Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Notices 19655 

1For purposes of this notice with comment 

period, the terms ‘‘ACO,’’ ‘‘ACO participants,’’ and 

‘‘ACO providers/suppliers’’ have the meanings 

ascribed to them in the Medicare Shared Savings 

Program proposed rule. 

2We note that some ACOs may also operate 

under arrangements with private payers. We 

address waivers as they might relate to how ACOs 

distribute payments from private payers in section 

III. of this notice with comment period. 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1345–NC2] 

Office of the Inspector General 

RIN 0938–ZB05 

Medicare Program; Waiver Designs in 

Connection With the Medicare Shared 

Savings Program and the Innovation 

Center 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS) and Office of 

the Inspector General (OIG), HHS. 

ACTION: Notice with comment period. 

SUMMARY: Section 1899(f) of the Social 

Security Act (of the Act), as added by 

the Affordable Care Act (ACA) 

authorizes the Secretary to waive certain 

fraud and abuse laws as necessary to 

carry out the provisions of section 1899 

of the Act (the Medicare Shared Savings 

Program). This notice with comment 

period describes and solicits public 

input regarding possible waivers of the 

application of the Physician SelfReferral Law, the Federal anti-kickback 

statute, and certain civil monetary 

penalties (CMP) law provisions to 

specified financial arrangements 

involving accountable care 

organizations (ACOs) under the 

Medicare Shared Savings Program. In 

addition, section 1115A(d)(1) of the Act, 

as added by section 3021 of the ACA, 

authorizes the Secretary to waive the 

same fraud and abuse laws, among 

others, as necessary solely for the 

purposes of carrying out the provisions 

of section 1115A of the Act with respect 

to the testing of certain innovative 

payment and service delivery models by 

the Center for Medicare and Medicaid 

Innovation. This notice with comment 

period also solicits public input 

regarding that separate waiver authority. 

DATES: To assure consideration, public 

comments must be delivered to the 

address provided below by no later than 

5 p.m. on June 6, 2011. 

ADDRESSES: In commenting, please refer 

to file code CMS–1345–NC2. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

• Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

• By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1345–NC2, P.O. Box 8013, 

Baltimore, MD 21244–8013. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

• By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1345–NC2, 

Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

• By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244– 

1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Comments received by CMS will be 

shared with OIG. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: Neal 

Shah (410) 786–1167 or Troy Barsky 

(410) 786–8873, for general issues and 

issues related to the Physician SelfReferral Law. James A. Cannatti III (202) 

619–0335, for general issues and issues 

related to the anti-kickback statute or 

civil monetary penalties. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Medicare Shared Savings Program: 

Background 

A. Introduction 

This notice with comment period 

seeks public comment on proposed 

waivers of sections 1128A(b)(1) and (2), 

1128B(b)(1) and (2), and 1877(a) of the 

Social Security Act (of the Act) in the 

specific circumstances described below, 

as necessary to carry out the provisions 

of section 1899 of the Act (as added by 

section 3022 of the Patient Protection 

and Affordable Care Act (Pub. L. 111– 

148), as amended by the Health Care 

and Education Reconciliation Act of 

2010 (Pub. L. 111–152) (collectively, the 

‘‘Affordable Care Act’’)). We seek to 

address application of these fraud and 

abuse laws to accountable care 

organizations (ACOs 1) formed in 

connection with the Medicare Shared 

Savings Program 2 so that the laws do 

not unduly impede development of 

beneficial ACOs, while also ensuring 

that ACO arrangements are not misused 

for fraudulent or abusive purposes that 

harm patients or Federal health care 

programs. Elsewhere in this issue of the 

Federal Register, the Centers for 

Medicare & Medicaid Services (CMS) 

published a proposed rulemaking 


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setting forth proposed requirements for 

ACOs under the Medicare Shared 

Savings (hereinafter referred to as the 

Medicare Shared Savings Program 

proposed rule). Section 3022 of the 

Affordable Care Act describes the 

Medicare Shared Savings Program as a 

program to promote accountability for a 

patient population, coordinate items 

and services under Parts A and B, and 

encourage investment in infrastructure 

and redesigned care processes for high 

quality and efficient service delivery. As 

described in the Medicare Shared 

Savings Program proposed rule, the 

Medicare Shared Savings Program is 

designed to achieve three goals: better 

health, better care, and lower cost. 

CMS’s expectation is that ACOs will 

help foster a new approach to delivering 

care that reduces fragmented or 

unnecessary care and excessive costs for 

Medicare fee-for-service beneficiaries 

and other patients. 

