice with comment period.
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The Physician Self-Referral Law, the anti-kickback statute, and the
civil monetary penalty (CMP) provision addressing hospital payments to
physicians to reduce or limit services, discussed elsewhere in this
notice with comment period, are important tools to protect patients and
the Federal health care programs from fraud, improper referral
payments, unnecessary utilization, underutilization, and other harms.
However, stakeholders have expressed concern that the restrictions
these laws place on certain financial arrangements between physicians,
hospitals, and other individuals and entities may impede development of
some of the innovative integrated-care models envisioned by the
Medicare Shared Savings Program. Section 1899(f) of the Act authorizes
the Secretary to waive these and certain other laws as necessary to
carry out the Medicare Shared Savings Program.
In section II. of this notice with comment period, we set forth
proposals for waivers of these fraud and abuse laws that we believe,
based on public input and our own analysis, may be necessary to carry
out the Medicare Shared Savings Program. We seek public comment on
these proposed waivers. In section III. of this notice with comment
period, we solicit public input on the possibility of additional or
different waivers, as well as input on other related considerations.
We expect to issue waivers applicable to ACOs participating in the
Medicare Shared Savings Program concurrently with CMS's publication of
final regulations for the Medicare Shared Savings Program. The
requirements of the final regulations will bear on the scope of any
waivers granted for the Medicare Shared Savings Program. Because of the
close nexus between the final regulations governing the structure and
operation of ACOs under the Medicare Shared Savings Program and the
development of waivers necessary to carry out the provisions of the
Medicare Shared Savings Program, we may consider comments submitted in
response to the Medicare Shared Savings Program proposed rule and the
provisions of the Medicare Shared Savings Program final rule when
crafting waivers applicable to the Medicare Shared Savings Program. CMS
may also consider comments received in response to this notice with
comment period when finalizing its regulations for the Medicare Shared
Savings Program.

B. Section 1899 of the Social Security Act

Section 1899 of the Act establishes the Medicare Shared Savings
Program to encourage the development of ACOs in Medicare. The Medicare
Shared Savings Program is one of the first initiatives that will be
implemented under the Affordable Care Act aimed specifically at
improving ``value'' in the Medicare program--that is, both higher
quality and lower total expenditures for individual Medicare
beneficiaries and the Medicare program. Section 1899 of the Act
encourages ACOs to promote accountability for individual Medicare
beneficiaries and population health management, improve the
coordination of patient care under Parts A and B, and encourage
investment in infrastructure and redesigned care processes for high
quality and efficient service delivery. The redesigned care processes
developed by ACOs should also improve care and lower costs for all
patients served by the ACO.
As proposed in the Medicare Shared Savings Program proposed rule,
ACOs will enter into an agreement with the Secretary to participate in
the Medicare Shared Savings Program for not less than a 3-year period
under one of two tracks. Under the first track, an ACO would have the
opportunity to share in actual savings during the first 2 years of the
agreement. During the third year, the ACOs would be in a ``two-sided
risk'' model in which they would be eligible to receive a higher
potential shared savings, but also would be required to repay the
Medicare program if costs for the ACO's aligned beneficiaries exceed
certain thresholds. Under the second track, ACOs would operate under
the two-sided risk model from the beginning of their agreement period.
Under either model, in order to share a percentage of achieved savings
with the Medicare program, ACOs must successfully meet quality and
savings requirements and certain other conditions under the Medicare
Shared Savings Program. ACO participants and ACO providers/suppliers
will continue to receive fee-for-service payments, and the ACO legal
entity may choose how it distributes shared savings or allocates risk
among its ACO participants and its ACO providers/suppliers.

C. Waiver Authority Under Section 1899(f) of the Act

Section 1899(f) of the Act provides that ``[t]he Secretary may
waive such requirements of sections 1128A and 1128B and title XVIII of
[the] Act as may be necessary to carry out the provisions of [section
1899 of the Act].'' This waiver authority is specific to the Medicare
Shared Savings Program, and does not address other similar integrated-
care delivery models. We may consider waivers (where authorized under
the Affordable Care Act), exceptions, or safe harbors, as applicable,
for other types of ACOs, integrated-care delivery models, or financial
arrangements at a later date.
We note that a waiver of a specific fraud and abuse law is not
needed for an arrangement to the extent that the arrangement: (1) Does
not implicate the specific fraud and abuse law; or (2) implicates the
law, but either fits within an existing exception or safe harbor, as
applicable, or does not otherwise violate the law. We note further that
many exceptions and safe harbors already exist that might apply to ACO
arrangements, depending on the circumstances.

