Can denying access to care be Healthcare Fraud?

If ACOs Deny Access to Medicare Advantage Patients is that healthcare fraud:

Primary Care Physician (PCP) Practices or companies that encourage and promote claiming an exaggerated level of severity of a beneficiary's (or patient's) medical condition.  The higher the documented severity the higher the ACO Medicare Advantage capitated rates from Medicare.  This occurs when the Medicare beneficiary enrolls in a ACO Medicare Advantage health insurance plan sponsored by private insurance companies.  The less the patient uses medical services, the more money the PCP makes.  Hence the scheme involves the PCP denying the patient access to specialists services in order to keep the actual costs low.   The PCP is paid a capitated rate based on the foreseen risk of the patient, but the PCP denies access to the patient in order to keep the costs low and the profitability high.  

Accountable Care Organizations by their very nature are structured in a way that implicates the so-called “Fraud and Abuse Laws.”  ACO provider participants have a financial stake in the organization, refer patients to other providers within the ACO, and share information about patients and practices – all warning flags for running afoul of the fraud and abuse laws.  However, ACOs were created with the explicit purpose of coordinating care for a population of patients to improve outcomes and reduce costs.  To avoid unduly constraining ACO participants' efforts to provide coordinated care, five waivers to the fraud and abuse laws have been created. This article provides a brief overview of the federal fraud and abuse laws, including the anti-kickback statute, the Stark laws, and the Civil Monetary Penalty laws, along with the corresponding self-implementing waivers to these laws available to ACOs.

The federal anti-kickback statute (42 U.S.C. §1320a-7b) prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program. For instance, the anti-kickback statute might prohibit a hospital from paying a doctor every time that doctor referred a patient to that hospital.

How can ACOs avoid violating these laws?

First and foremost, ACOs should have fraud and abuse issues top of mind as they craft contracts among provider participants and vendors.  Additionally, the Affordable Care Act authorized the Secretary of HHS to waive fraud and abuse laws under certain circumstances.  Five self-implementing waivers have been created to allow ACO providers to coordinate care and share savings without fraud and abuse. Summaries of these waivers are provided below.  It is worth noting that CMS and OIG have indicated their intent to limit these waivers in the future.

What are the Civil Monetary Penalty laws?

The Civil Money Penalties Law authorizes the Secretary of Health and Human Services (HHS) to impose civil money penalties and/or program exclusion for various forms of fraud and abuse involving the Medicare and Medicaid programs. One CMP, the “Beneficiary Inducement CMP” prohibits providing inducements to Medicare or Medicaid beneficiaries to use a particular provider or supplier.  Another CMP, known as the “Gainsharing CMP,” prohibits hospitals from make payments to physicians in order to encourage reductions or limitations on services. For example, a hospital may not increase a doctor's salary as a reward for a reduction in the number of stints implanted.

What is the Stark law?

This law governs physician self-referral for Medicare and Medicaid patients. Physician self-referral is the practice of a physician referring a patient to a medical facility in which the physician has a financial interest, be it ownership, investment, or a structured compensation arrangement. For example, a physician referring his patients to use a lab in which he has an ownership interest might violate the Stark law.

Shared Savings Distributions Waiver

Laws Waived: Waiver of the Physician Self-Referral Law, Federal anti-kickback statute, and Gainsharing CMP

Summary: Applies to distributions and uses of shared savings payments earned under the Shared Savings Program.

Conditions to Qualify:

1) The ACO has entered into a participation agreement and remains in good standing.

2) Shared savings are earned by the ACO during the term of its participation agreement.

3) The shared savings are distributed to or among the ACO's participants, suppliers and providers during the year in which the shared savings were earned by the ACO.

4) Payments of shared savings distributions made directly or indirectly from the hospital to a physician are not made knowingly to induce the physician to reduce or limit medically necessary items or services to patients under the directs care of the physician.

ACO Pre-Participation Waiver

Laws Waived: Physician Self-Referral Law, the federal anti-kickback statute, and the Gainsharing CMP.


1) Applies to start-up arrangements that pre-date an ACO's participation agreement.

2) Subject to certain limitations, including limits on the duration of the waiver and the types of parties covered.

3) Can only be used once.

Conditions to Qualify:

1) The arrangement is undertaken by a party or parties acting with the good faith intent to develop an ACO.

2) Take diligent steps to develop an ACO that would be eligible for a participation agreement.

3) The ACO's governing body has made and duly authorized a bona fide determination that the arrangement is reasonably related to the purposes of the Shared Savings Program.

4) Provide a description of diligent steps taken to develop an ACO. Description of the arrangement is publicly disclosed.

5) ACO must submit a statement on or before the last available application due date for the target year

ACO Participation Waiver

Laws Waived: Physician Self-Referral Law, the Federal anti-kickback statute, and the Gainsharing CMP


1) Applies broadly to ACO-related arrangements during term of participation agreement and for a specified time thereafter.

2) Applies to any arrangement of an ACO.

3) If meet waiver requirements, the waiver period will start on the date of the participation agreement and will end 6 months after the expiration of the participation agreement.

Conditions to Qualify:

1) The ACO has entered into a participation agreement and remains in good standing under its participation agreement.

2) The ACO meets certain requirements concerning its governance, leadership and management.

3) The ACOs governing body has made and duly authorized a bona fide determination, that the arrangement is reasonably related to the purposes of the Shared Savings Program.

4) Both the arrangement and its authorization by the governing body are documented and the documentations meets certain requirements like a description of the arrangement.

Patient Incentive Waiver

Laws Waived: Beneficiary Inducements CMP and the Federal anti-kickback

Summary: Applies to items or services provided by an ACO, its ACO participants, or its ACO providers/suppliers to beneficiaries for free or below fair-market-value.

Conditions to Qualify:

1) The ACO has entered into a participation agreement and remains in good standing under its participation agreement.

2) There is a reasonable connection between the items or services and the medical care of the beneficiary.

3) The items or services are in-kind.

4) The items or services are preventative care items or services or if the items advance one or more clinical goal.

Compliance with the Physician Self-Referral Law (Stark Law) Waiver

Laws Waived: Gainsharing CMP and the Federal anti-kickback statute for ACO arrangements that implicate the Physician Self-Referral Law

Summary: Applies to any financial relationship between or among the ACO, its ACO participants, and its ACO providers/suppliers that implicates the Physician Self-Referral Law.

Conditions to Qualify:

1) The ACO has entered into a participation agreement and remains in good standing under its participation agreement.

2) The financial relationship is reasonably related to the purposes of the Shared Savings Program.

3) The financial relationship fully complies with general exceptions to the referral prohibition related to both.

Ben Mirza is not only an attorney but was formerly a CPA, with a masters of public health.  There are over 100,000 attorneys in Florida, less than 500 of whom were ever Certified Public Accountants, and even less have the trifecta combination of law/finance/strategic healthcare background.   The benefit of this combined and layered skillset works well for clients who want an advocate to approach the issues holistically.  

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