A pair of healthcare policy researchers have shown a light on a nuance in federal law that could prove troublesome for the leaders of accountable care organizations (ACOs), and indeed, of any patient care organizations that are involved in coordinating care under value-based contracts.
In a “Perspective” op-ed published online in The New England Journal of Medicine on Jan. 31, Genevieve P. Kanter, Ph.D. (of the University of Pennsylvania ‘s Perelman School of Medicine) and Mark V. Pauly, Ph.D. (of the University of Pennsylvania’s Wharton School) write extensively about the Stark law and the complexities around coordinated care in relation to that. As the authors write in their article, “Coordination of Care or Conflict of Interest? Exempting ACOs from the Stark Law,” Drs. Kanter and Pauly note that, “[U]nder the Affordable Care Act, hospitals and physician groups are encouraged to form accountable care organizations (ACOs) that jointly contract to deliver care to specified populations of Medicare beneficiaries. Care coordination has become a central theme of new payment and delivery systems and is believed to be an indispensable strategy for eliminating delivery inefficiencies, controlling costs, and improving outcomes.”
That said, “There is, however, at least one downside to care coordination arrangements: they clash with existing regulations on financial conflicts of interest in medicine. This set of regulations, collectively known as the Stark law, prohibits physicians from referring patients to providers when a financial arrangement would allow the referring physician to benefit from such a referral,” they note. “For example, physicians who have a profit-sharing agreement with a nursing home are prohibited from referring their Medicare and Medicaid patients to that facility. The concern is that if physicians earn more money when they refer patients for additional care, they have an incentive to recommend more services, regardless of medical necessity. Indeed, numerous studies have reported increased utilization of services and greater spending when physicians can, because of either exemptions to the Stark law or poor enforcement of it, refer their patients to facilities in which they have a financial stake. ACO arrangements may violate self-referral prohibitions because of the shared-savings and referral relationships among providers within an ACO.”
Indeed, things are already becoming rather complex in this area. As Drs. Kanter and Pauly write, “This tension between care coordination and conflicts of interest has come to the fore with a recent request for information issued by the Centers for Medicare and Medicaid Services (CMS) in the service of ‘addressing unnecessary obstacles to coordinated care…caused by the physician self-referral law.’ CMS currently allows physicians and organizations participating in Medicare ACOs to receive temporary waivers from prosecution for violations of the Stark law. But legislation introduced in November would establish a permanent exemption for providers in ACO and other alternative payment and integrated care arrangements.”
The authors stake out a strong position about all of this, writing that “The easy way forward would be to add this exemption to the burgeoning number of permanent Stark law exemptions — but we are convinced that that is not the right way. The clash between ACO arrangements and conflict-of-interest laws tells researchers something important about potentially negative consequences of ACOs that could undermine not only physicians’ obligations to their patients, but also broader efforts to improve care and control costs. As policymakers deliberate on how ACOs fit into the existing regulatory landscape, a key question should be: Do the care coordination benefits of ACOs outweigh the harms from unnecessary referrals?” Ultimately, they believe, the business arrangements involved in hospital-physician group combinations do not justify changing the Stark laws; in fact, they believe that what they call the “scan evidence of cost reductions” achieved by ACOs do not support a case for changing conflict-of-interest laws. Instead, the authors argue for “studies of large-scale care coordination payment mechanisms,” with those studies being executed “under conditions that enable rigorous evaluation of the positive and negative effects of integration.”
Ultimately, the researchers argue that, “Although granting a Stark exemption for ACOs seems like a simple solution to the sticky problem of ACO arrangements clashing with the Stark law, it is a bit too simple. The tension between care coordination and conflicts of interest should not be used as a pretext for weakening an already impaired Stark regulation; instead, we think it should be used as strong motivation for reevaluating the way we approach both care coordination and regulation of conflicts of interest.”
