The IRS/DOJ/FTC Weigh-in on ACOs

Following the release of the CMS proposed ACO rule, the IRS has released a notice requesting comment whether existing guidance for tax-exempt organizations seeking to participate in the Medicare Shared Savings Program as ACOs is sufficient and whether additional, and what, guidance may be needed. 

Released along with the CMS Proposed ACO Rule, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) joint Proposed Antitrust Policy Statement is available regarding antitrust enforcement for ACOs.  The proposed statement sets forth and requests public comment on a proposed "safety zone" for certain ACOs as well as an expedited review process.  It coordinates antitrust competition analysis with CMS's review of ACO applications to ensure necessary guidance is available for the formation of procompetitive ACOs.

For some "light" weekend reading, check out all the documents related to the coordinated efforts of the agencies:

CMS Proposed ACO Rule

CMS/OIG Joint Notice of Potential Fraud and Abuse Waivers

DOJ/FTC Proposed Antitrust Policy Statement

IRS Solicitation of Comments


"Soon" becomes Now - CMS releases long-awaited ACO Rules

The long wait is finally over.  The Centers for Medicare and Medicaid Services finally released the much anticipated Accountable Care Organization (ACO) proposed rules today after lengthy delays and promises that the rules would be out "soon."  The proposed rules set forth the requirements for the Medicare Shared Savings Program and are expected to clarify many questions about how ACOs will operate and receive incentive payments under the Shared Savings Program. 

The HHS Office of the Inspector General (OIG) has also released a notice and request for public comment on proposed fraud and abuse waivers for application of Stark, the Anti-kickback Statute and certain civil monetary penatlies (CMP) law provisions to ACOs. The Secretary is authorized to waive these laws as necessary to implement the Shared Savings Program.  The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are also expected to weigh in on the antitrust implications for ACOs.  

The Antitrust Headache: What ACOs, AT&T and Blue Cross have in Common

So what exactly do a nation-wide health insurer and the second (potentially now first) largest U.S. wireless provider have in common? Upcoming battles over the antitrust implications of their actions and a not-so-beautiful friendship with the DOJ. 

For AT&T, its headache began last weekend when it announced its plans to buy T-Mobile for $39 billion, giving it effectively a 40% share of the current wireless market share and raising questions from network coverage to increased quality of service, pricing and competition.  AT&T and T-Mobile predict that the quality of calls would improve, coverage would be expanded, and more individuals would have access to faster wireless data connections as a result of the merger.

In a completely unrelated market and action, Blue Cross Blue Shield health insurance plans in the District of Columbia, Kansas, Missouri, North Carolina, Ohio, South Carolina and West Virginia recently found themselves on the receiving end of a U.S. Department of Justice (DOJ) subpoena.  The subpoenas come as part of a lawsuit filed last year by the DOJ against Blue Cross Blue Shield of Michigan alleging the insurer entered into agreements to raise hospital prices. 

Far from immune, health care providers and other stakeholders looking to form and operate Accountable Care Organizations (ACOs), the AT&T and Blue Cross cases serve as a reminder of the significant risk of antitrust scrutiny that such collaboratives can be subject to.  The development of such ACOs through hospital and physician joint ventures and similar relationships has the potential to create substantial market power and may encourage monopoly and price-fixing activity, thus coming under the watchful eye of the DOJ.  The DOJ and FTC are expected to address this matter soon in joint collaboration with the forthcoming proposed ACO regulations from CMS (see Statement of Sharis A. Pozen, Chief of Staff, Antitrust Division. before the Subcommittee on the Courts and Competition Policy, Concerning Antitrust Enforcement in the Health Care Industry (December 1, 2010)).

To read more, click "Continue Reading" below.

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Meaningful Use Missing for Behavioral/Mental Health

As Meaningful Use participation kicks off this year, eligible health care providers and facilities are scrambling to make sure they will qualify for the incentive payments being shelled out by the Medicare and Medicai EHR Incentive Programs ("EHR Incentive Programs") established by the American Recovery and Reinvestment Act as part of HITECH.  Yet, key sets of providers and facilities are glaringly missing from the list of those eligible for the EHR Incentive Programs.

The need to incorporate substance abuse, behavioral and mental health treatment professionals and facilities into a cohesive network of treatment along with the rest of an individual's medical treatment has long been recognized nation-wide.  However, these crucial health care providers and facilities are not currently eligible standing alone to receive incentive payments for incorporating meaningful use of EHR technology into their practices and facilities.

