United States: CMS And OIG Issue Final Fraud And Abuse Waivers In Connection With The Medicare Shared Savings Program

On October 29, 2015, the Centers for Medicare & Medicaid Services ("CMS") and the U.S. Department of Health and Human Services' Office of Inspector General ("OIG") published a final rule ("Final Rule") finalizing the waivers of the application of various fraud and abuse laws, including the physician self-referral law ("Stark Law"), the federal anti-kickback statute ("Anti-Kickback Statute"), and certain provisions of the civil monetary penalties law ("CMP Law"), to arrangements pursued by accountable care organizations ("ACOs") participating in the Medicare Shared Savings Program ("Shared Savings Program").

The publication of the Final Rule comes approximately three years after CMS and OIG's joint publication in November 2011 of the Interim Final Rule ("Interim Rule"), which established the waivers, a year after CMS and OIG extended the timeline for publication of the Final Rule, and some months after CMS and OIG issued additional related waiver guidance. The Final Rule predominantly adopts the provisions of the Interim Rule and the related guidance with little variation, as explained in more detail below, and provides additional explanation and clarification with respect to the various waiver requirements.

Available Waivers

Since the publication of the Interim Rule, CMS and OIG have monitored the use of the waivers in connection with the purposes of the Shared Savings Program and determined that "the waivers are adequately protecting beneficiaries and Federal health care programs while promoting innovative structures within the Shared Savings Program." Accordingly, the Final Rule finalizes the five waivers identified in the Interim Rule: (i) an ACO pre-participation waiver; (ii) an ACO participation waiver; (iii) a shared savings distribution waiver; (iv) a compliance with the Stark Law waiver; and (v) a patient incentive waiver. However, CMS and OIG remind stakeholders that they will continue to monitor application of the waivers to protect beneficiaries and the Medicare program from fraudulent and abusive conduct and "may propose to revise these waivers or take other appropriate action" in the future, if needed.

Elimination of the Gainsharing CMP Waiver

The primary difference between the Interim Rule and the Final Rule is the elimination of the waiver of the CMP Law's prohibition of payments made by hospitals to physicians to reduce or limit services ("Gainsharing CMP") due to recent legislative changes. At the time the Interim Rule was published in 2011, a Gainsharing CMP could be imposed whenever hospitals made payments to physicians for reducing or limiting services, regardless of whether those services were medically necessary. However, the Medicare Access and CHIP Reauthorization Act of 2015 ("MACRA") narrowed the Gainsharing CMP to prohibit hospitals from knowingly paying physicians to induce them to reduce or limit medically necessary services. Because of this change, payments by hospitals to physicians to reduce or limit medically unnecessary services no longer implicates the Gainsharing CMP. As stated in the Final Rule, "arrangements between hospitals and physicians that incentivize greater efficiency and reduction of waste, which previously may have run afoul of the Gainsharing CMP, would no longer implicate the provision, provided those arrangements do not involve reductions or limitations in medically necessary care. Thus, a waiver of the Gainsharing CMP is no longer necessary to carry out the Shared Savings Program, which, by its terms, promotes quality and patient care goals like fostering efficient medically necessary care, but not stinting on medically necessary care."

Reasonably Related to the Purposes of the Shared Savings Program

Many of the waivers include a requirement that an arrangement be "reasonably related to the purposes of the Shared Savings Program." Although certain commenters argued that the "reasonably related" standard was overly broad and vague, CMS and OIG believe that this standard "best achieves our goal of providing flexibility to ACOs to develop the innovative arrangements envisioned by CMS, while still requiring a verifiable connection with the Shared Savings Program so as to minimize the risk of allowing fraudulent or abusive arrangements."

The Final Rule lists a number of examples of arrangements that are not reasonably related to the purposes of the Shared Savings Program, including:

  • An arrangement whereby a provider is required to pay a sum to receive ACO-related referrals (e.g., "pay-to-play" arrangements);
  • Medical directorships or personal services arrangements where referring physicians receive payments for no actual services performed;
  • Payments to induce a physician or other provider to stint on medically necessary care for beneficiaries; or
  • Free gifts (e.g., sporting tickets) to ACO providers/suppliers or ACO participants.

Home Health Suppliers

Of the available waivers, CMS and OIG are most concerned with abuse of the pre-participation waiver because it applies to arrangements that occur prior to an ACO's participation in the Shared Savings Program and its attendant regulation and oversight. As such, the Final Rule adopts many of the safeguards identified in the Interim Rule for the pre-participation waiver, including the exclusion of certain entities from using the pre-participation waiver (e.g., drug and device manufacturers, distributors, DME suppliers, and home health suppliers).