The Physician Self-Referral Law, the 

anti-kickback statute, and the civil 

monetary penalty (CMP) provision 

addressing hospital payments to 

physicians to reduce or limit services, 

discussed elsewhere in this notice with 

comment period, are important tools to 

protect patients and the Federal health 

care programs from fraud, improper 

referral payments, unnecessary 

utilization, underutilization, and other 

harms. However, stakeholders have 

expressed concern that the restrictions 

these laws place on certain financial 

arrangements between physicians, 

hospitals, and other individuals and 

entities may impede development of 

some of the innovative integrated-care 

models envisioned by the Medicare 

Shared Savings Program. Section 1899(f) 

of the Act authorizes the Secretary to 

waive these and certain other laws as 

necessary to carry out the Medicare 

Shared Savings Program. 

In section II. of this notice with 

comment period, we set forth proposals 

for waivers of these fraud and abuse 

laws that we believe, based on public 

input and our own analysis, may be 

necessary to carry out the Medicare 

Shared Savings Program. We seek 

public comment on these proposed 

waivers. In section III. of this notice 

with comment period, we solicit public 

input on the possibility of additional or 

different waivers, as well as input on 

other related considerations. 

We expect to issue waivers applicable 

to ACOs participating in the Medicare 

Shared Savings Program concurrently 

with CMS’s publication of final 

regulations for the Medicare Shared 

Savings Program. The requirements of 

the final regulations will bear on the 

scope of any waivers granted for the 

Medicare Shared Savings Program. 

Because of the close nexus between the 

final regulations governing the structure 

and operation of ACOs under the 

Medicare Shared Savings Program and 

the development of waivers necessary to 

carry out the provisions of the Medicare 

Shared Savings Program, we may 

consider comments submitted in 

response to the Medicare Shared 

Savings Program proposed rule and the 

provisions of the Medicare Shared 

Savings Program final rule when 

crafting waivers applicable to the 

Medicare Shared Savings Program. CMS 

may also consider comments received in 

response to this notice with comment 

period when finalizing its regulations 

for the Medicare Shared Savings 

Program. 

B. Section 1899 of the Social Security 

Act 

Section 1899 of the Act establishes 

the Medicare Shared Savings Program to 

encourage the development of ACOs in 

Medicare. The Medicare Shared Savings 

Program is one of the first initiatives 

that will be implemented under the 

Affordable Care Act aimed specifically 

at improving ‘‘value’’ in the Medicare 

program—that is, both higher quality 

and lower total expenditures for 

individual Medicare beneficiaries and 

the Medicare program. Section 1899 of 

the Act encourages ACOs to promote 

accountability for individual Medicare 

beneficiaries and population health 

management, improve the coordination 

of patient care under Parts A and B, and 

encourage investment in infrastructure 

and redesigned care processes for high 

quality and efficient service delivery. 

The redesigned care processes 

developed by ACOs should also 

improve care and lower costs for all 

patients served by the ACO. 

As proposed in the Medicare Shared 

Savings Program proposed rule, ACOs 

will enter into an agreement with the 

Secretary to participate in the Medicare 

Shared Savings Program for not less 

than a 3-year period under one of two 

tracks. Under the first track, an ACO 

would have the opportunity to share in 

actual savings during the first 2 years of 

the agreement. During the third year, the 

ACOs would be in a ‘‘two-sided risk’’ 

model in which they would be eligible 

to receive a higher potential shared 

savings, but also would be required to 

repay the Medicare program if costs for 

the ACO’s aligned beneficiaries exceed 

certain thresholds. Under the second 

track, ACOs would operate under the 

two-sided risk model from the 

beginning of their agreement period. 

Under either model, in order to share a 

percentage of achieved savings with the 

Medicare program, ACOs must 

successfully meet quality and savings 

requirements and certain other 

conditions under the Medicare Shared 

Savings Program. ACO participants and 

ACO providers/suppliers will continue 

to receive fee-for-service payments, and 

the ACO legal entity may choose how it 

distributes shared savings or allocates 

risk among its ACO participants and its 

ACO providers/suppliers. 

C. Waiver Authority Under Section 

1899(f) of the Act 

Section 1899(f) of the Act provides 

that ‘‘[t]he Secretary may waive such 

requirements of sections 1128A and 

1128B and title XVIII of [the] Act as may 

be necessary to carry out the provisions 

of [section 1899 of the Act].’’ This 

waiver authority is specific to the 

Medicare Shared Savings Program, and 

does not address other similar 

integrated-care delivery models. We 

may consider waivers (where authorized 

under the Affordable Care Act), 

exceptions, or safe harbors, as 

applicable, for other types of ACOs, 

integrated-care delivery models, or 

financial arrangements at a later date. 

