ACO Participation Waivers

UCC-ACO AlignmentAlignment between Accountable Care Organizations (ACOs) and urgent care centers (UCCs) can be a very beneficial relationship. An ACO participation waiver allows for these relationships and arrangements to take place, but there are certain requirements that must be followed.

“The participation waiver is one of four waivers under the MSSP that permits participants in an ACO to enter into an arrangement to have the Stark, Anti-Kickback and Civil Money Penalty laws waived with respect to that arrangement,” Charles Buck, Partner at McDermott Will & Emery LLP, says. “It’s a very powerful waiver.”

Peter Pavarini, Partner at Squire Patton Boggs LLP, says that participation waivers came about when ACOs were put into the Affordable Care Act, because they were in conflict with pre-existing laws before Obamacare, particularly in regards to the Anti-Kickback, Stark and Anti-Trust laws.

“For an ACO to work, there’s a certain amount of self-referral within the network in order to achieve the shared savings that the MSSP would expect,” Pavarini says. “If an ACO provider has a financial interest in an urgent care center, and requires patients to use that facility, that could be a self-referral, and if it’s covered by Medicare, they potentially have a Stark violation. In order to make the ACO work, the waiver would say that it’s going to waive that particular law and that it no longer applies.”

Bob Homchick, Partner at Davis Wright Tremaine LLP, says that participation waivers are quite broad.

“The ACO has a significant amount of discretion, and while there are some limits, there are a variety of things that can be explored,” Homchick says. “This could include linking UCCs into the EMRs of other providers participating in the ACO or having some sort of agreement relating to care coordination between a primary care practice and the urgent care center that is configured in a way which promotes the purposes of the MSSP.”

“The key requirement is that the ACO’s governing body has to make a bona fide determination that the arrangement is reasonably related to the purpose of the MSSP,” Buck says. “Purposes of the MSSP means one or more of the following: promoting accountability for the quality, cost and overall care of the overall Medicare population, managing and coordinating care for Medicare FFS beneficiaries through an MSSP ACO, or encouraging investment in infrastructure and redesign care processes for high quality and efficient service delivery including Medicare beneficiaries.”

In addition, ACOs also have to publicly disclose the arrangement and the nature of it on their website.

“Public disclosure is meant to serve as a check on any abusive arrangements,” Buck says.

If an ACO enters a relationship with a clinical provider at an urgent care center, Buck says it can be a win-win situation.

“An ACO can enter into an agreement that would encourage the use of that urgent care center,” Buck says. “It would permit the UCC to maybe fund IT connectivity so that referrals are easier to make, and the medical records are shared more easily. Or perhaps the UCC could fund other infrastructure to  improve care pathways and clinical processes as a preferred provider that receives referrals from the ACO.”

However, if an ACO wants a percentage of the revenue from the referrals paid back to the ACO by the preferred provider, Buck says that he doesn’t think that participation waivers would generally allow for such an arrangement.

“That’s more akin to a payment-for-referrals, and would not typically fit within the waiver, although any particular waiver analysis is very fact specific and it is ultimately a matter for the judgement of the ACO board” Buck says. “This goes back to the requirement that the agreement must be reasonably related to MSSP purposes and goals, and pure revenue sharing is generally not going to meet that requirement.”

However, Buck says that financial incentives designed to improve the efficiency and quality of the ACO could qualify.

“If the UCC uses some of the money from the referrals to fund infrastructure costs or integration methods, the waiver could allow for that,” Buck says.

In the absence of a participation waiver, Buck says that the fact that the urgent care center is funding these infrastructure and/or integration costs could raise a kickback issue. A participation waiver will allow these relationships to take place, and hopefully allow a tighter, closer link between the ACO and the UCC.

“The UCC gets more business out of this type of relationship, so they’re happy, and the ACO is happy because patients can go to the UCC instead of the ER, which helps the ACO provide more cost-effective care” Buck says. “The ACO is also happy because the UCC helps to fund some of the infrastructure so that they can put clinical information back into their system in a seamless fashion. These relationships are also good for the patient too because they’re receiving more clinically appropriate care in a convenient setting.”

“The whole point of ACOs is to use available resources wisely, and encourage the care givers to make those decisions because it’s in their financial interest,” Pavarini says. “The entities are going to get a share of the shared savings, while helping to create those savings by making the decisions as to where patients are seen.”

When calculating how these shared savings are distributed, Pavarini says that generally speaking, there will be a formula that the provider agrees to when they sign the contract to participate in the ACO.

“It is not directly related to the number of dollars saved, but it might be indirectly related,” Pavarini says. “Not all urgent care providers are able to contribute in the same way to the savings generated by an ACO because of the acuity level of services offered and patients targeted.”

For example, if a provider runs a high volume urgent care center, they would expect to get more of the shared savings compared to someone who only occasionally does things for ACO patients. Pavarini says the formula is supposed to take into account where the savings are being created and who should get the greatest share. But there is one caveat.

“Primary care doctors should get a larger portion of the savings because they’re care managers,” Pavarini says. “Their role is to oversee the continuum of care, and to make sure that their patients are getting the right attention from the right providers.”

Not all urgent care centers will be a granted a participation waiver. Pavarini says that UCCs will have to answer a series of questions set forth in the regulations, and have to demonstrate that the relationship is consistent with the purposes of the ACO. In addition, the participation waiver will only cover legal activities.

“You can’t try to make the waiver cover something which has no relationship to the ACO, and might otherwise be legally troublesome,” Pavarini says. “If self-referrals are waived under the fraud and abuse laws, but the waiver is written so broadly that it would cover some impermissible activity, it’s going to be rejected by CMS. It has to be a little bit narrower, and you have to do what you say you’re going to do.”

While there are many regulations regarding participation waivers, they offer an opportunity for ACOs and UCCs to create mutually beneficial relationships through alignment with each other.

“There are opportunities for alignment of UCCs and ACOs,” Homchick says. “It all relates to the continuum of care and promotes the MSSP triple aim: deliver the right care in the right setting at the right cost.”

If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or

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