While commenters were concerned with the exclusion of home health suppliers from the pre-participation waiver, CMS and OIG clarified the intended meaning of such exclusion. For purposes of the Final Rule, "home health supplier" means a provider, supplier, or other entity that is "primarily engaged" in the furnishing of "home health services." Medicare-enrolled providers or suppliers (e.g., hospitals, skilled nursing facilities, physician practices) are eligible to take advantage of the pre-participation waiver as long as such entities are not "primarily engaged" in providing home health services.

Authorization from ACO's Governing Body

To be eligible for the pre-participation or participation waivers, an ACO's governing body must make and authorize a "bona fide determination that an arrangement is reasonably related to the purposes of the Shared Savings Program." Like the Interim Rule, the Final Rule does not "prescribe[e] particular methods for this determination" but expects members of the ACO governing body to employ a "thoughtful, deliberative process" for making such a determination that "articulate[s] clearly the basis for their determinations and authorizations." For example, one factor that CMS and OIG evaluate in determining whether such an authorization is bona fide is the proximity of time between the establishment of the arrangement and the ACO governing body's corresponding determination and authorization. A significant passage of time between establishment of the arrangement and the ACO governing body's determination might indicate that the ACO governing body was acting for other purposes.

The Final Rule continues to require that the ACO governing body's determination be "contemporaneously documented" in order to clearly demonstrate the nexus between the arrangement and the purposes of the Shared Savings Program. While nothing specific is required for documentation purposes, best practices would include a duly authorized written resolution showing the basis for the ACO governing body's determination. Additionally, although none of the waivers require an agreement signed by the parties, such an agreement would be a best documentation practice as well as one way to satisfy the Stark Law's writing requirement if a waiver does not apply to the arrangement, or if waiver protection were to be lost in the future.

The Final Rule also adopts the Interim Rule's requirements for public disclosure of arrangements for which waiver protection under the pre-participation waiver or participation waiver is invoked. Although several commenters wanted to impose additional disclosure requirements on ACOs, CMS and OIG refer to their additional waiver guidance issued in February 2015 as adequately responding to the commenters' concerns.

Shared Savings Distribution Arrangements for Commercial Health Plans

The Interim Rule requested comments regarding a potential waiver for shared savings derived from arrangements sponsored by commercial health plans. CMS and OIG decided not to expand the shared savings distribution waiver beyond the Shared Savings Program but would "consider addressing shared savings derived from commercial plans in future rulemaking." In support of their decision, CMS and OIG remarked that such commercial shared savings arrangements do not necessarily implicate the fraud and abuse laws, and they provided examples of ways in which private payer arrangements may not need a specific waiver. For example, an arrangement might qualify for the participation waiver if there is a sufficient nexus to the Shared Savings Program. Additionally, many commercial shared savings arrangements can be structured to fit within an exception to the Stark Law and a safe harbor under the Anti-Kickback Statute.

Patient Incentive Waiver

The Final Rule formalizes the patient incentive waiver, which waives application of the Anti-Kickback Statute and the CMP Law's prohibition on beneficiary inducements. As stated in the Interim Rule, in order to take advantage of the patient incentive waiver, there must be a "reasonable connection" between the item or service provided to the beneficiary and the beneficiary's medical care. While incentives permitted under the patient incentive waiver largely depend upon specific facts and circumstances, the Final Rule provides some guidance in this area. Appropriate incentives could include local transportation to medical appointments or a blood pressure cuff given to a hypertensive patient in an ACO's chronic disease management program. Inappropriate incentives would include items like beauty products or theater tickets. The Final Rule does not offer much clarity for more ambiguous items and services (e.g., gym memberships, personal training sessions, massages, skin creams) but advises ACOs to scrutinize such incentives carefully on a case-by-case basis.


The Final Rule provides comfort to many ACOs participating in the Shared Savings Program that have taken advantage of the fraud and abuse waivers outlined in the Interim Rule to protect a wide variety of arrangements. CMS and OIG regard the waivers as a way to promote all the benefits of the ACO model—innovation, quality, and efficiency—while still protecting patients from potential fraud and abuse. However, CMS and OIG will continue to monitor arrangements protected under the waivers to ensure that the waivers are not raising concerns of overutilization, increased costs, and poor quality of care, among others, and may make modifications to the waivers in the future as needed. Accordingly, ACOs taking advantage of one of the waivers should have a fall-back strategy in place to deal with the loss or restriction of a waiver should it no longer be available.

In August 2015, Jones Day reviewed the publicly available websites of approximately 425 ACOs participating in the Shared Savings Program to determine the scope and use of the various fraud and abuse waivers. Despite the breadth and power of the waivers, particularly the participation waiver, we found only 66 ACOs utilizing waivers to protect approximately 90 different types of arrangements. ACOs participating in the Shared Savings Program should strongly consider taking advantage of the waivers given the issuance of the Final Rule, which signals CMS and OIG's approval of the benefits of the waivers.

Andrew G. Jack and Megan B. Webb, associates in the Columbus and Los Angeles Offices, assisted in the preparation of this Commentary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.