Virtual Groups Under MACRA May Create Compliance Concerns

Virtual Groups Practice

Medical groups, payers, hospitals and health systems are being inspired by healthcare reform and new payment trends to consider new compensation models. While quality, efficiency and cost management will surely improve, and providing value-based care will be enhanced, the shift is also setting up new compliance pitfalls.

For instance, many providers may be considering joining a “virtual group” for performance year 2018 under the Centers for Medicare & Medicaid Services’ (CMS) Quality Payment Program and MACRA. Physicians who join a virtual group, however, need to keep in mind that some of the exceptions under Stark and the Anti-Kickback Statute (AKS) for group practices don’t apply, so they need to proceed carefully when making referrals.

Additionally, in-house counsel, compliance officers, HR professionals and executives in healthcare organizations need to understand how the new models for paying providers will change the way they position their organizations for success in this new value-based world. In particular, potential strategies for incentivizing physicians in connection with the new value-based programs should be planned carefully.

What’s a Virtual Group?

On June 30, 2017, CMS issued a proposed rule implementing MACRA for 2018, and under that rule, providers can participate in the Merit-Based Incentives Payment System (MIPS) as an individual, in a group, or in a virtual group.

“A virtual group is defined as a combination of two or more tax identification numbers (TIN) composed of solo practitioners and/or groups of 10 or fewer eligible clinicians who choose to ally themselves for the purpose of participating and reporting under the MIPS program,” according to a blog post by heath law firm Hall Render.

Smaller practices are particularly attracted to the virtual group model because they can better pool their resources in order to participate in MIPS, says Hall Render. But if a group elects to join a virtual group, all the eligible clinicians under its TIN would become part of the group. So you may feel like one entity. But beware: “Using the virtual group as a group practice for Stark self-referral purposes could conceivably result in a Stark violation with costly penalties and False Claims Act exposure.”

Why Virtual Groups Are Not Protected

“‘Virtual groups,’ by definition, are not ‘group practices’ as that term is specifically defined under the Stark regulations,” continues the Hall Render post, “because virtual groups do not constitute a ‘single legal entity.’” That means that “physician participants in a virtual group with a financial relationship with such virtual group may not be eligible to make referrals for designated health services payable by Medicare to the virtual group under the ‘In-office Ancillary Services Exception’ . . . , which can only be used by bona fide group practices.”

“Similarly, and for the same reason, virtual group member physicians could not meet Stark’s ‘Physician Services Exception,’” according to Hall Render. “Finally, the AKS ‘Investments in Group Practices’ safe harbor . . . cross-references the Stark Law and implementing regulations definition of a ‘group practice.’ Virtual group Eligible Clinicians could not fit within this safe harbor because the virtual group is not a group practice.”

Enter the Brave New Quality Payments World

Going forward, healthcare leaders and providers need to develop a value-based strategy so they can position their organizations and practices for financial success in the new value-based world. To learn how to strategize in this brave new world, join Joseph Wolfe, a partner at Hall Render, for “Paying Healthcare Providers for Quality and Value: Key Trends and Stark Law Considerations,” a webinar with ProfEdOnDemand. Joseph will provide a practical explanation of the quality and value metrics in new federal healthcare programs and commercial payment systems, and he’ll explore new delivery models, what providers can be doing to develop a value-based strategy, and the application of the Stark Law and other fraud and abuse laws to new models aimed at population health, quality of care and cost control.

To join the conference or see a replay, order a DVD or transcript, or read more

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