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AHLA's Speaking of Health Law
Top Ten 2022: Towards A Common Definition for Value-Based Arrangements
Based on AHLA’s annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2022. In the ninth episode, Martie Ross, Office Managing Principal, PYA, speaks with Tiana Korley, University of Michigan Office of the General Counsel, about how providers are pursuing value-based arrangements under the new AKS value-based safe harbors and Stark Law value-based exceptions. They discuss the role of fraud and abuse laws in a value-based world and take a deeper dive into some of the specifics of the rules. Sponsored by PYA.
Watch the conversation here.
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A H L a is pleased to present the special series, highlighting the top 10 health law issues of 2022, where we bring together thought leaders from across the health law field to discuss the major trends and developments of the year support for a H a. And this series is provided by PPY, which helps clients find value in the complex challenges related to mergers and acquisitions, clinical integrations, regulatory compliance, business value, fair market value assessments, and tax and assurance for more information, visit pya, pc.com.
Speaker 2:Well, hello, gentle listener, and welcome to episode nine. Um, I am Marty Ross, a consultant with pya. I am joined today by Tiana Corley, who, but the university of Michigan office of general counsel. Um, Tiana's had an impressive career in health law, both within the government, uh, working for AMCs as well as in private practice. And she was the author of toward a common de definition of value-based arrangements, um, in the top 10 an article. So welcome Tiana.
Speaker 3:Thank you so much, Marty. I'm happy to be here and thank you to you for taking time in HLA for this opportunity.
Speaker 2:Well, in your article, um, you address sort of the aftermath of the December, 2020 publication of the new anti kickback, safe Harbor and stark exception relating to value-based arrangements, um, and how, uh, hospitals and physicians and other providers are grappling with those rules as they look forward in pursuing value-based arrangements. But let's just start with a kinda a broad question, um, in this, in a world of fee for service rate reimbursement, the fraud abuse laws make sense because you're trying to prevent overutilization, uh, based, um, incentivized for something other than the best interest of the patient, but when you're in a value based model, do these rules even make sense?
Speaker 3:Yeah, that's a great question, Marty. And I think that, um, you know, we're kind of in this hybrid world, right? So we have, um, you know, some fee for service remaining, uh, quite a significant amount of fee for service remaining and even some of the alternative payment models, whether it be the Medicare shared savings program, which is, you know, of course the permanent program, as well as some of the, uh, models that we see coming out of the center for Medicare and Medicaid innovations, um, uh, at CMS, those are built essentially on a beef for service chassis. And so there's still some of those fee for service, uh, elements that are remaining. And so I think this is the government's best attempt to really kind of recognize the reality that payers and others are trying to get providers to move in the direction of value based care. But we're still in this a bit of a hybrid world where some of those incentives that OIG us concern about around over utilization, um, improper motives around quality of care, as well as, uh, re uh, reduction in beneficiary, freedom of choice. Um, those, some of those legacy, um, elements are still remaining in our current system. So it's kind of a balancing effort, I think on the part of both CMS and OOA,
Speaker 2:I, I like that imagery of sort of a hybrid state, and, but this hybrid state's been going on for a while, we sort of marked the affordable care act as the beginning of a formal transition to value based care. What have providers been doing prior to the publication of the exception in the state, Barbara? How have they been navigating these issues as they move towards value-based arrangements?
Speaker 3:Yeah, I think it's kind of the answer is as best as, as we all could. Um, I think that, um, historically, uh, the, the incentives particularly on the position side have been essentially volume driven and I'm not, not sure that we've moved away from that. Um, in fact, there was a really good, uh, article, uh, published by the Rand corporation recently on just that, um, just that issue in, in, in the journal of the American medical association. And so I think that physicians still are seeing a lot of, um, incentives based on volume, but really we some change and probably the faster, um, uh, change on the, on the payer and hospital side. Um, definitely. So we see payers seeking to incent hospitals to deliver care in a different way, focused on quality and focused on the total cost of care, but it's a little unclear that, that those, uh, metrics and have, um, transitioned down to two physicians. And so, um, so it's, it'll be interesting to see over the next few years, um, whether, uh, we do see restructuring particularly on the physician incentive compensation side as health systems move to different models of care.
Speaker 2:Yeah. You made reference to the good old Medicare shared savings program, um, which had built into the model, um, some leeway, uh, for financial arrangements among the participants. Um, can you comment on the success of that in promoting the MSSP objectives?
Speaker 3:So it's an interesting question. So, um, as, as you know, um, Medicare shared savings program, uh, comes with waivers of the fraud and abuse laws that are even broader than anything that's been, um, included essentially in the, in the final rule from OIG or CMS. And I know that, um, those waivers though essentially are gonna be time limited because providers can't spend the whole, they, they, they have a defined amount of time in the Medicare shared savings program. And so even for providers that are essentially relying on those waivers that are available through Ms S P those waivers, aren't going to last forever. And, um, some of the waivers that we see coming out of the innovation center attached to other models, aren't as broad as what we see in the permanent Medicare shared savings program. So really providers needed these rules from OIG and CMS to begin to realize what life would be like either if they're not participating in the Medicare shared savings program or essentially for life after the Medicare shared savings program. So, um, I, I, I think I would encourage those who advise providers, um, who are participating in the Medicare shared savings program to think about what that life looks like after transition from that program, because, um, you know, the, you do have to come up with like a reality after, um, that participation ends. Um, if you're not going to go, you know, through, to the enhanced model, if you're going to come out at some time, just really thinking about what that looks like.
