Beneficiary inducement rules and guidelines for ACOs

By Richard Cowart

Television commercials offer free testing kits when you order a company’s products. Power wheelchair advertisements exclaim that the products are free; just contact their sales representative. Medicare Advantage salespersons are paid sales commissions based upon how many new beneficiaries they sign up. What’s right? What’s legal in promoting beneficiary sales? Like Medicare Advantage Plans and Medicare DME suppliers, ACOs will be held to strict guidelines on beneficiary inducements. Let’s look at a snapshot of the new guidelines.

Under CMS guidelines, the beneficiary inducement rules will apply to not only ACOs, but also ACO participants, ACO providers/suppliers, and other individuals or entities performing functions or services related to ACO activities. As a rule, each of these ACO entities, whether acting individually or collectively, will be prohibited from providing gifts or other remuneration to beneficiaries as inducements for receiving items or services to join or to remain in an ACO.

The principal exception to prohibition will be items involving care coordination or health awareness. CMS recognizes that it may be beneficial for an ACO to provide items or services to beneficiaries for free or less than fair market value to encourage care coordination and health awareness. Accordingly, CMS provides an exception to the general prohibition to allow ACOs and related entities to provide in-kind items or services to beneficiaries so long as: (a) there is a reasonable connection between the items and/or services and the medical care that the beneficiary is receiving, and (b) the items or services are either preventive care items or services, or advance a clinical goal of the beneficiary. Acceptable clinical goals include adherence to a drug regimen, adherence to a follow-up care plan, or management of a chronic disease or condition. For example, blood pressure monitors may be provided (at less than FMV) to patients with hypertension.

In the originally proposed ACO regulations, it was unclear how much care management services an ACO could offer a beneficiary without violating the Civil Monetary Penalty Law provision prohibiting beneficiary inducements. In the final ACO regulations, additional guidance was provided which should assist ACOs in directing their resources in a manner to positively impact the health, and overall healthcare costs, of beneficiaries without fear of inadvertently subjecting the ACO and its participants to civil monetary penalties or other compliance concerns.

Beneficiary inducements and ACO sales practices should become an area of first concern as ACOs commence their formative efforts and seek to achieve critical mass for efficient operations. Take note to instruct the ACO sales force and build the ACO business model with these precautions in mind.

Richard G. Cowart, Chair Health Law and Public Policy Department; Baker, Donelson, Bearman, Caldwell & Berkowitz;