D. Fraud and Abuse Laws--Background

1. Physician Self-Referral Law (Section 1877 of the Act)
Section 1877 of the Act (42 U.S.C. 1395nn, the ``Physician Self-
Referral Law'') is a civil statute that prohibits physicians from
making referrals for Medicare ``designated health services,'' including
hospital services, to entities with which they or their immediate
family members have a financial relationship, unless an exception
applies. These entities may not bill Medicare for services rendered as
a result of a prohibited referral and section 1877(g)(1) of the Act
states that no payment may be made for prohibited designated health
service referrals. Civil monetary penalties also apply to any person
who presents (or causes to be presented) a bill for services for which
he or she knows or should know payment may not be made under section
1877(g)(1) of the Act. For additional

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details, see section 1877(g)(3) of the Act. Violations of the statute
may also result in liability under the False Claims Act (31 U.S.C.
3729-33).
2. The Anti-Kickback Statute (Section 1128B(b) of the Act)
Section 1128B(b) of the Act (42 U.S.C. 1320a-7b(b), the ``anti-
kickback statute'') provides criminal penalties for individuals or
entities that knowingly and willfully offer, pay, solicit, or receive
remuneration to induce or reward the referral of business reimbursable
under any of the Federal health care programs, as defined in section
1128B(f) of the Act. The offense is classified as a felony and is
punishable by fines of up to $25,000 and imprisonment for up to 5
years. Violations of the anti-kickback statute may also result in the
imposition of CMPs under section 1128A(a)(7) of the Act (42 U.S.C.
1320a-7a(a)(7)), program exclusion under section 1128(b)(7) of the Act
(42 U.S.C. 1320a-7(b)(7)), and liability under the False Claims Act (31
U.S.C. 3729-33). Certain practices that meet all of the conditions of a
statutory exception at section 1128B(b)(3) of the Act or regulatory
safe harbor at 42 CFR 1001.952 are not subject to prosecution or
sanctions under the anti-kickback statute.
3. Prohibition on Hospital Payments to Physicians To Induce Reduction
or Limitation of Services (Sections 1128A(b)(1) and (2) of the Act)
Sections 1128A(b)(1) and (2) of the Act (the ``Gainsharing CMP'')
apply to certain payment arrangements between hospitals and physicians,
including arrangements commonly referred to as ``gainsharing''
arrangements. Under section 1128A(b)(1) of the Act, a hospital is
prohibited from making a payment, directly or indirectly, to induce a
physician to reduce or limit services to Medicare or Medicaid
beneficiaries under the physician's direct care. Hospitals that make
(and physicians who receive) such payments are liable for CMPs of up to
$2,000 per patient covered by the payments (sections 1128A(b)(1) and
(2) of the Act).

