The Stark Physician Self-Referral Law and Accountable Care Organizations: Collision Course or Opportunity to Reconcile Federal Anti-Abuse and Cost-Saving Legislation?

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I. INTRODUCTION II. Overview of Accountable Care Organizations   A. What is an Accountable Care Organization?   B. Structure and Operations   C. Preliminary Cost and Quality Findings III. CONFLICT WITH FEDERAL STARK PHYSICIAN SELF-REFERRAL LAW   A. Potential Implication of Stark   B. Purpose of Stark   C. Stark and ACO Approaches to Achieving Shared Goals IV. CMS' WAIVER APPROACH AND ALTERNATIVES   A. Current Waiver   B. Public Comments Received on CMS' Interim Final Waiver Rule   C. Alternative Approaches V. RECOMMENDATION VI. CONCLUSION 

I. INTRODUCTION

Scholars and legal practitioners have long debated the virtues and vices of integrated models of health care delivery and financing. Few such models have been as promising or as rapidly adopted as Accountable Care Organizations ("ACOs"), the latest concept in delivering cost-effective, high-quality health care. Implementation of pre-ACO models, however, never required extensive grants of immunity to providers and suppliers from the federal Stark physician self-referral law ("Stark") and other fraud and abuse laws. (1) The broad waivers issued by the Centers for Medicare & Medicaid Services ("CMS") for implementing ACOs raise unprecedented legal questions concerning Stark's application to these hospital/physician arrangements designed to decrease costs. Furthermore, the waivers represent new opportunities to reconcile, through rulemaking, the cost savings of ACOs with their attendant risks of physician abuse or patient harm accomplished through Stark-proscribed self-referral.

This Article discusses: the ACO model and how it works (Part I); the specific areas of conflict between Stark regulations and ACOs and their respective approaches to regulating health care cost and quality (Part II); CMS' current interim waiver of Stark for ACO arrangements, including stakeholder reactions through public comment and alternative approaches to resolving ACO-Stark conflict (Part III). Part IV analyzes the costs and benefits of addressing ACO-Stark conflict through a temporary waiver versus ex ante reconciliation of the two regimes. It recommends that CMS maintain the current waiver with additional safeguards to mitigate Stark risks, and consult findings from the 2012 empirical data collected before taking further action.

II. OVERVIEW OF ACCOUNTABLE CARE ORGANIZATIONS

This section provides a general survey of Accountable Care Organizations ("ACOs"). It discusses what an ACO is, how it is structured and operated, and current empirical results regarding ACOs' effects on cost and quality of health care services delivered.

A. What is an Accountable Care Organization?

An Accountable Care Organization ("ACO") is a group of medical providers and suppliers that work together to manage and coordinate care for a patient population. (2) The Medicare Shared Savings Program ("MSSP"), authorized under the Affordable Care Act ("ACA"), gives providers and suppliers the option to create such a structure for Medicare fee-for-service beneficiaries. (3) In exchange for reducing medical costs and maintaining quality of care at or beyond a level specified by CMS, the ACO providers and suppliers receive a share of cost savings realized through voluntarily implementing various service delivery reforms. (4) These include processes to promote evidence-based medicine, sharing of electronic health records ("EHR"), joint decision-making and governance, and care coordination processes. (5) More generally, the ACA statute outlines ACO objectives, which are to: promote accountability, encourage investment in infrastructure, coordinate provision of Medicare services, and redesign care processes for high quality and efficient service delivery. (6)

ACOs have adopted a variety of innovative methods for integrating care and reducing costs for specific patient populations. Studies based on ACO pilot demonstrations present a plethora of qualitative findings of provider-specific approaches to accomplishing ACO goals. …