Leveraging ACO Waivers – An Investment

Opportunity for Physician-Led ACOs

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In Collaboration with:

1Copyright 2019

Property of Synchrony Health and Jones Day

Any rebroadcast, retransmission or sharing of this presentation or any of its content without

the express written consent of both Synchrony Health and Jones Day is strictly prohibited

MAY 14, 2019

ACO Waivers

Anti-Kickback

Statute

Stark

Law

Today’s Topic:

Your Speakers today..

John KirsnerPartner, Jones Day

Advises healthcare organizations of all types

(systems, hospitals, group practices, ACOs, CINs,

and ancillary networks)

Focus on organization formation, transactions

(sales/mergers), payor contracting, and joint

ventures

Has advised in the development of more than a

dozen CINs and has assisted both MSSP and

Commercial ACOs in shared savings arrangements,

distribution strategies, and waiver arrangements

Gary ThompsonCEO, Synchrony Health

Founded country’s first ACO enablement company

for physician-led ACOs - developed 16 ACOs with

1,200 physicians and 120,000 patients

Former VP of Clinical Programs for Humana leading

Care Management, Clinical Informatics and Medical

Cost Trend Detection

Director of Development and Finance for AHI

Healthcare Systems, providing cost and care

management infrastructure for risk-bearing

Physician Organizations

What we’ll discuss

Waivers in Simple Terms

…What they are and how to use them

A Legal Deep-Dive into the Waivers

…and why your attorney has never heard of them

The Logic behind the Waivers

…Yes, CMS knows EXACTLY what they’re doing here

Keys to Staying Compliant

…There will be no running with scissors

Key Elements to Effective Use of the Waivers

…How to avoid the hard lessons

Limitations on Use

…This isn’t a free-for-all

4

ACO Waivers in Simple Terms

Functional Definition: the ACO Waivers were created by CMS and

the Office of the Inspector General to allow “Self-Made”

Exceptions or Safe Harbors to Stark and Anti-Kickback laws in

order to increase the likelihood of success of ACOs in MSSP

“the restrictions these laws place on certain arrangements

between physicians, hospitals, and other individuals and other

entities may impede the development of some of the innovative

care models envisioned by the Shared Savings Program”

-Federal Register, November 2, 2011

Waivers help enable ACOs to align clinical delivery

performance with the ACO financial model to improve the way

care is delivered

It’s all about clearing existing roadblocks5

Example #1:

Start-Up and Operational Funding Scenario: A Group of otherwise unaffiliated Primary Care

Physicians desire to create an ACO but lack the necessary capital

Options:

“Boot-strap” the operation with whatever money the PCPs can contribute

…PCPs don’t have that kind of money

Secure investment capital from private equity or angel investors

…will likely have to give up significant equity

Leverage the ACO Waivers to create “Strategic Partnerships” with Post-Acute, Ancillary, or Specialist Providers who contribute start-up and operating capital and become “Preferred Providers” for the ACO

…creates a strong incentive to work together to improve care coordination and reduce medical costs

6

Example #2:

Mitigating the Increased Risk Exposure

Scenario: New MSSP Rules require ACOs to take on increasing Risk and many Physician-led ACOs will be challenged to remain in the program

Repayment Mechanism Options:

Place funds in escrow

Secure a Line of Credit

Secure a surety bond

Reinsurance can help offset downside risk

The ACO Waivers can be leveraged to work with the ACO’s “Strategic Partners” to secure the necessary capital

…only deepens the existing relationship

7

Example #3:

Creation of ACO-owned Healthcare Services

e.g. Owned, JV’d or Affiliated Imaging Center

There is a shortage of independent, free-standing imaging centers in a market and the ACO desires to take advantage of the lower reimbursement to non-Hospital providers to reduce overall medical costs

Options:

Form a single Tax ID Legal Entity and recruit all ACO PCPs into the new Group Practice, compliant with Stark Laws

…Independent PCPs are independent for a reason

Leverage the ACO Waivers to create an ACO-owned legal entity to provide imaging services to ACO patients

…this approach can be applied to any type of healthcare service

…the ACO’s “Strategic Partners” can also refer to the ACO’s owned services

8

Legal Deep-Dive:

Overview of Stark and Anti-Kickback Statutes

9

Anti-Kickback Statute Stark Law

Prohibition

Solicitation, receipt, offer, or payment of

any remuneration in return for referrals

of items/services payable under Medicare

or Medicaid

Making referrals for DHS payable by

Medicare or Medicaid to an entity

with which physician (or family

member) has a financial relationship

Knowledge

Requirement

Intent-based

(“knowingly and willingly”)

Strict liability

Exceptions Regulatory “safe harbors” * Regulatory “exceptions”

Penalties

Criminal and civil penalties ($25,000 per

offense and/or imprisonment up to 5

years; exclusion from Medicare/Medicaid)

Civil penalties

($15,000 per improper claim;

repayment of claims; exclusion from

Medicare/Medicaid)

* In October 2015, CMS finalized new exceptions and technical clarifications to the Stark Law (e.g., the

“writing” requirement, personal services/lease holdovers, missing signatures, etc.).