E. Summary of Public Input Opportunities

Since the passage of the Affordable Care Act, the U.S. Department
of Health and Human Services (DHHS) has offered numerous opportunities
for the public to provide input into the design and operation of ACOs
and waivers necessary to carry out the provisions of the Medicare
Shared Savings Program. For example, CMS issued a Request for
Information Regarding Accountable Care Organizations and the Medicare
Shared Saving Program on November 10, 2010,\3\ and held multiple
listening sessions with stakeholders. CMS, OIG, and the Federal Trade
Commission held a joint workshop on October 5, 2010, entitled
``Workshop Regarding Accountable Care Organizations, and Implications
Regarding Antitrust, Physician Self-Referral, Anti-Kickback, and Civil
Monetary Penalty (CMP) Laws.'' \4\ We also received and reviewed
written public comments in connection with the workshop.\5\ Through
these means, the DHHS has received public input representing a wide
spectrum of views.
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\3\ 75 FR 70165 (2010).
\4\ Information about the workshop is available on CMS's Web
site at http://www.cms.gov/center/physician.asp.
\5\ The public comments are available on the FTC's Web site at
http://www.ftc.gov/os/comments/aco/index.shtm.
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There appears to be a general consensus among public stakeholders
that ACOs have the potential to change health care delivery in a manner
that improves patient care, and that some waivers of the fraud and
abuse laws may be necessary to facilitate their operations. However, in
general, no clear consensus has emerged on the scope of the waivers
necessary to carry out the Medicare Shared Savings Program, perhaps
because the relevant regulations have not yet been published. Moreover,
it is possible that the Medicare Shared Savings Program final
regulations will include additional modifications in response to public
comments to the proposed regulations. Therefore, our approach is to
propose and solicit comments on possible waivers in section II. of this
notice with comment period, and to solicit comments on different,
potentially broader waivers, as well as additional waiver design
considerations, in section III. of this notice with comment period.
This approach will facilitate full and informed stakeholder input on,
and government consideration of, these important, inter-connected
issues.

II. Medicare Shared Savings Program: Proposed Waivers

We currently contemplate that, pursuant to the authority granted
under section 1899(f) of the Act, the Secretary would waive sections
1128A(b)(1) and (2), 1128B(b)(1) and (2), and 1877(a) of the Act in the
specific circumstances described below. The waivers would not apply to
any other provisions of Federal or State law. All financial
arrangements not covered by a waiver would be required to comply with
existing laws. We invite the public to comment on the proposed waivers
described in this section.
To promote efficiency and ease of use, it is our intent to
promulgate waivers that will be consistent across the fraud and abuse
laws to the extent possible given the different scope and structure of
the laws. We also intend to apply these waivers uniformly to all
qualified ACOs, ACO participants, and ACO providers/suppliers
participating in the Medicare Shared Savings Program.

A. Threshold Qualification for Proposed Waivers

In order to qualify for any of the proposed waivers described in
section II.B. of this notice with comment period--
ACOs would be required to enter into an agreement with CMS
to participate in the Medicare Shared Savings Program; and
ACOs, ACO participants, and ACO providers/suppliers would
be required to comply with the agreement, section 1899 of the Act, and
its implementing regulations (including, without limitation, all
transparency, reporting, and monitoring requirements).

B. Scope of the Proposed Waivers

1. Physician Self-Referral Law (Section 1877(a) of the Act)
Under this proposal, the Secretary would waive application of the
provisions of section 1877(a) of the Act (42 U.S.C. 1395nn(a)) to
distributions of shared savings received by an ACO from CMS under the
Medicare Shared Savings Program: (1) To or among ACO participants, ACO
providers/suppliers, and individuals and entities that were ACO
participants or ACO providers/suppliers during the year in which the
shared savings were earned by the ACO; or (2) for activities necessary
for and directly related to the ACO's participation in and operations
under the Medicare Shared Savings Program. Our intent with this
proposal would be to protect financial relationships created by the
distribution of shared savings within the ACO, as well as financial
relationships created by a distribution of shared savings outside the
ACO, but only if the distribution outside the ACO relates closely to
the requirements for an ACO under section 1899 of the Act, including
achieving the quality and savings goals of the Medicare Shared Savings
Program. We do not intend to protect distributions of shared savings
dollars to referring physicians outside the ACO, unless those referring
physicians are being compensated (using shared savings) for activities
necessary for and directly related to the