The Current Payment Structure

As currently provided for by HITECH and ONC's regulations, certain providers and facilities are eligible for incentive payments where they demonstrate "meaningful use" of certified EHR technology.  The EHR Incentive Programs exclude:

  • Clinical psychologists
  • Psychiatric hospitals
  • Clinical social workers
  • Mental health and substance abuse treatment facilities

For example, a community behavioral health organization ("CBHOs") would not be eligible for incentive payments even though providing the same or additional services that a hospital (eligible for facility incentive payments) might provide.  Likewise, while a psychiatrist, primary care physician or nurse practitioner affiliated with a CBHO could potentially receive incentive payments as "eligible professionals", the facility itself along with other health care providers, such as psychologists and clinical social workers providing services there, would not. 

Although the availability of funding may have played a large part of this omission, the exclusion of substance abuse and behavioral and mental health from the EHR Incentive Programs runs contrary to the very ideology and goals of the Programs.  By far, the populations served by these providers and facilities are in greatest need for the improved efficiency, quality, coordination and integration of health care that EHR technology facilitates.

The Need for Increased Eligiblity: The Behavioral Health Information Technology Act of 2011

Extending the EHR Incentive Programs to these key providers and facilities would provide much needed assistance in the adoption and implementation of EHR technology.  It would help substance abuse, mental and behavioral health professionals access recent and up-to-date patient medical histories and would improve the accuracy of diagnoses, the quality of care received by patients and bridge gaps in the provision of mental and substance abuse treatment services.  With access to EHR technology, physicians and substance abuse or mental and behavioral health professionals would be better able to coordinate adn integrate mental or behavioral health care into the rest of a patient's medical care, especially for patients admitted through hospital Emergency Departments who may be involved in care at multiple facilities.

Last week, legislation was introduced into the Senate with the aim of rectifying this oversight. The Behavioral Health Information Technology Act of 2011 ("BHITA" for short), S. 539, was sponsored by Senator Sheldon Whitehouse and seeks to expand eligibility for Meaningful Use participation to substance abuse and behavioral and mental health providers and facilities. Sen. Whitehouse stated,

"Mental health care is a critical component of a health care safety net and allowing these providers access to cost-saving, quality-enhancing advances in health information technology will improve the care that millions of Americans receive." 

Previous efforts to amend HITECH have unfortunately already failed, as a similar bill, the Health Information Technology Extension for Behavioral Health Services Act, H.R. 5040, died in the House last year.  However, the similar BHITA introduced this year into the Senate shows that the need to include these vital providers and facilities continues to be recognized by policymakers.

The BHITA would:

  • Extend Medicare and Medicaid eligible professional incentive payments to clinical psychologists and social workers
  • Extend Medicare incentive payment eligibility to community mental health centers, private and public psychiatric hospitals, residential/outpatient mental health and substance abuse treatment facilities
  • Clarify eligibility for community health centers, psychiatric hospitals, substance abuse and behavioral and mental health professionals, residential/outpatient mental health/substance abuse treatment facilities as Health Information Technology Regional Extension Centers

If passed (and it has only made its way to the Senate Finance Committee so far), the BHITA would be one big step towards treatment of the individual as a whole through better integration and coordination of medical care with substance abuse and mental and behavioral health care.  Yet even if passed, additional efforts will likely still be needed to achieve complete efficiency, integration and coordination of care for other populations.

An amendment or similar program for long term care facilities may also be necessary in the future, as individuals in need of long term care comprise yet another population desperately in need of efficient and coordinated systems. Although the Patient Protection and Affordable Care Act provides grants for long term care facilities, the grants are nothing like the aggressive EHR incentive payments and program created by HITECH.  To achieve the goals sought after by the EHR Incentive Programs of efficiency, coordination and improved quality of care for patients, these facilities, along with the providers of substance abuse, mental health and behavioral health treatment and services, need to be folded into the EHR development and implementation process.     

CVS in the HIPAA Spotlight...Again.