Legal Deep-Dive

Five Types of Waivers – Only Three Matter

Shared Savings Distribution Waiver

…to allow flexibility in bonus structures

Patient Incentive Waiver

…Incentivize engagement, compliance and prevention

Participation Waiver

Two other waivers (Pre-Participation Waiver and Physician Self-Referral Waiver) are basically redundant with the Participation Waiver

Applies generally to any ACO-related arrangement that can help achieve “the triple aim”

…can help fund operations through working capital contributions by downstream providers (“Other Entities”)

…can establish the basis for creating ACO-owned healthcare services

10

Legal Deep-Dive:

Key Characteristics of Waivers Breadth – Waivers are broad and permit many arrangements

currently prohibited or which present material risk under the

Stark Law, the Anti-Kickback Statute, and the CMP Law.

Parties Covered –Participation and Shared Savings Distribution

Waivers extend to any arrangement of an ACO, one or more of its

ACO participants or its ACO providers/suppliers, or a combination

thereof, as well as to outside providers and suppliers (i.e., non-

ACO participants) that have a role in coordinating and managing

care for ACO patients.

Public Disclosure –Participation Waivers require public disclosure

of the parties and material terms.

Self-Executing – No application or approval required.

11

Legal Deep-Dive:

Governing Body Determination

For the Participation Waiver, an ACO’s governing body is

required to make a bona fide determination that an

arrangement is “reasonably related” to the purposes of the

MSSP. No specific instructions by CMS on how to make this determination given

wide variety in ACO size, composition, and resources.

However, ACOs must “articulate clearly the bases for their

determinations and authorizations.”

Arrangements that are not reasonably related

to the purposes of the MSSP include: “Pay-to-play” arrangements;

Medical directorships or personal services arrangements where referring

physicians receive payments for no actual services performed; or

Free gifts to ACO providers/suppliers or participants.

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Legal Deep-Dive:

Public Disclosure Requirement The Participation Waivers require the ACO to publicly

disclose the arrangement.

CMS does not expect the disclosure requirements to be

onerous.

Financial/economic terms not required to be disclosed.

Post information identifying the parties to the

arrangement and the type of item, service, good, or

facility provided under the arrangement on a public

website belonging to the ACO within 60 days of the date

of the arrangement.

13

The Logic Behind the Waivers:

(aka “What CMS won’t say…”) Independent Providers are critical to the success of

Accountable Care

…Health Systems have feasted on volume-based care

…Physician-led ACOs have been the most effective ACOs in creating savings in MSSP

…creating aligned financial relationships between independents will improve care coordination, outcomes, and costs

The most important players in this new value-based world are Independent Primary Care Physicians

…Accountable Care is, by definition, Primary Care-centric

…but they lack access to capital

…the additional income available through bonuses and additional ancillary revenue sources can greatly reinvigorate independent Primary Care

14

Staying Compliant:

The Fall-Back Strategy CMS and OIG continue to monitor application of the

waivers to protect beneficiaries and the Medicare

program from fraudulent and abusive conduct.

May propose to revise the waivers or take “other

appropriate action” in the future, if needed.

Have a fall-back strategy in place if waivers are

revised, limited, or otherwise restricted in the future.

Written agreement.

Fair market value determination.

Compliance with other elements of applicable Stark Law

Exceptions and Anti-Kickback Statute Safe Harbors.

15

Effective Use of Waivers:

Avoiding the Hard Lessons It has to work for the people who pay for healthcare (Triple Aim)

…does it really lower healthcare costs?

Improving Care Coordination should be a key component of the

relationship

…care coordination improves outcomes and lowers costs

Build upon already established relationships

…history of good clinical collaboration

Long-term goals are important but ongoing monitoring is critical

…define measurable objectives that align with the triple-aim

The relationship must be actively worked by both sides

…simply writing checks doesn’t magically transform things16

Legal Cautions:

ACO Waiver Limitations

Can only waive certain laws (Stark, AKS, CMP)

…apply only during participation in MSSP

Can’t pay for referral volumes

…no “pay for play”

Compliance with requirements important

CMS/OIG can audit the ACO

Know the “Fall-back Strategy” now

Nobody likes to scramble

17

Q & A

18Copyright 2019

Property of Synchrony Health and Jones Day

Any rebroadcast, retransmission or sharing of this presentation or any of its content without

the express written consent of both Synchrony Health and Jones Day is strictly prohibited

Follow-Up www.ACOExhibitHall.com

Risk Strategies - Chuck Newton

Email: Cnewton@re-solutions.net

Phone: 804-647-8360

Synchrony Health - Gary Thompson:

Email: Gary@SynchronyHealthOne.com

Phone: 502-297-4600

Jones Day - John Kirsner:

Email: JKirsner@JonesDay.com

Phone: 614-281-370019

Copyright 2019

Property of Synchrony Health and Jones Day

Any rebroadcast, retransmission or sharing of this presentation or any of its content without

the express written consent of both Synchrony Health and Jones Day is strictly prohibited