Speaker 2:Well, that, that's an interesting point. We, this, this roughly rough transition from basic to enhanced and the increasing degree of risk that the program pushes you into, certainly CMS was didn't hide anything saying that was clearly their intent. Is that part of the intent behind these exceptions and, and safe Harbor as well? Is that, is this again, CMS and OIG trying to gently push more and more towards risk?
Speaker 3:You know, I think so. I mean, I, I see it that way, right by virtue of there being less flexibility on the care coordination side, as well as a host of different program, integrity, safeguards, and guardrails that we have to comply with, um, for purposes of, um, in the safe Harbor for care coordination. And then for, for fewer program integrity, um, components associated if you're taking on full financial risk. And so, um, as the government has been clear about its desire to move providers into risk, I think that these safe harbors and exceptions recognize that reality and shared goal. Um, I also think though that this is the government's attempt to balance, um, providers who may not be ready to take on full risk and that they may never be able to take on full risk. And so you see a lot in the preamble commentary about small practices and rural providers, and you even see some concern by those who commented on the proposed rules about whether or not these, um, final rules favor, larger providers, um, and will reduce competition. And so it's really, I think, a tough job for both OIG and CMS to try to come out with rules that a address the whole healthcare industry, um, that, that, um, where these rules apply. And also even within, um, certain stakeholder groups, for example, you know, physician practices coming up with rules that apply to a physician practice with several hundred physicians versus a solo practitioner, um, that's affiliating with another provider. So it's, it's a really hard work. And I, I honestly think that the OIG and CMS did, did a good job. Um, they're likely are, are improvements that I would make, but, but, but I think that this was the first shot at really historic reform to, um, the implementing regulations for both the stark law, as well as the safe Harpers for the kickback statute.
Speaker 2:You don't think they're done, do you?
Speaker 3:I do not
Speaker 2:More refinements. Okay.
Speaker 3:I do.
Speaker 2:Let's, let's delve into the exceptions and I, uh, and exceptions slash waiver. And I, I really liked your approach of looking at this, um, by way of definition, uh, of C of CMS and OIG trying to get their arms around, what is this stuff? And I, I have to admit, I kind of had a great, a cheat sheet here, um, to sort of see if I can capture all these terms. So the exception and the waiver are focused on exception of safe Harbor, excuse me, are focus on, um, a value-based arrangement, which is one in which the parties are engaged in defined value-based activity for a specific value based purpose, um, tied to an identified target patient population. Did I miss any of the key terms there?
Speaker 3:I think you got'em all.
Speaker 2:Well, let's talk about those. And so what is a value based purpose as they define it?
Speaker 3:Well, so I think that the government did give us, or they did articulate in the regulation specific kind of a menu of value based purposes, um, for providers. And so I think that this is one of those definitions where, you know, if we're looking at coordinating and managing care for target patient population or transitioning from, be for service to, um, to a more value based care, uh, type of, um, way of care delivery, this was the government's attempt at structuring a definition where providers could have some insight as to what that term really means left to the devices of the provider community. And without any, I think, you know, there are any number of things that we would choose, um, to be defined as value based purposes. So the government did give us, I think it's an option of four, um, um, choices essentially, of, of what constitutes a value based purpose.
Speaker 2:Well, let, let's talk about everyone's favorite stark topic, gain sharing arrangements, um, because for a hospital, those are typically driven by reduction of operating costs, um, and having partnerships with physicians to, you know, more standardized processes with the intent of reducing costs. But one can also argue, um, that gain sharing arrangements are about the importance of standardization of practice and that in fact, reinforces better quality care, greater efficiency. How does one, you know, navigate that value based purchase when there are often these dual interests in pursuing some of these arrangements?
Speaker 3:Yeah, so I think gain sharing, I mean, the, the government has given us a lot of latitude on gain sharing anyway, because the, the, the law was revised by Congress. And that was at a time that, um, my former boss Congressman McDermot, um, uh, worked on, um, making that adjustment to the law. Um, so I, I think that you're, you're right, that it's, it's hard to synthesize the incentives of physicians and of health systems. And that's an increasing theme that, um, you know, that we see, um, even, even for employed physicians, I think it's sometimes hard to align incentives. And in terms of the improvements that we might see down the line, I think that there's an opportunity for OIG and CMS to recognize that and, and make some changes in that space.
Speaker 2:Okay. Um, what's a target patient population. Do you have to have that by name, or can you generally just describe their characteristic?