We note that a waiver of a specific 

fraud and abuse law is not needed for 

an arrangement to the extent that the 

arrangement: (1) Does not implicate the 

specific fraud and abuse law; or (2) 

implicates the law, but either fits within 

an existing exception or safe harbor, as 

applicable, or does not otherwise violate 

the law. We note further that many 

exceptions and safe harbors already 

exist that might apply to ACO 

arrangements, depending on the 

circumstances. 

D. Fraud and Abuse Laws—Background 

1. Physician Self-Referral Law (Section 

1877 of the Act) 

Section 1877 of the Act (42 U.S.C. 

1395nn, the ‘‘Physician Self-Referral 

Law’’) is a civil statute that prohibits 

physicians from making referrals for 

Medicare ‘‘designated health services,’’ 

including hospital services, to entities 

with which they or their immediate 

family members have a financial 

relationship, unless an exception 

applies. These entities may not bill 

Medicare for services rendered as a 

result of a prohibited referral and 

section 1877(g)(1) of the Act states that 

no payment may be made for prohibited 

designated health service referrals. Civil 

monetary penalties also apply to any 

person who presents (or causes to be 

presented) a bill for services for which 

he or she knows or should know 

payment may not be made under section 

1877(g)(1) of the Act. For additional 


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3 75 FR 70165 (2010). 

4 Information about the workshop is available on 

CMS’s Web site at http://www.cms.gov/center/ 

physician.asp. 

5The public comments are available on the FTC’s 

Web site at http://www.ftc.gov/os/comments/aco/ 

index.shtm. 

details, see section 1877(g)(3) of the Act. 

Violations of the statute may also result 

in liability under the False Claims Act 

(31 U.S.C. 3729–33). 

2. The Anti-Kickback Statute (Section 

1128B(b) of the Act) 

Section 1128B(b) of the Act (42 U.S.C. 

1320a-7b(b), the ‘‘anti-kickback statute’’) 

provides criminal penalties for 

individuals or entities that knowingly 

and willfully offer, pay, solicit, or 

receive remuneration to induce or 

reward the referral of business 

reimbursable under any of the Federal 

health care programs, as defined in 

section 1128B(f) of the Act. The offense 

is classified as a felony and is 

punishable by fines of up to $25,000 

and imprisonment for up to 5 years. 

Violations of the anti-kickback statute 

may also result in the imposition of 

CMPs under section 1128A(a)(7) of the 

Act (42 U.S.C. 1320a-7a(a)(7)), program 

exclusion under section 1128(b)(7) of 

the Act (42 U.S.C. 1320a-7(b)(7)), and 

liability under the False Claims Act (31 

U.S.C. 3729–33). Certain practices that 

meet all of the conditions of a statutory 

exception at section 1128B(b)(3) of the 

Act or regulatory safe harbor at 42 CFR 

1001.952 are not subject to prosecution 

or sanctions under the anti-kickback 

statute. 

3. Prohibition on Hospital Payments to 

Physicians To Induce Reduction or 

Limitation of Services (Sections 

1128A(b)(1) and (2) of the Act) 

Sections 1128A(b)(1) and (2) of the 

Act (the ‘‘Gainsharing CMP’’) apply to 

certain payment arrangements between 

hospitals and physicians, including 

arrangements commonly referred to as 

‘‘gainsharing’’ arrangements. Under 

section 1128A(b)(1) of the Act, a 

hospital is prohibited from making a 

payment, directly or indirectly, to 

induce a physician to reduce or limit 

services to Medicare or Medicaid 

beneficiaries under the physician’s 

direct care. Hospitals that make (and 

physicians who receive) such payments 

are liable for CMPs of up to $2,000 per 

patient covered by the payments 

(sections 1128A(b)(1) and (2) of the Act). 

E. Summary of Public Input 

Opportunities 

Since the passage of the Affordable 

Care Act, the U.S. Department of Health 

and Human Services (DHHS) has offered 

numerous opportunities for the public 

to provide input into the design and 

operation of ACOs and waivers 

necessary to carry out the provisions of 

the Medicare Shared Savings Program. 

For example, CMS issued a Request for 

Information Regarding Accountable 

Care Organizations and the Medicare 

Shared Saving Program on November 

10, 2010,3 and held multiple listening 

sessions with stakeholders. CMS, OIG, 

and the Federal Trade Commission held 

a joint workshop on October 5, 2010, 

entitled ‘‘Workshop Regarding 

Accountable Care Organizations, and 

Implications Regarding Antitrust, 

Physician Self-Referral, Anti-Kickback, 

and Civil Monetary Penalty (CMP) 

Laws.’’ 4 We also received and reviewed 

written public comments in connection 

with the workshop.5 Through these 

means, the DHHS has received public 

input representing a wide spectrum of 

views. 