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ACO's participation in and operations under the Medicare Shared Savings
Program. Other financial relationships with referring physicians
outside the ACO would need to meet an existing exception under the
Physician Self-Referral Law (for example, the fair market value,
personal services, or indirect compensation exceptions).
This proposed waiver would be limited to distributions of shared
savings; all other financial relationships involving physicians (or
their immediate family members) or entities participating in the
Medicare Shared Savings Program that implicate the Physician Self-
Referral Law would still need to satisfy an existing exception.
2. The Anti-Kickback Statute (Sections 1128B(b)(1) and (2) of the Act)
Under this proposal, the Secretary would waive application of the
provisions of sections 1128B(b)(1) and (2) of the Act (42 U.S.C. 1320a-
7b(b)(1)-(2)) with respect to the following two scenarios:
Distributions of shared savings received by an ACO from
CMS under the Medicare Shared Savings Program: (1) To or among ACO
participants, ACO providers/suppliers, and individuals and entities
that were ACO participants or ACO providers/suppliers during the year
in which the shared savings were earned by the ACO; or (2) for
activities necessary for and directly related to the ACO's
participation in and operations under the Medicare Shared Savings
Program.
Any financial relationship between or among the ACO, ACO
participants, and ACO providers/suppliers necessary for and directly
related to the ACO's participation in and operations under the Medicare
Shared Savings Program that implicates the Physician Self-Referral Law
and fully complies with an exception at 42 CFR 411.355 through 411.357.
As with the proposed waiver of the Physician Self-Referral Law
described previously, our intent with the proposal under the first
bulleted paragraph would be to protect financial arrangements created
by the distribution of shared savings within the ACO, as well as
financial arrangements created by a distribution of shared savings
outside the ACO, but only if the distribution outside the ACO is for
activities necessary for and directly related to the ACO's
participation in and operations under the Medicare Shared Savings
Program. We do not intend to protect distributions of shared savings
dollars to referral sources outside the ACO, unless those referral
sources are being compensated (using shared savings) for activities
necessary for and directly related to the ACO's participation in and
operations under the Medicare Shared Savings Program. Other financial
arrangements outside the ACO would need to fit in a safe harbor or
otherwise comply with the anti-kickback statute.
Our intent with the proposal under the second bulleted paragraph
would be to protect under the anti-kickback statute those financial
relationships between and among the ACO, its ACO participants, and its
ACO providers/suppliers that relate closely to the ACO's operations
under section 1899 of the Act, but only if the relationship implicates
the Physician Self-Referral Law and fits squarely in an exception.
Ordinarily, compliance with an exception to the Physician Self-Referral
Law does not operate to immunize conduct under the anti-kickback
statute, and arrangements that comply with the Physician Self-Referral
Law are still subject to scrutiny under the anti-kickback statute.
Here, however, in light of the specific safeguards proposed to be
incorporated in the Medicare Shared Savings Program, the authority
under section 1899(f) of the Act for the Secretary to waive the anti-
kickback statute as necessary to carry out section 1899 of the Act, and
our desire to minimize burdens on entities establishing ACOs under
section 1899 of the Act, we are proposing a limited exception to the
general rule.
Failure to qualify for one of the proposed waivers under the anti-
kickback statute would not mean that an arrangement is automatically
illegal under the anti-kickback statute. To the extent that the anti-
kickback statute is implicated by a financial arrangement that is not
subject to a waiver, the financial arrangement would need to comply
with the law. We note that the same financial arrangement might violate
the Physician Self-Referral Law and would need to be analyzed for
compliance with that law.
3. Prohibition on Hospital Payments to Physicians To Induce Reduction
or Limitation of Services (Sections 1128A(b)(1) and (2) of the Act)
Under this proposal, the Secretary would waive application of the
provisions of sections 1128A(b)(1) and (2) of the Act (42 U.S.C. 1320a-
7a(b)(1) and (2)) with respect to the following two scenarios:
Distributions of shared savings received by an ACO from
CMS under the Medicare Shared Savings Program in circumstances where
the distributions are made from a hospital to a physician, provided
that--
++ The payments are not made knowingly to induce the physician to
reduce or limit medically necessary items or services; and
++ The hospital and physician are ACO participants or ACO
providers/suppliers, or were ACO participants or ACO providers/
suppliers during the year in which the shared savings were earned by
the ACO.
Any financial relationship between or among the ACO, its
ACO participants, and its ACO providers/suppliers necessary for and
directly related to the ACO's participation in and operations under the
Medicare Shared Savings Program that implicates the Physician Self-
Referral Law and fully complies with an exception at 42 CFR 411.355
through 411.357.

