Value-based care week 4: the legal framework

Dorothy Vinsky · September 7, 2017 · Short URL:

The new challenges to the healthcare regulatory regime

This weekly focuses on the legal framework for value-based care. Often when I am asked to explain value-based care, I begin my response with reference to the laws that initiated the shift to value-based care, or new system that rewards providers who are able to create cost savings while improving quality of care. The following articles give us a high-level overview of the regulatory landscape for value-based care.

(Editor's note: Join us for a highly-curated gathering to discuss value-based care challenges, opportunities and innovations. Check out our SplashX Invent Health small gathering, co-hosted by HP.) 

Value-based payment regime and waivers from fraud and abuse rules

This ABA article addresses the initial impact of value-based care on the structure of the healthcare payment system in the U.S. After the enactment of the Medicare Access and Chip Reauthorization Act (MACRA) in 2015, including its creation of a new physician payment methodology through Merit-Based Incentive Payment System (MIPS), the Medicare Shared Savings Program (MSSP) initiated a change from Medicare and Medicaid Services' (CMS) old fee-for-service reimbursement model to a value-based payment system that rewards physicians who (i) achieve cost savings while (ii) improve quality of care by meeting specific quality metrics.

Accountable Care Organizations (ACO) were created to implement MSSP's value-based payment model, and in this connection, CMS granted ACOs 5 waivers from the federal healthcare fraud and abuse laws. Key reason for these waivers is that ACOs require cooperation among physicians and facilities in ways that are prohibited by current fraud and abuse laws. The current regulatory framework is based on protecting Medicare patients from treatments that are improperly influenced/provided under the fee-for-services payment system. It is important for advisors and compliance officers to become familiar with the 5 waivers for ACOs as we move towards a system of value-based care. The 5 waivers include:

  • waiver for startup-planning stage of ACOs
  • participation waiver, inclusive of waiver requirements for startup-planning and applies to ACOs that have formed and are participating in the MSSP
  • shared savings and distribution waiver, or waiver of Stark Law and Anti-Kickback Statutes to "use or distribution of shared savings by ACOs."
  • physician self-referral laws, or Stark Law, waiver for referrals if certain criteria are met
  • waiver for patient incentives for beneficiary situations in which services are given for free or less than fair market value if certain criteria are met

To summarize, while it is unclear whether ACOs are going to become the mechanism for healthcare delivery, this article suggests that the value-based payment model is here to stay. As such, HHS and fraud abuse lawyers should monitor the types of fraud related to value-based care and its clinical metrics and use of statistics to assess new threats to federal healthcare programs and future adjustments to the fraud and abuse rules and enforcement actions.

Read more here

Value-based payments and compliance

These slides from the HCAA Compliance Institute 2016 are a good starting point for an overview of value-based care and the regulatory regime relating to its creation and implementation. HHS noted the "law as a platform for delivering better care: that is safe, timely, effective, efficient, equitable and patient-centered." HHS announced 85% of fee-for service Medicare payments will be tied to quality or value of care by 2016 and 90% by 2018 through Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs. With regard to ACOs or bundled services, HHS announced 30% of fee-for-service Medicare payments will be tied to value-based models and 50% by 2018. Key takeaways from this presentation include the government's increased focus on enforcement of quality of care and proactive steps that providers, executives, quality committees and compliance officers may consider to protect against Quality of Care and Medical Necessity investigations and litigation.

Read more here.

Senate says Stark Law is "increasingly unnecessary"

This article summarizes the Senate Finance Committee Chair's 2016 report on the Stark Law, in which the Committee found that the Stark Law was a "significant impediment" to value-based payment models. In contrast to the original intention of the Stark Law to prevent physicians from self-referring Medicare patients under their care to entities in which they had a financial interest, the Committee noted that alternative payment systems (APMs)mostly eliminated such services because under APMs physicians are rewarded to reduce the use of unnecessary services.

Read more here.

Current news

Employers promote value-based care

In a recent Forbes article, National Business Group on Health (NBGH) reports that nearly 40% of employers are incorporating some type of value-based care in their workers' health plans in 2018. NBGH reported that 21% of employers "plan to promote ACOs in 2018 but that number could double by 2020 as another 26% are considering offering them." With regard to Medicare, major insurers have announced that their Medicare Advantage plans are on track or ahead of schedule to change to alternative payment models. In its second quarter earnings call, Cigna's CEO reported that 85% of Cigna's Medicare Advantage lives are in value-based programs.

Read more here.

Large US employers project healthcare benefit costs to reach $14,156 in 2018

NBGH's annual survey found that large US employers are facing a 5% increase in healthcare benefit costs for the fifth consecutive year in 2018, projected to be in the amount of $14,156 in 2018. Employers typically cover 70% and employees pay 30% of this total cost. Employers in this survey plan to focus on adoption of value-based care while still pursuing traditional cost-sharing and plan design changes. This press release outlines some of the programs, including telehealth, ACOs, health centers, centers of excellence and value-based benefit design.

Read more here.

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