There appears to be a general 

consensus among public stakeholders 

that ACOs have the potential to change 

health care delivery in a manner that 

improves patient care, and that some 

waivers of the fraud and abuse laws may 

be necessary to facilitate their 

operations. However, in general, no 

clear consensus has emerged on the 

scope of the waivers necessary to carry 

out the Medicare Shared Savings 

Program, perhaps because the relevant 

regulations have not yet been published. 

Moreover, it is possible that the 

Medicare Shared Savings Program final 

regulations will include additional 

modifications in response to public 

comments to the proposed regulations. 

Therefore, our approach is to propose 

and solicit comments on possible 

waivers in section II. of this notice with 

comment period, and to solicit 

comments on different, potentially 

broader waivers, as well as additional 

waiver design considerations, in section 

III. of this notice with comment period. 

This approach will facilitate full and 

informed stakeholder input on, and 

government consideration of, these 

important, inter-connected issues. 

II. Medicare Shared Savings Program: 

Proposed Waivers 

We currently contemplate that, 

pursuant to the authority granted under 

section 1899(f) of the Act, the Secretary 

would waive sections 1128A(b)(1) and 

(2), 1128B(b)(1) and (2), and 1877(a) of 

the Act in the specific circumstances 

described below. The waivers would not 

apply to any other provisions of Federal 

or State law. All financial arrangements 

not covered by a waiver would be 

required to comply with existing laws. 

We invite the public to comment on the 

proposed waivers described in this 

section. 

To promote efficiency and ease of use, 

it is our intent to promulgate waivers 

that will be consistent across the fraud 

and abuse laws to the extent possible 

given the different scope and structure 

of the laws. We also intend to apply 

these waivers uniformly to all qualified 

ACOs, ACO participants, and ACO 

providers/suppliers participating in the 

Medicare Shared Savings Program. 

A. Threshold Qualification for Proposed 

Waivers 

In order to qualify for any of the 

proposed waivers described in section 

II.B. of this notice with comment 

period— 

• ACOs would be required to enter 

into an agreement with CMS to 

participate in the Medicare Shared 

Savings Program; and 

• ACOs, ACO participants, and ACO 

providers/suppliers would be required 

to comply with the agreement, section 

1899 of the Act, and its implementing 

regulations (including, without 

limitation, all transparency, reporting, 

and monitoring requirements). 

B. Scope of the Proposed Waivers 

1. Physician Self-Referral Law (Section 

1877(a) of the Act) 

Under this proposal, the Secretary 

would waive application of the 

provisions of section 1877(a) of the Act 

(42 U.S.C. 1395nn(a)) to distributions of 

shared savings received by an ACO from 

CMS under the Medicare Shared 

Savings Program: (1) To or among ACO 

participants, ACO providers/suppliers, 

and individuals and entities that were 

ACO participants or ACO providers/ 

suppliers during the year in which the 

shared savings were earned by the ACO; 

or (2) for activities necessary for and 

directly related to the ACO′s 

participation in and operations under 

the Medicare Shared Savings Program. 

Our intent with this proposal would be 

to protect financial relationships created 

by the distribution of shared savings 

within the ACO, as well as financial 

relationships created by a distribution of 

shared savings outside the ACO, but 

only if the distribution outside the ACO 

relates closely to the requirements for an 

ACO under section 1899 of the Act, 

including achieving the quality and 

savings goals of the Medicare Shared 

Savings Program. We do not intend to 

protect distributions of shared savings 

dollars to referring physicians outside 

the ACO, unless those referring 

physicians are being compensated 

(using shared savings) for activities 

necessary for and directly related to the 


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ACO’s participation in and operations 

under the Medicare Shared Savings 

Program. Other financial relationships 

with referring physicians outside the 

ACO would need to meet an existing 

exception under the Physician SelfReferral Law (for example, the fair 

market value, personal services, or 

indirect compensation exceptions). 

This proposed waiver would be 

limited to distributions of shared 

savings; all other financial relationships 

involving physicians (or their 

immediate family members) or entities 

participating in the Medicare Shared 

Savings Program that implicate the 

Physician Self-Referral Law would still 

need to satisfy an existing exception. 

2. The Anti-Kickback Statute (Sections 

1128B(b)(1) and (2) of the Act) 

Under this proposal, the Secretary 

would waive application of the 

provisions of sections 1128B(b)(1) and 

(2) of the Act (42 U.S.C. 1320a–7b(b)(1)– 

(2)) with respect to the following two 

scenarios: 

• Distributions of shared savings 

received by an ACO from CMS under 

the Medicare Shared Savings Program: 

(1) To or among ACO participants, ACO 

providers/suppliers, and individuals 

and entities that were ACO participants 

or ACO providers/suppliers during the 

year in which the shared savings were 

earned by the ACO; or (2) for activities 

necessary for and directly related to the 

ACO’s participation in and operations 

under the Medicare Shared Savings 

Program. 