C. Duration of Waivers

1. Shared Savings Waivers
The waivers related to the distribution of shared savings would
apply to the distributions of shared savings earned by the ACO during
the term of agreement with CMS to participate in the Medicare Shared
Savings Program, even if the actual distributions occur after the
expiration of the agreement.
2. Anti-Kickback Statute and Gainsharing CMP Waivers for Arrangements
in Compliance With a Physician Self-Referral Law Exception
The anti-kickback statute and Gainsharing CMP waivers described
above in sections II.B.2. of this notice with comment period (related
to the anti-kickback statute) and II.B.3. of this notice with comment
period (relating to the Gainsharing CMP) for arrangements that comply
with an existing Physician Self-Referral Law exception would apply
during the term of the ACO's agreement with CMS to participate in the
Medicare Shared Savings Program.

III. Medicare Shared Savings Program: Solicitation of Public Comments
on Additional Waiver Design Considerations

We have proposed waivers in this notice with comment period that
address stakeholder input with respect to shared savings distributions
and treatment under the anti-kickback statute and Gainsharing CMP for
certain arrangements that comply with a Physician Self-Referral Law
exception. We recognize that the proposed waivers described in section
II. of this notice with comment period do not cover all of the possible
financial arrangements involved with setting up and operating an ACO.
Some of those arrangements may not need additional protection

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under the fraud and abuse laws (for example, they might fit in existing
exceptions and safe harbors or might not implicate the laws), while
others may need additional protection. Accordingly, we are soliciting
comments regarding waivers for financial arrangements that would be
necessary to carry out the provisions of the Medicare Shared Savings
Program. When commenting in response to this notice with comment
period, please explain how any favored waivers, modifications, or
additions would be necessary to carry out the provisions of the
Medicare Shared Savings Program and why the financial arrangements at
issue would not qualify for existing safe harbors or exceptions.
We have received significant public input suggesting that we
consider promulgating waivers for ACOs in the Medicare Shared Savings
Program that would apply more broadly than our proposals in section II.
of this notice with comment period. Accordingly, we are soliciting
comments on the topics that follow. Our current view is that we would
grant waivers that would apply uniformly to all ACOs, ACO participants,
and ACO providers/suppliers participating in the Medicare Shared
Savings Program.
Our goal is ultimately to use our waiver authority to support
beneficial ACO development under the Medicare Shared Savings Program,
while still protecting patients and programs from harms caused by fraud
and abuse. Striking this balance is both critically important and
particularly challenging in the context of the Medicare Shared Savings
Program. This is because providers and suppliers will continue to be
paid on a fee-for-service basis, even under the two-sided risk model.
We welcome comments on how best to balance these interests.
The topics on which we seek comment are described in the paragraphs
that follow. We note that certain comments will be relevant to multiple
topics; we will consider comments even when they combine several of the
following topics:
Arrangements related to establishing the ACO. We are
interested in comments addressing whether it is necessary to waive the
Physician Self-Referral Law, anti-kickback statute, or Gainsharing CMP
for remuneration, directly related to: (1) Forming the ACO; (2)
implementing the governance and administrative requirements applicable
to the ACO under the final regulations for the Medicare Shared Savings
Program; or (3) building technological or administrative capacity
(including providing training) needed to achieve the Medicare Shared
Savings Program cost and quality goals. For purposes of this paragraph,
we are interested in comments addressing remuneration in the form of
payments used to finance actual investment or startup expenses, as well
as nonmonetary benefits transferred for the purpose of establishing the
ACO. We also seek public comment on the exact type of expenses and
corresponding financial arrangements that might be covered by a waiver
