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Value-Based Arrangements and Navigating the Fraud and Abuse Laws

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The value-based Anti-Kickback Statute safe harbors and Physician Self-Referral exceptions are some of the most significant rulemaking related to these laws in years. Jennifer Michael, Member, Bass Berry & Sims, and Tony Maida, Partner, McDermott Will & Emery, discuss the background behind the rulemaking and some of the issues they are seeing around value-based arrangements. Jennifer and Tony are speaking at AHLA’s upcoming 2023 Fraud and Compliance Forum in Baltimore, MD.

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Speaker 1:

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Speaker 2:

This episode of A H L A speaking of health law is brought to you by A H L A members and donors like you. For more information, visit American health law.org.

Speaker 3:

Tony Maita , I'm very excited to be speaking with you at the Fraud and Clients Forum in September about value-based arrangements and navigating the fraud and use laws . So, let's talk a little bit about what Arson is going to cover . Give some background and talk about why this is such a high topic and what kind of issues we're seeing. So let's start off by introducing ourselves. I am Jennifer Michael. I am a member in the healthcare practice in the DC office of Vast , since my practice focuses on abuse and regulatory compliance . Prior to reentering private practice , I worked at hs , o I g in the industry guidance branch for just under nine years . Um , started off as a line attorney , became Deputy Chief, and eventually chief at the time that the , um, branch was working on the proposals. I left before the, the rule finalized, though , uh, Tony.

Speaker 4:

Yeah, likewise. I'm excited to be presenting with you as well at the conference in Sep at the end of the month. Uh , my name , this is Tony Meda . I'm a partner at McDermott Will and Emory and one of the co-chairs of our , uh, fraud and abuse and reimbursement practice. Um, I also , uh, am a O I G alumni. Jennifer and I overlapped for a bit. Um, I was in the Indus the , uh, administrative and Civil Remedies branch , uh, for about 10 years working on , uh, Medicare , uh, related False Claims Act cases and, and settling , settling those cases and , um, was not , uh, and I think the reason why we're talking about this program , this topic at the program is, you know, this is probably the most significant rulemaking for the anti-kickback statute and the Physician Self-Referral law or Stark Law , um, in many years. Um, and the agencies had heard from stakeholders that these statutes and regulations posed problems or obstacles, whether real or imagined , um, to the transition from Medicare fee for service payment structure to value-based payment. Um, and so the agencies took that , um, to heart and spend a lot of time and effort that Jennifer can attest to, I'm sure, in coming up with a proposal , uh, and , and final regulation. Um, that really changes the dynamic , uh, uh, um, uh, and , and potentially has provides , uh, new ways or new , uh, avenues for entities to structure arrangements.

Speaker 3:

Yeah, and these safe harbors as , um, most listeners likely know, are unique in that, you know, in most cases, Y g has a specific type of arraignment in mind when they're promulgating a safe harbor. So, for example, like space rental or equipment rental investments in ambulatory surgical centers. And so they have that specific arrangement in mind and then can develop safeguards that are tailored to those arrangements. And here in the values , you know, they were trying to, to promote flexibility and protect arrangements that , um, you know, they , some they had some ideas about, but also to predict arrangements that were novel and maybe not yet been , uh, they didn't know what they were protecting. And so these are very different harbors, which makes them both , um, you know, more exciting and a little to a much wider range of arrangements, but also , um, sometimes, you know, because they couldn't anticipate all of the various types of arrangements that, that , um, parties might want to enter into. Sometimes it's a little bit of a square peg round hole . And so Tony and I will be talking about some of the challenges that come across. Um, but first, you know, this is going to be an advanced session, so not going to spend a lot of time on the definitions and, and, and differences between the various safe harbors. Um, my guess is a lot of the listeners here will already have attended at least one, probably more sessions about that and, and are already familiar with the safe harbors. But just for a quick background, of course , the Antifa statute and Stark Law are, are, are different. Some overlap, but the anti-kickback statute is an intent-based criminal statute. Um, <inaudible> with the safe harbor is voluntary. So the Safe harbors , um, you know, the degree of difficulty to satisfying 'em is, is a little higher than some of the Stark Law exceptions. Um, the , the new value-based safe harbor, sorry , the Care Coordination Safe Harbor, which protects in kind remuneration exchange between V B E participants, the , the parties don't need to, to assume any financial risk , but that protects only in kind remuneration. And then if you want to exchange cash, then you assume some financial risk . And there is the substantial downside, financial risk , safe harbor, and the full financial risk safe harbor. There's also a safe harbor that protects , um, tools and supports given to beneficiaries. And then finally, there is a, an amendment to the personal services safe harbor to protect outcomes-based payment arrangements. So that also protects cash payments, but that safe harbor is a little different, the value-based safe harbors, because it does have a market value limitation. Um, one of the, the greatest flexibilities with these new value-based safe harbors is that lack of a fair market value requirement, which gives parties a lot of flexibility.