• Any financial relationship between 

or among the ACO, ACO participants, 

and ACO providers/suppliers necessary 

for and directly related to the ACO’s 

participation in and operations under 

the Medicare Shared Savings Program 

that implicates the Physician SelfReferral Law and fully complies with an 

exception at 42 CFR 411.355 through 

411.357. 

As with the proposed waiver of the 

Physician Self-Referral Law described 

previously, our intent with the proposal 

under the first bulleted paragraph 

would be to protect financial 

arrangements created by the distribution 

of shared savings within the ACO, as 

well as financial arrangements created 

by a distribution of shared savings 

outside the ACO, but only if the 

distribution outside the ACO is for 

activities necessary for and directly 

related to the ACO’s participation in 

and operations under the Medicare 

Shared Savings Program. We do not 

intend to protect distributions of shared 

savings dollars to referral sources 

outside the ACO, unless those referral 

sources are being compensated (using 

shared savings) for activities necessary 

for and directly related to the ACO’s 

participation in and operations under 

the Medicare Shared Savings Program. 

Other financial arrangements outside 

the ACO would need to fit in a safe 

harbor or otherwise comply with the 

anti-kickback statute. 

Our intent with the proposal under 

the second bulleted paragraph would be 

to protect under the anti-kickback 

statute those financial relationships 

between and among the ACO, its ACO 

participants, and its ACO providers/ 

suppliers that relate closely to the 

ACO’s operations under section 1899 of 

the Act, but only if the relationship 

implicates the Physician Self-Referral 

Law and fits squarely in an exception. 

Ordinarily, compliance with an 

exception to the Physician Self-Referral 

Law does not operate to immunize 

conduct under the anti-kickback statute, 

and arrangements that comply with the 

Physician Self-Referral Law are still 

subject to scrutiny under the antikickback statute. Here, however, in light 

of the specific safeguards proposed to be 

incorporated in the Medicare Shared 

Savings Program, the authority under 

section 1899(f) of the Act for the 

Secretary to waive the anti-kickback 

statute as necessary to carry out section 

1899 of the Act, and our desire to 

minimize burdens on entities 

establishing ACOs under section 1899 of 

the Act, we are proposing a limited 

exception to the general rule. 

Failure to qualify for one of the 

proposed waivers under the antikickback statute would not mean that an 

arrangement is automatically illegal 

under the anti-kickback statute. To the 

extent that the anti-kickback statute is 

implicated by a financial arrangement 

that is not subject to a waiver, the 

financial arrangement would need to 

comply with the law. We note that the 

same financial arrangement might 

violate the Physician Self-Referral Law 

and would need to be analyzed for 

compliance with that law. 

3. Prohibition on Hospital Payments to 

Physicians To Induce Reduction or 

Limitation of Services (Sections 

1128A(b)(1) and (2) of the Act) 

Under this proposal, the Secretary 

would waive application of the 

provisions of sections 1128A(b)(1) and 

(2) of the Act (42 U.S.C. 1320a–7a(b)(1) 

and (2)) with respect to the following 

two scenarios: 

• Distributions of shared savings 

received by an ACO from CMS under 

the Medicare Shared Savings Program in 

circumstances where the distributions 

are made from a hospital to a physician, 

provided that— 

++ The payments are not made 

knowingly to induce the physician to 

reduce or limit medically necessary 

items or services; and 

++ The hospital and physician are 

ACO participants or ACO providers/ 

suppliers, or were ACO participants or 

ACO providers/suppliers during the 

year in which the shared savings were 

earned by the ACO. 

• Any financial relationship between 

or among the ACO, its ACO 

participants, and its ACO providers/ 

suppliers necessary for and directly 

related to the ACO’s participation in 

and operations under the Medicare 

Shared Savings Program that implicates 

the Physician Self-Referral Law and 

fully complies with an exception at 42 

CFR 411.355 through 411.357. 

C. Duration of Waivers 

1. Shared Savings Waivers 

The waivers related to the distribution 

of shared savings would apply to the 

distributions of shared savings earned 

by the ACO during the term of 

agreement with CMS to participate in 

the Medicare Shared Savings Program, 

even if the actual distributions occur 

after the expiration of the agreement. 