for arrangements involving initial investments or startup expenses, and
the period of time during which an investment or payment would be
considered an ``initial'' investment or ``startup'' expenditure. We
also seek comments on any safeguards that could be incorporated to
protect patients or Federal health care programs from fraud and abuse.
For example, we seek comments on whether protected remuneration should
be required to be commercially reasonable.
Arrangements between or among ACO participants and/or ACO
providers/suppliers related to ongoing operations of the ACO and
achieving ACO goals. We are interested in comments addressing whether
the Physician Self-Referral Law, anti-kickback statute, or Gainsharing
CMP should be waived for financial arrangements (other than those
created by distributions of shared savings, as described in section II.
of this notice with comment period) between or among ACO participants
and/or ACO providers/suppliers that are: (1) Necessary for and directly
related to operating the ACO; or (2) necessary for and directly related
to achieving the integrated care, cost savings, and quality goals of
the Medicare Shared Savings Program. If such a waiver is favored, we
request public comments on the types of financial arrangements that
should be covered by a waiver and whether these financial arrangements
should be required to be commercially reasonable and reflect fair
market value.
Arrangements between the ACO, its ACO participants, and/or
its ACO providers/suppliers and outside individuals or entities. We are
interested in comments addressing whether the Physician Self-Referral
Law, anti-kickback statute, or Gainsharing CMP should be waived for
financial arrangements (other than those created by distributions of
shared savings, as described in section II. of this notice with comment
period) between the ACO, its ACO participants, and/or its ACO
providers/suppliers and entities or individuals outside the ACO, where
the financial arrangements are: (1) Necessary for and directly related
to establishing the ACO; or (2) necessary for and directly related to
achieving the integrated care, cost savings, and quality goals of the
Medicare Shared Savings Program. We seek particular input on how this
could be done while minimizing the potential for fraud and abuse
(including whether these financial arrangements should be required to
be commercially reasonable and reflect fair market value).
Distributions of shared savings or similar payments
received from private payers. We are interested in comments addressing
whether a waiver is necessary to address distributions of shared
savings payments received by the ACO from a private payer. We are
seeking comments on this topic because ACOs under the Medicare Shared
Savings Program may also operate under private payer contracts. Some
stakeholders have expressed concern that payments under private payer
contracts might implicate the fraud and abuse laws where the payments
flow between parties that also have referral relationships with respect
to Federal health care program patients. We solicit comments on the
advisability of a waiver in this context, the scope and design of such
a waiver, and whether any specific conditions are needed or should be
imposed to prevent fraud and abuse.
Other financial arrangements for which a waiver would be
necessary. We are interested in comments addressing whether there are
financial arrangements not addressed in the above topics for which
waivers of the Physician Self-Referral Law, anti-kickback statute, or
Gainsharing CMP should apply. Specifically, we seek comments describing
specific financial arrangements (or combinations of arrangements), why
they would be necessary for and directly related to the operations of
ACOs under the Medicare Shared Savings Program, why no current
exception or safe harbor would apply, and any applicable conditions or
safeguards that should apply if a waiver were to be granted.
Duration of waivers. We are interested in views on the
duration of any waivers. Except as noted in section II. of this notice
with comment period with respect to shared savings distributions, we
currently expect that waivers would apply during the term of an ACO's
agreement with CMS under the Medicare Shared Savings Program, and that
waivers would cease to apply if the agreement is terminated before the
end of the term. We solicit comments on this or other approaches.
Additional safeguards. We seek comments addressing any
additional