Speaker 4:

Right. And I would just re reiterate or sort of , um, repeat what Jennifer said in terms of we , you know, we're there , there , you many people have probably attended, you know, I think in 2021, you know, every law firm did webinars on this topic. H l a did tons of webinars. There's, there's probably a good time if you haven't looked at these regulations in a while , um, it would be good to dust off some of that material to sort of come to this session and , um, you know, with them in mind so that you, you know, can, so that we can kind of get into the, the types of arrangements that we're seeing clients ask about and sort of how to apply these laws in a practical, or these regulations in , in , you know, in a practical way so you can take them back to either your clients or organization , um, and be able to, to work on that. Um, I know that , uh, and I think it is fair to say that, you know, because these rules came out at the end of 2020 during the pandemic, I, I , I don't think there was a lot of work or interest in the provider and supplier community , uh, in, in looking at this. There was a lot of other things going on at the time , um, that distracted, but I, I have definitely seen an uptick in interest over this calendar year on different organizations wanting to look at these regulations again or perhaps for the first time. And to think about sort of now that medic , you know, the march towards value-based care really is happening, and how can we, is there, are there things or programs that the organization would like to do, and how do we accomplish those from a regulatory perspective? Um, as Jennifer said, the Stark Law exceptions are different , um, because Stark is different. Stark is a strict liability statute that applies to financial relationships between physicians and d h s entities. So while the kickback statute essentially applies to everyone on the other side of an arrangement where there's federal business involved, the Stark law is limited. You have to have a physician and a D H S entity. Uh , there's also a full risk financial or a stark exception. Um, there's a meaningful downside risk exception , uh, to the physician self-referral law, but it relates to the compensation of the physician , um, that the physician's compensation is at least at 10% at risk , um, from the D H SS entity. And then there's also a value-based arrangements , um, uh, uh, uh, exception that covers where you don't have to accept financial risk from payers. Um, and it also protects monetary compensation in contrast to the, and a kickback safe harbor where if you're not taking on risk only in kind , remuneration is protected or eligible for protection under the safe harbor. Whereas on the , uh, the exception, the Stark law exception, you could protect monetary and non-monetary compensation. And it also applies. And there are also special rules around how group practices can distribute d h s profits that are directly attributable to a physician participating in a value-based enterprise. Um, and so the , the the really the, you know, the, the regulatory framework that we health lawyers have lived with for a long time, which is you have to meet a stark exception because Stark is mandatory if you have a physician in a D H S entity and then you have a safe, and then you have the a k s safe harbors and you can meet a safe harbor. Um, but those safe harbors are voluntary and otherwise you have to do facts and circumstances analysis to assess your risk.

Speaker 3:

Right? And so I, I think this session is so timely because as I think you mentioned, Tony, I I've also seen a very large uptick in client interest in applying these safe harbors or entering into arrangements where an entity is assuming some level of financial risk. Um, you know, sometimes we'll see entities assuming full financial risk, or maybe they , they're assuming full financial risk . So a lot of times, even if you, you feel the entity believes that they truly are at full financial risk, they might not technically satisfy that definition, that a safe harbor's definition there. So I, I am seeing a lot of interest of the substantial downside financial risks harbor and , um, Tony and I are going to talk about some challenges that we have seen work through and structuring these arrangements , um, in particular, and we're gonna work through some, some hypothetical where, you know, we talk about some of the definitional challenges we've seen or structural challenges, what it means to assume risk , um, how, what it means to have a me assume, a meaningful share of that substantial downside financial risk in practice, not just, you know, from an academic perspective. Um, so we're , we're excited to discuss those challenges with you and talk about how , how we've, how we've managed to get comfortable with the arrangements that , um, that we've worked on.

Speaker 4:

Right ? And I think there's a , there are other , there are, and we'll explore some other places that these are regulations can potentially be used in terms of, you know, there, there are different structures and healthcare is both, you know, sort of consolidating and also verticalizing, if that's a word, where you have lots of different types of providers and organizations in the same , um, family. Um, and there are referrals coming from a variety of directions, right? I think, and additional, you know, payment structure is coming out of c m s that is trying to, you know, look at physician, different types of physician practices and have, you know, a , a episode of care payment or, and particularly for primary care, since they are, you know, primary care physicians are the gatekeepers in many ways for healthcare expenses. You know, there's more and more practices that are, you know, assuming risk associated, you know, with the , with their beneficiaries. Um, you know, and everybody who has an A C O is probably is likely thinking about these regulations in terms of, you know, not just their current operations, because oftentimes you, you might have you , you still have a c o waivers, but as those programs change and morph over time, you know, part of what we're talking about is what are, what are client , what are people doing today, but what are they gonna need to be thinking about to do three years from now? Um, and , and both from a organizational perspective as well as, you know, there are other ways to use or to ways to look at, think about these regulations like physician compensation. Um, or , uh, another topic that I think we both get an awful lot of questions about is patient engagement tools and supports. Um, there is a new safe harbor that covers patient engagement, you know, providing things of value to patients to help the manage their co their coordinate and manage their care. And in order to use that safe harbor, you have to be the value-based enterprise and the value-based enterprise participants can use that safe harbor to provide tools or, or, you know , uh, things that can help patients , uh, better coordinate their care. There are a number of requirements to that safe harbor, and there's a annual monetary cap on spending. Um, so that can sometimes be operationally challenging. But I think, you know, one of the, there is one of the, you know, the , the administration and other people in government have talked about the importance of addressing social determinants of health as a way to reduce costs and improve outcomes. And that save the patient engagement safe harbor is a vehicle , um, to do that. But it may not necessarily answer all of the questions or, or cover all of the programs that , uh, organization may want to do. And so there are, you know, other things to look at too, in terms of the beneficiary inducement exceptions, or , um, thinking about requesting an advisory opinion from O I G on a particular arrangement , um, or otherwise thinking about how to, you know, how to manage the risk or mitigate the risk or what sort of safeguards would one put into place in order to deal with that sit , uh, that type of arrangement.

Speaker 3:

Agreed. Well, hopefully this piqued your interest. And , um, Tony and I will be joined by Tiana Corley of O I G. The government will be represented, and we hope to see you in September at the Fraud Compliance Forum.

Speaker 2:

Thank you for listening. If you enjoy this episode, be sure to subscribe to a H L A , speaking of health law, wherever you get your podcasts. To learn more about a H L A and the educational resources available to the health law community, visit american health law.org.

Speaker 1:

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