2. Anti-Kickback Statute and 

Gainsharing CMP Waivers for 

Arrangements in Compliance With a 

Physician Self-Referral Law Exception 

The anti-kickback statute and 

Gainsharing CMP waivers described 

above in sections II.B.2. of this notice 

with comment period (related to the 

anti-kickback statute) and II.B.3. of this 

notice with comment period (relating to 

the Gainsharing CMP) for arrangements 

that comply with an existing Physician 

Self-Referral Law exception would 

apply during the term of the ACO’s 

agreement with CMS to participate in 

the Medicare Shared Savings Program. 

III. Medicare Shared Savings Program: 

Solicitation of Public Comments on 

Additional Waiver Design 

Considerations 

We have proposed waivers in this 

notice with comment period that 

address stakeholder input with respect 

to shared savings distributions and 

treatment under the anti-kickback 

statute and Gainsharing CMP for certain 

arrangements that comply with a 

Physician Self-Referral Law exception. 

We recognize that the proposed waivers 

described in section II. of this notice 

with comment period do not cover all 

of the possible financial arrangements 

involved with setting up and operating 

an ACO. Some of those arrangements 

may not need additional protection 


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under the fraud and abuse laws (for 

example, they might fit in existing 

exceptions and safe harbors or might not 

implicate the laws), while others may 

need additional protection. 

Accordingly, we are soliciting 

comments regarding waivers for 

financial arrangements that would be 

necessary to carry out the provisions of 

the Medicare Shared Savings Program. 

When commenting in response to this 

notice with comment period, please 

explain how any favored waivers, 

modifications, or additions would be 

necessary to carry out the provisions of 

the Medicare Shared Savings Program 

and why the financial arrangements at 

issue would not qualify for existing safe 

harbors or exceptions. 

We have received significant public 

input suggesting that we consider 

promulgating waivers for ACOs in the 

Medicare Shared Savings Program that 

would apply more broadly than our 

proposals in section II. of this notice 

with comment period. Accordingly, we 

are soliciting comments on the topics 

that follow. Our current view is that we 

would grant waivers that would apply 

uniformly to all ACOs, ACO 

participants, and ACO providers/ 

suppliers participating in the Medicare 

Shared Savings Program. 

Our goal is ultimately to use our 

waiver authority to support beneficial 

ACO development under the Medicare 

Shared Savings Program, while still 

protecting patients and programs from 

harms caused by fraud and abuse. 

Striking this balance is both critically 

important and particularly challenging 

in the context of the Medicare Shared 

Savings Program. This is because 

providers and suppliers will continue to 

be paid on a fee-for-service basis, even 

under the two-sided risk model. We 

welcome comments on how best to 

balance these interests. 

The topics on which we seek 

comment are described in the 

paragraphs that follow. We note that 

certain comments will be relevant to 

multiple topics; we will consider 

comments even when they combine 

several of the following topics: 

• Arrangements related to 

establishing the ACO. We are interested 

in comments addressing whether it is 

necessary to waive the Physician SelfReferral Law, anti-kickback statute, or 

Gainsharing CMP for remuneration, 

directly related to: (1) Forming the ACO; 

(2) implementing the governance and 

administrative requirements applicable 

to the ACO under the final regulations 

for the Medicare Shared Savings 

Program; or (3) building technological or 

administrative capacity (including 

providing training) needed to achieve 

the Medicare Shared Savings Program 

cost and quality goals. For purposes of 

this paragraph, we are interested in 

comments addressing remuneration in 

the form of payments used to finance 

actual investment or startup expenses, 

as well as nonmonetary benefits 

transferred for the purpose of 

establishing the ACO. We also seek 

public comment on the exact type of 

expenses and corresponding financial 

arrangements that might be covered by 

a waiver for arrangements involving 

initial investments or startup expenses, 

and the period of time during which an 

investment or payment would be 

considered an ‘‘initial’’ investment or 

‘‘startup’’ expenditure. We also seek 

comments on any safeguards that could 

be incorporated to protect patients or 

Federal health care programs from fraud 

and abuse. For example, we seek 

comments on whether protected 

remuneration should be required to be 

commercially reasonable. 

• Arrangements between or among 

ACO participants and/or ACO 

providers/suppliers related to ongoing 

operations of the ACO and achieving 

ACO goals. We are interested in 

comments addressing whether the 

Physician Self-Referral Law, antikickback statute, or Gainsharing CMP 

should be waived for financial 

arrangements (other than those created 

by distributions of shared savings, as 

described in section II. of this notice 

with comment period) between or 

among ACO participants and/or ACO 

providers/suppliers that are: (1) 

Necessary for and directly related to 

operating the ACO; or (2) necessary for 

and directly related to achieving the 

integrated care, cost savings, and quality 

goals of the Medicare Shared Savings 

Program. If such a waiver is favored, we 

request public comments on the types of 

financial arrangements that should be 

covered by a waiver and whether these 

financial arrangements should be 

required to be commercially reasonable 

and reflect fair market value. 