[[Page 19660]]

safeguards that might be necessary for and effective to protect
patients and the Federal health care programs. We have premised our
proposed waivers on the fact that ACOs, ACO participants, and ACO
providers/suppliers under the Medicare Shared Savings Program will be
required to comply with all applicable rules and regulations governing
the program, including, for example, all monitoring, transparency,
marketing, and quality requirements. We are interested in public
comments addressing the sufficiency of these protections for purposes
of fraud and abuse law waivers.
Scope of proposed waivers in section II. of this notice
with comment period. We seek comments addressing the scope of the
waivers described in section II. of this notice with comment period. In
particular, we are interested in comments as to whether the proposed
waivers are too broad or too narrow, and, if so, how such over- or
under-breadth might best be addressed. In addition, in section II.B. of
this notice with comment period, we propose that the Physician Self-
Referral Law, anti-kickback statute, and Gainsharing CMP be waived in
circumstances where certain activities are ``necessary for and directly
related to'' the ACO's participation in and operations under the
Medicare Shared Savings Program. We seek comments on this standard, as
well as comments recommending other standards that might be used to
ensure that a waiver of the fraud and abuse laws is limited to ACO
purposes. We are interested in examples of how this standard might
apply to specific arrangements contemplated by ACOs, either to include
or exclude the arrangements from the protection of a waiver. For
example, we do not intend to extend waiver protections to ACO
participants or ACO providers/suppliers that have independent financial
arrangements with potential referral sources that are unrelated to the
ACO, its operations, or the Medicare Shared Savings Program.
Two-sided risk model. The Medicare Shared Savings Program
proposed rule contemplates that all ACOs will eventually participate in
a two-sided risk model pursuant to which the ACO would assume financial
risk if costs for its aligned beneficiaries exceed certain thresholds.
As currently proposed, CMS would not require the ACO to put its ACO
participants or ACO providers/suppliers at risk for cost overages.
However, CMS would permit ACOs to place some or all ACO participants
and/or ACO providers/suppliers at risk. We are interested in comments
addressing whether additional or different fraud and abuse waivers
might be appropriate for ACOs participating in the two-sided risk
model. We are particularly interested in comments on the relative risk
of overutilization or increased program costs (and, conversely, the
risk of underutilization or stinting) arising from the downside risk
feature of the two tracks being proposed for the Medicare Shared
Savings Program and whether the relative risk should impact the scope
of the waiver. In addition, we seek comments on whether different
waivers would be necessary for and appropriate in circumstances where
ACO participants and/or ACO providers/suppliers may individually bear
risk for the cost of items and services furnished to ACO beneficiaries.
For example, we are interested in whether such waivers should extend
only to compensation that places referring parties at risk for
achieving the quality and performance metrics under the Medicare Shared
Savings Program. Similarly, we are interested in comments addressing
whether any additional financial arrangements arising in connection
with the downside risk (for example, escrow accounts, surety bonds, and
letters of credit) necessitate waiver protection and, if so, under what
circumstances.
Use of existing exception and safe harbor for electronic
health records arrangements. We are interested in comments addressing
whether we should waive the Physician Self-Referral Law and anti-
kickback statute for ACO arrangements that satisfy the existing
exception and safe harbor for electronic health records arrangements
(42 CFR 411.357(w) and 42 CFR 1001.952(y)), but that are expected to
occur after the sunset date of 2013 currently applicable to that
exception and safe harbor.
Beneficiary inducements. We seek comments addressing
whether and under what circumstances it would be necessary for the
Secretary to waive, in whole or in part, the provisions of section
1128A(a)(5) of the Act (the prohibition on inducements offered to
Medicare and Medicaid beneficiaries) in connection with the Medicare
Shared Savings Program. Specifically, we seek comments describing
arrangements (or combinations of arrangements) that would require
protection, why those arrangements would be necessary to carry out the
provisions of the Medicare Shared Savings Program, and any applicable
conditions or safeguards that should apply if a waiver were to be
granted to ensure that beneficiaries are not inappropriately induced to
obtain services from ACO participants or ACO providers/suppliers.
Timing of waivers. We seek comments addressing whether
final waivers should be published contemporaneously with, in advance
of, or soon after final rule regarding the Medicare Shared Savings
Program.

IV. Center for Medicare and Medicaid Innovation: Solicitation of Public
Comments on Waiver Design Considerations

Section 1115A of the Act establishes within CMS the Center for
Medicare and Medicaid Innovation (Innovation Center) ``to test
innovative payment and service delivery models to reduce program
expenditures under the applicable titles while preserving or enhancing
the quality of care furnished to individuals under such titles.'' In
selecting models, the Secretary is directed to prefer models that also
improve coordination, quality, and efficiency of health care services
furnished to Medicare, Medicaid, and dually eligible individuals. In
relevant part for purposes of this notice, section 1115A(d)(1) of the
Act provides that the Secretary ``may waive such requirements of Title
XI and XVIII . . . as may be necessary solely for purposes of carrying
out this section with respect to testing models described in subsection
(b).'' This waiver authority is specific to activities carried out
under section 1115A of the Act and, like the waiver authority under
section 1899(f) of the Act, does not address other arrangements. At
this time, we are interested in public comments on the separate waiver
authority at section 1115A(d)(1) of the Act and how we might best
exercise it to address demonstrations and pilot programs under section
1115A of the Act.

V. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this document.

Authority: Sections 1899 and 1115A of the Act.

Dated: March 24, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Dated: March 28, 2011.
Daniel R. Levinson,
Inspector General.
[FR Doc. 2011-7884 Filed 3-31-11; 11:15 am]
BILLING CODE 4120-01-P; 4152-01-P