Searching for Safe Harbors? CMS-Sponsored Model Participants Receive Anti-Kickback Statute Protection

*This is the fifth article in a series analyzing recent updates to the Stark Law and Anti-Kickback Statute and their effects on health care providers. To request a copy of the entire series, click here.

In its mission to reward value over volume, the Centers for Medicare & Medicaid Services’ (CMS) Innovation Center develops and tests novel payment and service delivery models for patient care. On November 20, 2020, the Office of Inspector General (OIG) adopted regulations creating two AKS safe harbors related to CMS-sponsored models (the New AKS Regulations) recognizing the importance of such models. 

• The first safe harbor protects payments between CMS-sponsored model participants;
• The second protects patient incentive payments made pursuant to CMS-sponsored models. 

Both safe harbors are found at Section 1001.952(ii) of the Code of Federal Regulations, Title 42.

CMS Innovation Models

As payers and providers transition from fee-for-service to value-based care, participation in Accountable Care Organizations (ACOs) continues to rise. According to Health Affairs, in 2019 there were over 1,500 public and private ACO contracts, covering nearly 44 million patients, reflecting a slow but steady increase over the past ten years. In addition to ACOs, CMS also tests new types of alternative payment models, including models for episode-based payment initiatives, primary care transformation, and initiatives focused on Medicaid and CHIP populations. CMS currently manages 45 different models that are ongoing or accepting applications, and its Innovation Center continues to develop new model varieties, to ensure that different entities and clinicians can participate. CMS posts reports on its models’ successes and setbacks each year here.

Existing Fraud and Abuse Waivers

To facilitate CMS’s experimentation with new payment methods, Congress authorized the Secretary of Health and Human Services (HHS) to issue fraud and abuse waivers to model participants, pursuant to Section 1115A(d)(1) of the Social Security Act. OIG publishes waivers and guidance on using the waivers here. Depending on the model, these waivers permit participants to exchange payments that advance the model’s goals or provide incentive payments to patients, which might otherwise risk AKS enforcement.

Although existing fraud and abuse waivers help protect model participants, they require HHS’s affirmative intervention and the issuance of a waiver. The New AKS Regulations provide an additional safe harbor that model participants can use without needing a separate waiver.

New AKS Safe Harbors for Model Participants and Patient Incentives

Under two new safe harbors, the AKS does not apply to transactions “between or among CMS-sponsored model parties under a CMS-sponsored model arrangement,” or to any “CMS-sponsored model patient incentive.” During the comments phase, stakeholders expressed their hope that the new safe harbors would “encourage greater voluntary participation in new CMS-sponsored models” and result in “a simplified and standardized approach rather than disparate OIG waivers, with tailored conditions, for CMS-sponsored models.”

Existing fraud and abuse waivers may still provide participants additional, specific benefits not found in the safe harbor. Fortunately, OIG assured participants that “[e]xisting model waivers will continue in effect in accordance with the waiver terms,” and that “the promulgation of this safe harbor does not preclude OIG from issuing model-specific waivers in the future.” OIG did caution, however, it would expect to issue fewer model-specific waivers going forward as participants increasingly rely on the safe harbors instead.

Safe Harbor Requirements and Conditions

The safe harbors apply only if CMS makes a determination that the model qualifies for the safe harbor. This requirement ensures that CMS still holds the reins and can determine, in its discretion, that certain models pose too great of a compliance risk to justify an AKS safe harbor.

Second, the safe harbors only apply to CMS-sponsored model participants and their agents. OIG considered comments from stakeholders requesting a broader safe harbor that would also protect other value-based arrangements, not sponsored by CMS. But OIG was convinced that the fraud and abuse risks were still too high. CMS models are highly regulated, monitored, and transparent. This level of oversight from CMS helps reduce fraud and abuse concerns, justifying the safe harbor exception.

Model participants that wish to use this new safe harbor for their transactions must confirm that their financial arrangement supports the CMS model’s goals and the goals of the AKS to reduce fraud and abuse. Parties must document how their transactional arrangement advances the model’s aims, including discouraging the provision of medically-unnecessary items or services. In addition, the parties must confirm that their financial arrangements are not intended to solicit or induce patient referrals or business, echoing the goals of the AKS.

Patient Incentive Safe Harbor

The new safe harbor for patient incentives could spur further experimentation in rewards-based care. During the commenting phase, stakeholders urged OIG to protect a broad range of potential incentives, including for transportation, nutrition support, home monitoring technology, and gift cards. Commenters predicted that future models might experiment with forms of patient incentives that may not “directly” relate to health care, but that still encourage healthy habits or incentivize patients to seek health care. Commenters also sought flexibility on what types of patients could receive these incentive payments, and when.

In response, OIG confirmed that the new AKS safe harbor could potentially protect a broad range of incentives raised by commenters, depending on approval from CMS. In its draft rule, OIG initially required patient incentives to have “a direct connection to the patient’s health care.” In response to comments, the new safe harbor includes other types of incentives if “the participation documentation expressly specifies a different standard.” The incentives may also be furnished not only by CMS model participants but also by other entities specified in the participation agreement. This language preserves CMS’s flexibility. CMS has broad discretion to approve new and different patient incentives in its model participation agreements. These CMS participation agreements, in turn, determine what types of transactions will receive safe harbor protection. OIG’s revisions reflect an ongoing policy choice to afford CMS as much flexibility as possible to design innovative payment systems in the future.

Going Forward

The decision of whether to participate, or continue participating, in CMS-sponsored model is a complex one, with many different benefits and drawbacks. OIG’s New AKS Regulations now provide one additional benefit of participation: an AKS safe harbor. These regulations may help encourage participation in existing models and further innovation in future models.