• Arrangements between the ACO, its 

ACO participants, and/or its ACO 

providers/suppliers and outside 

individuals or entities. We are interested 

in comments addressing whether the 

Physician Self-Referral Law, antikickback statute, or Gainsharing CMP 

should be waived for financial 

arrangements (other than those created 

by distributions of shared savings, as 

described in section II. of this notice 

with comment period) between the 

ACO, its ACO participants, and/or its 

ACO providers/suppliers and entities or 

individuals outside the ACO, where the 

financial arrangements are: (1) 

Necessary for and directly related to 

establishing the ACO; or (2) necessary 

for and directly related to achieving the 

integrated care, cost savings, and quality 

goals of the Medicare Shared Savings 

Program. We seek particular input on 

how this could be done while 

minimizing the potential for fraud and 

abuse (including whether these 

financial arrangements should be 

required to be commercially reasonable 

and reflect fair market value). 

• Distributions of shared savings or 

similar payments received from private 

payers. We are interested in comments 

addressing whether a waiver is 

necessary to address distributions of 

shared savings payments received by 

the ACO from a private payer. We are 

seeking comments on this topic because 

ACOs under the Medicare Shared 

Savings Program may also operate under 

private payer contracts. Some 

stakeholders have expressed concern 

that payments under private payer 

contracts might implicate the fraud and 

abuse laws where the payments flow 

between parties that also have referral 

relationships with respect to Federal 

health care program patients. We solicit 

comments on the advisability of a 

waiver in this context, the scope and 

design of such a waiver, and whether 

any specific conditions are needed or 

should be imposed to prevent fraud and 

abuse. 

• Other financial arrangements for 

which a waiver would be necessary. We 

are interested in comments addressing 

whether there are financial 

arrangements not addressed in the 

above topics for which waivers of the 

Physician Self-Referral Law, antikickback statute, or Gainsharing CMP 

should apply. Specifically, we seek 

comments describing specific financial 

arrangements (or combinations of 

arrangements), why they would be 

necessary for and directly related to the 

operations of ACOs under the Medicare 

Shared Savings Program, why no 

current exception or safe harbor would 

apply, and any applicable conditions or 

safeguards that should apply if a waiver 

were to be granted. 

• Duration of waivers. We are 

interested in views on the duration of 

any waivers. Except as noted in section 

II. of this notice with comment period 

with respect to shared savings 

distributions, we currently expect that 

waivers would apply during the term of 

an ACO’s agreement with CMS under 

the Medicare Shared Savings Program, 

and that waivers would cease to apply 

if the agreement is terminated before the 

end of the term. We solicit comments on 

this or other approaches. 

• Additional safeguards. We seek 

comments addressing any additional 


srobinson on DSKHWCL6B1PROD with NOTICES2
19660 Federal Register / Vol. 76, No. 67 / Thursday, April 7, 2011 / Notices 

safeguards that might be necessary for 

and effective to protect patients and the 

Federal health care programs. We have 

premised our proposed waivers on the 

fact that ACOs, ACO participants, and 

ACO providers/suppliers under the 

Medicare Shared Savings Program will 

be required to comply with all 

applicable rules and regulations 

governing the program, including, for 

example, all monitoring, transparency, 

marketing, and quality requirements. 

We are interested in public comments 

addressing the sufficiency of these 

protections for purposes of fraud and 

abuse law waivers. 

• Scope of proposed waivers in 

section II. of this notice with comment 

period. We seek comments addressing 

the scope of the waivers described in 

section II. of this notice with comment 

period. In particular, we are interested 

in comments as to whether the proposed 

waivers are too broad or too narrow, 

and, if so, how such over- or underbreadth might best be addressed. In 

addition, in section II.B. of this notice 

with comment period, we propose that 

the Physician Self-Referral Law, antikickback statute, and Gainsharing CMP 

be waived in circumstances where 

certain activities are ‘‘necessary for and 

directly related to’’ the ACO’s 

participation in and operations under 

the Medicare Shared Savings Program. 

We seek comments on this standard, as 

well as comments recommending other 

standards that might be used to ensure 

that a waiver of the fraud and abuse 

laws is limited to ACO purposes. We are 

interested in examples of how this 

standard might apply to specific 

arrangements contemplated by ACOs, 

either to include or exclude the 

arrangements from the protection of a 

waiver. For example, we do not intend 

to extend waiver protections to ACO 

participants or ACO providers/suppliers 

that have independent financial 

arrangements with potential referral 

sources that are unrelated to the ACO, 

its operations, or the Medicare Shared 

Savings Program. 