On March 7, CVS Caremark (CVS) hit the HIPAA spotlight again, and not in a good way.  Back in 2009, CVS was the target of a joint U.S. Department of Health and Human Services (HHS) Offices for Civil Rights (OCR) and Federal Trade Commission (FTC) investigation after media reports alleged that certain CVS locations were disposing of pill bottles containing patient information in unsecured dumpsters.  Although CVS denied the allegations, CVS shelled out a $2.25 million settlement as well as took corrective action to settle both potential HIPAA and FTC violations.  As a result, CVS is being actively monitored by HHS until 2012 and by the FTC for the next 20 years.  Then this past October, CVS was sued by six Texas pharmacies for trade secret misappropriation and Racketeer and Influenced and Corrupt Organizations Act (RICO) violations as a result of certain CVS data-mining practices. The plaintiffs, who are board members of the American Pharmacies, alleged that CVS denied patients choice of pharmacies and smothered business competition as well as used patient PHI in violation of HIPAA. 

Now, Strike 3.  Bloomberg News reported recently that CVS has been sued by a Pennsylvania resident, Arthur Steinberg, and the Philadelphia Federation of Teachers Health and Welfare Fund, for selling patient prescription information to pharmaceutical manufacturers such as Merck & Co, AstraZeneca and Bayer.  Allegedly, CVS was paid by pharmaceutical manufacturers to encourage physicians to prescribe their drugs to patients. "CVS encouraged physicians to do so through letters which included patient names, dates of birth and what medications patients were currently prescribed, allegedly obtained from CVS pharmacy services." The lawsuit accuses CVS of unfair trade practices, unjust enrichment and violating consumer protection laws. 

As Cignet Health and Mass General know all too well from the combined $5.3 million in civil penalties imposed recently by OCR, OCR is pursuing HIPAA violations with a vengeance as a result of HITECH's increased enforcement and CVS could potentially face a HIPAA investigation in addition to the pending lawsuits.  HIPAA as amended by HITECH generally prohibits Covered Entities and their Business Associates from marketing and selling PHI without first obtaining patient authorization.  Only under very limited circumstances may patient information be "sold" or released without authorization for such purposes.  Investigation by OCR is even more likely given that CVS has been under OCR's watchful eye since 2009.  In addition, CVS's actions could also potentially violate its 2009 settlement agreement with OCR, placing it in even more hot water. 

FTC & Attorney General Launch Inquiry into a Nevada ACO is reporting that the Nevada Attorney General's office and the Federal Trade Commission have launched an inquiry into a patient-care collaboration between Reno-based Renown Health and a local cardiology practice.  The publication indicates that Renown Health, a not-for-profit health system, confirmed the "informal inquiry."

Based on the write-up by, Renown’s Institute for Heart & Vascular Health and Sierra Nevada Cardiology Associates formed a partnership as a first step the two providers are taking in forming an accountable care organization (ACO).  The report suggests that Renown also is also in discussions with Reno Heart Physicians to form a similar agreement, but apparently the FTC and Nevada Attorney General's office first want a closer look at the arrangements.  The article also writes that a spokeswoman for Renown has stated:

Their interest is not unexpected given the size of the transaction, and we've met and are cooperating and providing requested information . . . 

The forgoing may strike fear into many collaboratives and pilots that are in a similar position of trying to move forward with planning and developing the necessary clinical, technological and organizational structure that will allow them to operate an ACO by the January 1, 2012 deadline currently set under the PPACA.  However, because the PPACA regulations have not yet been issued, many remain cautious and concerned about becoming "too invested" (financially, and otherwise) before further guidance regarding how the FTC and CMS will exercise their waiver authority granted under the PPACA.  For instance, will new safe harbors and exceptions be created under Stark and AKS, or will ACOs need to submit for waivers on a case-by-case basis?

Last year, on October 5, 2010, the Federal Trade Commission (FTC), the Centers for Medicare & Medicaid Services (CMS), and the Office of Inspector General (OIG) of the Department of Health and Human Services (DHSS) held a 1-day workshop regarding legal issuesrelated to ACOs, namely: antitrust, physician self-referral, anti-kick-back, and civil monetary penalty laws.  See the FTC's Website and Notice of Meeting, 75 Fed Reg 57039 (September 17, 2010). Public comment was also solicited, and physicians, hospitals, health systems, consumers and "all others interested in ACOs" were invited to participate in person or by telephone. 

