CMS Unveils New Plan to Provide Infrastructure Capital to ACOs


The Center for Medicare & Medicaid Innovation introduced the ACO Investment Model, on October 15, 2014, through which CMS will provide newly-formed ACOs in rural and underserved areas access to capital necessary for investment in the infrastructure necessary to successfully implement care management and assist existing ACOs to prepare to assume greater financial risk. Through the ACO Investment Model, CMS will provide up to $114 million in up front investments to a maximum of  75 ACOs. The ACO Investment Model was developed in response to concerns and research suggesting that some Medicare Shared Savings Program (MSSP) ACOs lack adequate access to the capital needed to invest in infrastructure necessary to implement population care management successfully. The new model builds on the Advanced Payment Model and aims to encourage ACO formation in areas of low ACO penetration in order to produce better care and lower costs for Medicare fee-for-service beneficiaries. Continue reading this entry

Outsourcing Ambulatory and Outpatient Services: What Hospitals Need to Know


We are in the midst of a trend involving the “outsourcing” of certain outpatient and ambulatory services by hospitals and health systems. These outsourcing transactions often involve partnerships with for-profit, specialty  providers, such as imaging, ambulatory surgery, home health and hospice, physical therapy or urgent care businesses—partners with focused expertise—designed to enhance service offerings to hospital outpatients. These partnerships allow hospitals to focus on what they do best—inpatient care—while at the same time freeing up capital, sharing risk (of the outpatient venture) and better managing the outsourced service offering.  Many hospitals consider the cost of giving up a certain level of revenues and control over the ventured service lines well worth the benefits gained thereby. These ventures can be true “win-wins” for all involved, but carry with them a certain business and legal complexities that need to be carefully considered.

Transaction Structure

The typical outsourced relationship structure is generally driven by the service line(s) to be ventured, preferred manner of reimbursement, how the deal is to be managed and the types of parties to be involved (e.g., will physicians be involved?). For example, imaging ventures are often structured to avoid status as independent diagnostic testing facilities and to take advantage of physician fee schedule billing. Such a structure may, or may not, however, allow for ownership of the provider entity by the hospital or the venture partner and, rather, may call for ownership by a physician organization. Ambulatory surgery centers, on the other hand, can be structured to allow for ownership by the ancillary service provider, the hospital and physicians. In addition, central to each of these structures is, generally, a long-term, incentive-based management contract with the ancillary service provider thereby leveraging that partner’s expertise in running the outpatient service.

Legal and Regulatory Issues

Carve-out ancillary deals can be riddled with legal and regulatory issues. For example, a relationship structured to take advantage of hospital rates will implicate Medicare’s provider-based billing rules, which are filled with traps for the unwary.  Transactions designed to be billed as physician practices, such as certain outpatient imaging or physical therapy arrangements, may bring into play a particular state’s corporate practice of medicine doctrines. And, structures that include referring physician investment will necessarily require compliance with Federal physician self-referral laws (Stark) and the Federal anti-kickback statute. This list is not exhaustive, but is illustrative of the need to carefully consider the intersection between desired transaction structure and reimbursement and the laws, rules and regulations implicated thereby.

Key Takeway

The burgeoning hospital ancillary services outsourcing trend remains robust. These ventures allow each partner to do what they do best: hospitals are able to focus on inpatient care and the ancillary services providers are able to bring capital and management expertise to the arrangement. However, the deals are complex and, we advise, the parties to these structures should understand how to balance their business objectives against the laws, rules and regulations implicated thereby. Seasoned health care transaction counsel should be consulted before moving too far forward with any such deal.

Ebola Preparedness: Employee Education Is Key


In the wake of the world’s largest Ebola Virus Disease (EVD) outbreak in history, Americans have been inundated with media hype surrounding the disease, and the government and employers’ perceived inadequacy in their response. While the threat of a widespread EVD outbreak in the United States is minimal, healthcare providers in particular, but also airlines and travel-related companies, mortuary employers and laboratories should all take steps to educate and protect their workforce. As experience has taught, educating and openly communicating with employees helps reduce truancy, limits discriminatory activity, and ultimately creates a healthier and safer workforce. Still, many employers are unsure what they can and cannot require of their employees. Below, we touch on some of the most pertinent topics that employers in these critical sectors may want to consider as they confront employees and customer/patient pools concerned about EVD. Continue reading this entry

mHealth Technology – Development in an Uncertain Regulatory Climate


The development and use of mobile technologies and devices is expanding at an incredibly fast pace and is changing, and in fact revolutionizing, the way patients and healthcare providers interact. Mobile medical technologies or “mHealth” technologies and applications can allow patients to better manage their own health and wellness, and provides patients and providers with greater access to patient data and information. Developers, providers, patients, hospitals and health systems and ancillary health care service providers, among many others, are rapidly creating, adopting and using varying levels of mHealth technology to improve care, outcomes and patient experiences across the diverse spectrum of health care delivery. However, existing in a highly regulated space may prove to be a challenge for mHealth technology developers and entrepreneurs. Developers will need to determine how, and if, a wide array of laws and regulations apply to their technology, and how to comply with the applicable regulations. Examples of laws, issues and regulations that developers should give consideration to, include, but are not limited to, the Health Insurance Portability and Accountability Act (HIPAA), various individual State data protection and privacy laws, regulations impacting reimbursement, and the oversight, classification and registration requirements of the U.S. Food and Drug Administration (FDA). Continue reading this entry

Legal Preparedness – Are You Ready for Ebola?


With confirmed Ebola Virus Disease (EVD) patients in the United States, health care facilities and providers should review whether they are compliant with existing laws and recommendations for emergency preparedness. Providers should take the time during non-emergency circumstances to identify issues, make advance legal decisions, and focus on training and education. There is a misperception that liability arises during exigency, but providers risk civil (and even potentially criminal) liability and loss of accreditation if they fail to plan for reasonably foreseeable emergency situations. This liability risk also extends to hospital administrators and emergency planners, who can be held individually liable. Planning requires an awareness of current laws and recommendations as well as an understanding of available resources. Continue reading this entry