• Two-sided risk model. The 

Medicare Shared Savings Program 

proposed rule contemplates that all 

ACOs will eventually participate in a 

two-sided risk model pursuant to which 

the ACO would assume financial risk if 

costs for its aligned beneficiaries exceed 

certain thresholds. As currently 

proposed, CMS would not require the 

ACO to put its ACO participants or ACO 

providers/suppliers at risk for cost 

overages. However, CMS would permit 

ACOs to place some or all ACO 

participants and/or ACO providers/ 

suppliers at risk. We are interested in 

comments addressing whether 

additional or different fraud and abuse 

waivers might be appropriate for ACOs 

participating in the two-sided risk 

model. We are particularly interested in 

comments on the relative risk of 

overutilization or increased program 

costs (and, conversely, the risk of 

underutilization or stinting) arising from 

the downside risk feature of the two 

tracks being proposed for the Medicare 

Shared Savings Program and whether 

the relative risk should impact the scope 

of the waiver. In addition, we seek 

comments on whether different waivers 

would be necessary for and appropriate 

in circumstances where ACO 

participants and/or ACO providers/ 

suppliers may individually bear risk for 

the cost of items and services furnished 

to ACO beneficiaries. For example, we 

are interested in whether such waivers 

should extend only to compensation 

that places referring parties at risk for 

achieving the quality and performance 

metrics under the Medicare Shared 

Savings Program. Similarly, we are 

interested in comments addressing 

whether any additional financial 

arrangements arising in connection with 

the downside risk (for example, escrow 

accounts, surety bonds, and letters of 

credit) necessitate waiver protection 

and, if so, under what circumstances. 

• Use of existing exception and safe 

harbor for electronic health records 

arrangements. We are interested in 

comments addressing whether we 

should waive the Physician Self-Referral 

Law and anti-kickback statute for ACO 

arrangements that satisfy the existing 

exception and safe harbor for electronic 

health records arrangements (42 CFR 

411.357(w) and 42 CFR 1001.952(y)), 

but that are expected to occur after the 

sunset date of 2013 currently applicable 

to that exception and safe harbor. 

• Beneficiary inducements. We seek 

comments addressing whether and 

under what circumstances it would be 

necessary for the Secretary to waive, in 

whole or in part, the provisions of 

section 1128A(a)(5) of the Act (the 

prohibition on inducements offered to 

Medicare and Medicaid beneficiaries) in 

connection with the Medicare Shared 

Savings Program. Specifically, we seek 

comments describing arrangements (or 

combinations of arrangements) that 

would require protection, why those 

arrangements would be necessary to 

carry out the provisions of the Medicare 

Shared Savings Program, and any 

applicable conditions or safeguards that 

should apply if a waiver were to be 

granted to ensure that beneficiaries are 

not inappropriately induced to obtain 

services from ACO participants or ACO 

providers/suppliers. 

• Timing of waivers. We seek 

comments addressing whether final 

waivers should be published 

contemporaneously with, in advance of, 

or soon after final rule regarding the 

Medicare Shared Savings Program. 

IV. Center for Medicare and Medicaid 

Innovation: Solicitation of Public 

Comments on Waiver Design 

Considerations 

Section 1115A of the Act establishes 

within CMS the Center for Medicare and 

Medicaid Innovation (Innovation 

Center) ‘‘to test innovative payment and 

service delivery models to reduce 

program expenditures under the 

applicable titles while preserving or 

enhancing the quality of care furnished 

to individuals under such titles.’’ In 

selecting models, the Secretary is 

directed to prefer models that also 

improve coordination, quality, and 

efficiency of health care services 

furnished to Medicare, Medicaid, and 

dually eligible individuals. In relevant 

part for purposes of this notice, section 

1115A(d)(1) of the Act provides that the 

Secretary ‘‘may waive such requirements 

of Title XI and XVIII . . . as may be 

necessary solely for purposes of carrying 

out this section with respect to testing 

models described in subsection (b).’’ 

This waiver authority is specific to 

activities carried out under section 

1115A of the Act and, like the waiver 

authority under section 1899(f) of the 

Act, does not address other 

arrangements. At this time, we are 

interested in public comments on the 

separate waiver authority at section 

1115A(d)(1) of the Act and how we 

might best exercise it to address 

demonstrations and pilot programs 

under section 1115A of the Act. 

V. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this document. 

Authority: Sections 1899 and 1115A of the 

Act. 

Dated: March 24, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: March 28, 2011. 

Daniel R. Levinson, 

Inspector General. 

[FR Doc. 2011–7884 Filed 3–31–11; 11:15 am] 

BILLING CODE 4120–01–P; 4152–01–P 


srobinson on DSKHWCL6B1PROD with NOTICES2