Speaker 3:You can. I think providers got a lot of latitude in the final rule with what constitutes a target patient population. And so I think my, one of my favorite lines from the commentary is that, you know, an entire patient population can be a target patient population though. OIG will look very suspiciously on at, um, so not really, but, um, I think that providers, again have a significant amount of latitude as long as it's, uh, legitimate, uh, defensible, um, as to how you select a target patient population, which is one of the great, um, aspects of the, the companion rules. That, again, we just have a significant amount on a flexibility though. I don't think that the flexibility is unlimited. And so, as I, as I was referencing in the article, I'm looking to the advisory opinion and perhaps some other guidance from OIG to basically inform, um, and put some meat on the bones of, of how we should be viewing these regulations, because it really can't be open ended. I'm sure that that's not the intent. And, um, you know, whether we see it through advisory opinions, whether we see it through enforcement actions, I do think that there'll be some additional clarity as to what some of these terms mean.
Speaker 2:Yeah. Um, you know, one of the first things we teach young little health attorneys, um, is that the stark law is strict liability. You violate the law, you are subject to penalties versus the, on a kickback statute, which you have to, um, uh, intent, uh, demonstrated, uh, to have a violation. And, and this is I, as you read through the safe Harbor, which I believe has even more re specific requirements than the exception does on the stark side. I mean, bottom line, if the parties have good intent, um, which is to improve the quality of care, um, be more efficient in the delivery of care, will, will, um, enforcement agencies really have, uh, like to stand on and trying to prove you couldn't meet the safe Harbor.
Speaker 3:It's a great question. And it's one that's gone through in my head as well. Marty, I think, um, you know, if we are in, we're talking a value based enterprise, we have parties that are coming together. They are meeting regularly to discuss progress towards this outcome measure, and it's gonna be a substantial, like it's gonna be a substantive, um, outcome measure, not something like patient satisfaction, patient convenience. We're talking about really concerted efforts among the different providers involved in that value based enterprise to improve health outcomes of their target patient population. The question I have is whether that does mitigate, um, any type of bad intent argument that the government may make. And, um, I, I, I really think that if, if the parties are trying to come together, they're doing this hard work, they're doing good work. Um, I just think it, it may make it harder for OIG to, um, to look at enforcement actions or DOJ for that matter for like a false claims act perspective. Um, so I, I think, again, it'll, I think time will tell as to what happens with, um, with some of these partnerships that are encouraged by, by the final rules.
Speaker 2:Um, one thing I have not been able to get my head around, and I've probably certainly not spent enough time thinking about this, but is, um, in the physician employment relation, um, where we are being asked more and more, uh, to comment on compensation arrangements that include typical fee for service incentives, you know, work based VU compensation, but also now incorporate these elements of value based care, whether that be, um, you know, achievement all on, uh, quality measures or engagement in certain activities. Um, do we still look at those to the lens of the employment exception? Does the value based exception come into play, uh, with regard to those arrangements? You know, how do we balance the two?
Speaker 3:Well, I think that the value, so certainly the employment exception is still available. Um, and I think that the, the new exceptions around value based care give, uh, a different pathway, right? So they, they give us a different option, um, to, to, and, uh, compensate physicians. Um, and so I think it's an additive approach and there's, there's even more flexibility. Um, and, and it's nice to, it's nice to have more options in how we, we compensate, um, employed physicians.
Speaker 2:Well, as you wrap up here, um, what are your crystal ball predictions for the future? Um, both with regard to, um, continued adoption, uh, value based arrangements, but also how, um, the, the, um, exception and the way, and the safe Harbor will play into that.
Speaker 3:Oh, if only I had a crystal ball, um, I think that we will continue to see, um, adoption of, and, and the push towards value based care. It has been slow. I certainly, um, will acknowledge that. And I'm sure that the government, um, acknowledges that, um, even with the good efforts of the innovation center and, um, to promote the Medicare shared savings program, um, it has been a very slow process on the transition from, uh, fee for service to value based care. That being said, um, with the, uh, solvency of the Medicare trust fund under continued assaults and with the, uh, payers really moving towards, uh, uh, value based care. I think that we will continue to be on this March towards value based care. We'll continue to be living in this hybrid world where OIG and CMS are on the lookout for good things in terms of this transition to value based care, but also, um, continuing to express concerns about some of those legacy issues that the government has traditionally been worried about such as over utilization, um, uh, unfair competition, patient steering, all of those types of things. So, um, and then one of the big hopes that I have is that the government issue guidance and advisory opinions interpreting some of the, um, the preamble commentary and some of the application of these final rules. So I hope that that's something that we see this year, um, and perhaps into next year as well, it'll be a bumpy ride as it, as it has been. Um, but that's what keeps it interesting. Right?
Speaker 2:A absolutely. And we'll be back here next year to see summarize what we saw 20, 22 and what we'll see going forward. Um, Tiana, thank you so much for taking this time. I hope you have a
Speaker 3:Good one. Thanks so much, Marty.
Speaker 1:Thank you for listening. If you enjoy this episode, be sure to subscribe to a L a speaking of health law, wherever you get your podcasts to learn more about ALA and the educational resources available to the health law community, visit American health law.org.