That day-long workshop resulted in two comprehensive transcripts being posted on the FTC's website: one for the Morning Session, and one for the Afternoon Session.  These are lengthy documents, however each contains critical discussions regarding the legal issues that need to be addressed by ACOs, and therefore I highly recommend each as a "must read" for individuals involved with developing ACOs.

For a copy of the full agenda for the October 2010 Workshop, click "Continue Reading Below". 

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For Lack of a Proper "Print" Function - The Difficulties in Responding to Subpoenas to Produce the EHR

Prepared by Krystyna H. Nowik, Esq.

As the use of electronic health records (EHRs) and participation in health information exchanges (HIEs) expands, so does their appearance in court.  EHRs are more and more frequently relied upon to produce all or part of a patient’s medical record in response to a discovery request.  Not only do EHRs include files, tests results and clinical notes, but they can also include images such as X-rays, charts, consent forms and other documentation, and handwritten notes.  One might be tempted to think that producing an EHR in response to a subpoena would be a fairly easy feat – the records are all available electronically so simply search the EHR for those particular records and print or save them.  But as those well versed with EHR technology are quite aware, responding to discovery requests where an EHR is involved can be a Herculean task for hospitals with anything but the newest EHR technology. 

When paper was the norm, hospital administrators could sort through and pull out only the requested (and relevant) information from the patient’s paper medical record.  With the adoption of EHR technology, however, this became more problematic because not only was there significantly more data available to sort through in a given EHR, but older EHR technology commonly lacked the capacity to efficiently track, filter and selectively “print” or save the required data.  In addition, many hospitals may still retain legacy systems in addition to their current EHR system and as such, data must be pulled from multiple sources to create a complete record.  The result? Extremely time and resource-consuming efforts to produce information in addition to a multitude of discovery problems and reliability concerns.

For hospitals with EHR systems incapable of filtering or selectively printing data, each screen may have to be printed individually using the "print screen" function.  Once printed, there is also no guarantee that the record will look like it would when viewed live in the EHR.  For example, printing may have to be by all treatment notes, then all progress notes, then medications, then audit trails (which may not even be printable at all).  This can result in boxes and boxes of disorganized information being produced, much of which may make virtually no sense at all.  And to top it off, all of the information may not have even been available to the physician at the point of care.  Because of these problems "printing" out EHRs, all too often are plaintiffs requesting access to the live EHR itself, and courts may also order hospitals to figure out how to produce the data in a computer read-only format.  This could potentially require painstaking collaboration with the vendor itself and IT professionals.   

And then come the problems with interpreting the record in court.  When looking at the traditional paper medical chart versus an EHR, it is clear that the EHR is far more complex and generally tells a different and more clinical story than the one needed for litigation.  For example, it may be commonplace for a physician to turn “off” a flag, promoting the need for an explanation as to why the “flag” was turned off or overridden under the circumstances.  Additionally, certain definitions may mean one thing for purposes of one hospital's EHR but something else for another EHR.  For example, an order "accepted" into the EHR system could mean either it was pending or that it was officially entered and signed off on by the physician.  This discrepancy would have to be explained in court by a knowledgeable member of the hospital's HIM or IT department.  Another problem is that come a plaintiff's day in court, the EHR technology, functions and capabilities may look nothing like when the physician actually had access to the information, making it impossible to reproduce exactly what the physician saw that day(s).  One can only imagine the number of people who would be required to testify as to the system’s capabilities, lags in time between when procedures were actually performed and when they were actually entered into the EHR, current and prior functionalities, and how audit trails did and currently function. 

In addition, hospitals and providers may also have trouble when patients request copies of their medical record in electronic format, as HITECH expanded patient access rights to include such copies where the information is maintained in an EHR.  HITECH requires copies to be produced in an electronic form and format if the individual so chooses.  Even if not readily producible, a hospital would still be required to produce the record in a readable electronic form agreed to by the individual and the hospital.  And if all these concerns aren’t enough to make one’s head spin, when HIEs are thrown into the blender, things get even more complicated.  Putting aside the issues surrounding whether and when an HIE may be properly served with a subpoena for medical records, where an HIE functions with a “centralized” or even a hybrid architecture (meaning it has some key components centralized and others federated), it could also be pulled into litigation along with the individual provider(s) to produce EHRs or related records that it may maintain and control.  With a centralized architecture, the HIE itself stores and controls the data or maintains registries as opposed to the individual providers storing the data and merely pushing or pulling it into and through the HIE.  Even where an HIE functions primarily with a federated architecture (de-centralized), it will have audit trails and other records which could be required during the course of litigation or even for investigation by the Office of Civil Rights (OCR).  

