Will New Value-based Care Regulations Spark Innovation?

by | Jan 20, 2021 | All News, Blog

Two important regulatory changes went into effect on Tuesday, January 19 to facilitate the shift to value-based care. These rules intend to modernize the Physician Self-Referral Statute (Stark)[1] and the Anti-Kickback Statute (AKS)[2] and make it easier to set up and administer value-based arrangements among healthcare services providers and those who pay for such services. The new rules will be relevant to physicians and business entities providing designated health services under Medicare. These are also of interest to digital health suppliers because of the role this technology can play in improving care coordination and care management. For the 2,739 independent diagnostic testing facilities in the U.S., it may facilitate new business models involving value-based enterprises previously complicated by the old Stark and AKS rules.

Valued-based Terms

The AKS rules specifically define new terms and a regulatory framework that will form a lexicon for describing value-based care for many years to come. The Stark rule and the AKS rule use the same terms. The definitions below are excerpts from the AKS rule, except as noted:

  • Value-based enterprise: Two or more VBE participants collaborating to achieve at least one value-based purpose; each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise; that have an accountable body or person responsible for financial and operational oversight of the value-based enterprise; and that have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s).
  • VBE participant: An individual or entity that engages in at least one value-based activity as part of a value-based enterprise, other than a patient acting in their capacity as a patient..
  • Valued-based purpose: Coordinating and managing the care of a target patient population; improving the quality of care for a target patient population; appropriately reducing the costs to or growth in expenditures of payors without reducing the quality of care for a target patient population; or transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.
  • Value-based activity: Any of the following activities, provided that the activity is reasonably designed to achieve at least one value-based purpose of the value-based enterprise: the provision of an item or service; the taking of an action; or the refraining from taking an action; and does not include the making of a referral.
  • Target patient population: An identified patient population selected by the VBE or its VBE participants using legitimate and verifiable criteria that are set out in writing in advance of the commencement of the value-based arrangement; and further the value-based enterprise’s value-based purpose(s).

New and Modified Safe Harbors

“Safe Harbors” are provisions in a regulation that provides protection from legal liability or penalty when certain conditions are met. The following is a summary of the AKS changes:
  • Modifications to the existing safe harbor for personal services and management contracts, including outcomes-based payments;
  • Modifications to the existing safe harbor for warranties;
  • Modifications to the existing safe harbor for electronic health records items and services;
  • Modifications to the existing safe harbor for local transportation;
  • A new safe harbor for care coordination arrangements to improve quality, health outcomes, and efficiency;
  • A new safe harbor for value-based arrangements with substantial downside financial risk;
  • A new safe harbor for value-based arrangements with full financial risk;
  • A new safe harbor for arrangements for patient engagement and support to improve quality, health outcomes, and efficiency;
  • A new safe harbor for CMS-sponsored model arrangements and CMS-sponsored model patient incentives;
  • A new safe harbor for cybersecurity technology and related services;
  • A new safe harbor for accountable care organization (ACO) beneficiary incentive program; and
  • An exception for telehealth technologies for in-home dialysis.
These rules are intended to encourage arrangements in which providers and others coordinate the care of patients with other providers, share resources among themselves to facilitate better care coordination, share in the benefits of more efficient care delivery, and engage and support patients, without violating federal anti-kickback laws and self-referral regulations. However, these regulations should not be misread as a relaxation of the original intent of both Stark and AKS as guardrails against fraud and abuse.

Can Value-based Care Encourage AI Innovation?

Under the traditional fee-for-service model, innovative technologies that improve care but do not have specific billing codes can struggle to attain financial viability. For good reason, payers are often reluctant to assign billing codes for new services until a body of evidence proving economic benefit is available. This process takes time and up-front investment. Because participants in VBEs share in savings (and potentially in losses), VBEs have an incentive to try new approaches faster.

The new provisions regarding digital health technology are especially encouraging. Digital health technology is defined as “hardware, software, or services that electronically capture, transmit, aggregate, or analyze data and that are used for the purpose of coordinating and managing care.” CMS, in the Stark rule even mentions technology that can help hospitals access data from Emergency Medical Services providers such as to monitor cardiac emergencies. In cardiovascular disease, we see many opportunities to improve care and lower costs through better diagnostics leading to better prevention and smarter utilization of expensive invasive procedures. We at Keya Medical are interested in working with VBE participants to deploy advanced digital technologies aimed at improving care management and coordination for target patient populations, such as the avoidance of unnecessary invasive procedures.

References

[1] Centers for Medicare & Medicaid Services. “Medicare Program; Modernizing and Clarifying the Physician Self-Referral Regulations.” Federal Register, 2 Dec. 2020, www.federalregister.gov/documents/2020/12/02/2020-26140/medicare-program-modernizing-and-clarifying-the-physician-self-referral-regulations.
[2] Health and Human Services Department. “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to Safe Harbors Under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements.” Federal Register, 2 Dec. 2020, www.federalregister.gov/documents/2020/12/02/2020-26072/medicare-and-state-health-care-programs-fraud-and-abuse-revisions-to-safe-harbors-under-the.