OIG Releases Yet Another Advisory Opinion 15-08

Medigap Arrangment Involving PHO Discounts

Someone must be busy at the Office of Inspector General’s Office. Last week they released two new advisory opinions and a Special Fraud Alert. This week they released another Advisory Opinion, this time addressing sharing savings from a preferred hospital network between a Medigap insurer and its policy beneficiaries. The program at issue provided a premium credit of $100 toward the policyholder’s next renewal premium for participating in a discount program involving price reductions from a physician-hospital organization.

The second part of the program involved negotiated service rates with a physician-hospital organization (PHO). The PHO agreed to discounts of up to 100% of the Medicare Part A inpatient deductibles which would normally be paid by the Medigap plan. The PHO received an administrative fee from the Medigap plan for each discount that was provided by the PHO.

The OIG analysed the program under the civil monetary penalty (CMP) provisions and the Anti-Kickback Statute (AKS) and concluded that the arrangement would not constitute grounds for civil monetary penalties or administrative sanctions.

The OIG found that discounting of the inpatient deductible created a low risk of fraud or abuse because the Medicare Part A payments are fixed and the discount would not impact reimbursement amounts. Additionally, the OIG observed that patients would not generally haveknowledge of the discount and would not be encouraged to seek additional care. The program did not offerfinancial rewards to the physicians involved in the patient’s care and the program was open to all providers who agreed to the discount program through participation in the PHO.
The OIG also found that the premium credits that were provided to beneficiaries created minimal risk of program abuse.

The OIG also noted that the proposed arrangement has the potential of lowering costs for policyholder under the Medigap plan and that the savings would be reported to the state regulatory agency.

Medical Director – Fraud Alert – Physician Compensation

The Office of Inspector General of the Department of Health and Human Services release a new Fraud Alert on June 9, 2015.  The Fraud Alert relates to physician compensation for medical directorships and other services and warns that the compensation arrangements under these arrangements must be at fair market value and must require legitimate services to be performed in return for that compensation.  This is nothing new for those involved in physician compliance issues. However, the fact that the OIG chose this issue for a special Fraud Alert is significant in itself.

Medical director compensation has gained the attention of governmental enforcers over the years with some high profile cases that have focused on fraudulent medical director arrangements.  The compliance industry has tightened its belt on these issues; requiring strict adherence to policies and guidelines for medical director compensation. Clearly there is a legitimate need for health care providers to retain physicians to provide medical direction of various service lines.  In fact, regulations require medical director oversight in many areas.  Even where there is a legitimate need, it is necessary to carefully structure the medical director arrangement to be legally compliant.

You may find your compliance officer of health lawyer advising even more restrictive structuring of medical director arrangements as a result of this Fraud Alert.  The OIG uses Fraud Alerts to place emphasis on areas of concern.  These issuance must be taken seriously and should cause providers to review their policies, procedures and contracts to assure that they are legally compliant and could withstand scrutiny by external government investigators.

A few things to consider include:

• Specifically defining the precise services that are required of the medical director.
• Assuring that contracts are current, validly executed, and have not expired.
• Require regular logs to be provided by the medical director which detail the services that are actually performed.
• Require the service logs to correspond to specific duties that are described in the director agreement.
• Support compensation with external fair market value opinions.
• Cap compensation to assure that fair market value is never exceeded.

These are just a handful of issues providers need to consider when entering these arrangements with physicians.  For further details, contact your health care attorney or compliance officer.  By all means, pull your medical director agreements off the shelf and make certain that they are legally compliant.  You cannot assume that those arrangements will not be scrutinized by government enforces.

See – Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability June 9, 2015.

CMS Releases Final Revised Shared Savings Program Regulations

The Center for Medicare and Medicaid Services (CMS) has issued final regulations revising requirement applicable to Accountable Care Organizations (ACOs) under the Medicare Shared Savings Program (MSSP).  CMS previously issued proposed rules and a notice of rulemaking in December of 2014 which were finalized on June 9, 2015 after consideration of comments received during the comment period.  The new rules are effective in August with just a few exceptions and contain some fairly significant changes in the rules that govern ACOs and applications under the MSSP.

We will be reviewing the regulations in detail and providing a comprehensive summary, so check back or grab our RSS feed.

A bullet form listing of some of the key changes in the final regulations include:

• New requirements for ACO specific contracts or contract amendments.

• Additional details on the ACO requirement to establish mechanisms for shared governance among ACO participants.

• New standards for submitting a list of ACO participants/supplier.

• Expansion of program integrity and provisions to protect beneficiaries.

• Rules regarding adjustment to benchmarks resulting from mergers or acquisitions.

• ACOs are required to maintain a dedicated webpage and are required to post certain information using CMS templates on that web page.  Information that must be posted included:
  • identification key clinical and administrative leaders
  • identification of the types of ACO participants involved in the ACO
  • quality measurement performance information
  • information regarding shared savings payments and losses

• Specific requirements for ACOs to submit executed provider agreements along with their initial application and upon renewal.

• CMS authority to take action against or terminate and ACO that does not continue to meet the minimum assigned beneficiary standards.

• Rules regarding modification to benchmarks during a pending performance year.

• A prohibition on an ACO provider filling the “beneficiary representative” slot on the ACO’s governing body.

• Additional flexibility regarding the qualifications of the ACO’s medical director.

• A transitional process from the Pioneer program to the MSSP.

• Revised process for beneficiaries to elect to opt out of data sharing.  Beneficiaries will only be permitted to opt out directly through CMS.

• Expansion of beneficiaries that are included in aggregate reports.

• Removal of the requirement for ACOs to provide opt-out information to beneficiaries before requesting claims data.

• Waiver of the three-day inpatient stay rule for certain nursing home admissions during Track 3.

• Several revisions to the beneficiary assignment process.

• Changes to the annual shared savings repayment mechanisms.

• Permitting a second year of Track 1 participation for certain ACOs.

• Revisions to the manner in which ACOs may select their MSR/MLR under Track 2.

• Provision for prospective assignment of beneficiaries to Track 3.

• Sharing of up to 75% of savings in Track 3.

• First year benchmarking remains unchanged.

• Revision of  benchmarking methods applicable to ACOs entering their second and subsequent contract periods.   Benchmarking years will be equally weighed to reflect the average per capita shared savings.