Even though EHR records in general are as accurate as the paper medical record would be, separating that information from its source and producing it in a readable and comprehensive format creates more challenges than many hospital and providers are capable of dealing with currently.  Although certainly EHR technology and HIE capabilities have evolved and continue to evolve rapidly (Meaningful Use, anyone?) to respond to many of these challenges, hospitals and health care providers who have not yet updated their systems, or have only updated parts of their systems, still must deal with these concerns, particularly when involved in litigation.  Developing policies and procedures to deal with discovery requests concerning EHRs is an absolute necessity as well as ensuring key management personnel, such as privacy, health information management (HIM) and information technology (IT) officers, understand exactly how the EHR functions (from audit trails to authentication of users) and what it is capable of producing for litigation and other non-clinical purposes. 

NJ ACO Pilot Bill Approved by Senate Budget and Appropriations

See prior Legal HIE post "NJ ACOs, will they fly?"
For Release: Immediate
Thursday, March 03, 2011
Contact: Jason Butkowski
(609) 292-5215
TRENTON – A bill sponsored by Senators Joseph F. Vitale and Jim Whelan which would establish a three-year pilot program in the Department of Human Services in order to make sure Medicaid recipients have access to quality health care was approved by the Senate Budget and Appropriations Committee today by a vote of 7-5.

“Under the current health care delivery and payment structure, Medicaid recipients are often unable to access high-quality, cost-effective health care,” said Senator Vitale, D-Middlesex, and Vice Chair of the Senate Health, Human Services and Senior Citizens Committee. “As a result, we pay more money for less-than-stellar results in terms of positive patient outcomes. It’s time that we move away from the existing system which puts vulnerable New Jerseyans at a disadvantage to receive high-quality care, and begin to invest State resources in a smarter, cost-effective model of health care for Medicaid enrollees.”

“This bill is about spending State health care dollars smarter, and improving care for people who depend on our State’s health care safety net for access to medical services,” said Senator Whelan, D-Atlantic, and a member of the Senate health panel. “Right now, we lack the objective evaluation and cost-effective protections to make sure that we’re getting the biggest bang for our buck, and providing the best care possible for people enrolled in the Medicaid system. It’s time that we do better for New Jerseyans in need.”

The bill, S-2443, would create the “Medicaid Accountable Care Organization Demonstration Project” to ensure that Medicaid recipients in New Jersey have access to high-quality, cost-effective medical care. The bill would establish a demonstration project within the Department of Human Services to increase access to primary care, behavioral health care, and dental care by Medicaid recipients in a particular region. The bill would also improve the quality of health care by establishing objective metrics and relying on patient experience, and would reduce unnecessary and inefficient care without interfering with a patients’ access to the health care providers and services they need to stay healthy.

The bill would authorize Accountable Care Organizations (ACOs), defined as nonprofit corporations, to provide coordinated, high-quality care to Medicaid recipients in a municipality or defined geographic region with more than 5,000 Medicaid recipients. If the program proves successful in lowering costs and improving care, the sponsors said they would consider working with the Department to establish a permanent program.

“As part of the federal health care reform law, states have been given the authority to empower ACOs to provide coordinated, high-quality, cost-effective health care to Medicaid recipients,” said Senator Whelan. “Frankly, we’re flying blind right now in terms of the level of care available to Medicaid recipients, and it’s time to try something new to create a high-quality standard of care that allows us to achieve the best patient outcomes at a fraction of the current price. By shifting to a smarter model of care, we can maximize the impact of our health care investment.”

“Whether it’s FamilyCare or the medical home pilot program, New Jersey has been a laboratory for best practices in administering and delivering health care for New Jerseyans in greatest need, and the Medicaid ACO Demonstration Project is another step forward in better health care at less cost to the State’s taxpayers,” said Senator Vitale. “We recognize that we have a responsibility to provide quality care for people who depend on Medicaid, and we have to stretch limited health care dollars as far as they will go. By moving to an ACO model of delivering health care services, we can achieve both, and will once again set New Jersey up as a national model for other states to follow.”

The bill now heads to the full Senate for consideration.