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AHLA's Speaking of Health Law
Hot Topics in Value-Based Care and the Value-Based Enterprise Rules
Joe Wolfe, Attorney, Hall Render Killian Heath & Lyman, speaks with Tony Maida, Partner, McDermott Will & Emery, and Jennifer Michael, Member, Bass Berry & Sims, about the state of value-based care and the rules related to value-based enterprises (VBEs). They discuss the trends and developments they are seeing in value-based care; examples or hypotheticals that provide a good illustration of the VBE rules; and issues related to fair market value, commercial reasonableness, and volume/value. Tony co-authored an article for AHLA’s Health Law Connections magazine last year related to these topics. From AHLA’s Fraud and Abuse Practice Group. Sponsored by Carnahan Group.
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Speaker 2:Uh , welcome everyone to today's A HLA podcast where we will be talking about value-based care and, and more specifically, the Stark and kickback value-based enterprise rules , uh, the VBE rules that have been around since January of 2021. Uh, there's so much we could cover related to vbe, and you're seeing , uh, throughout a HLA lots of more talk about , uh, VBS as well. And, and our hope today is to give just a brief overview for framing purposes, but then to focus on some trends , uh, that we're seeing , uh, how these rules are actually being used and some, some, hopefully examples of, of VPs that could be implemented. And as , as those of you that have dug into these rules, know there have been government examples , um, there's some examples maybe that some of us are already seeing in the market, and then some that maybe we're just, you know, kind of thinking of and, and, and may maybe are looking to implement down the road. Uh, today's podcast is brought to you by the American Health Law Association's Fraud and Abuse Practice Group. I currently chair the Practice Group, and our mission is to help our members stay informed about healthcare fraud and abuse and compliance issues. Um, our vice chairs , our speakers, our authors, and our other volunteers are doing a , a really good job of developing webinars , uh, publications and other types of content to educate our members on , uh, important compliance developments and trends that we're seeing in the industry. Um , my guests today are Tony Meda from McDermott and Jennifer Michaels from Asbury . Uh, both are well-known in the industry, especially on this topic. Uh, if you attended the ALA's Fraud and Compliance Forum , uh, back in September, you may have attended their session called , uh, Value-Based Arrangements and Navigating the Fraud and Abuse Laws. Uh, the session was, was excellent. I was in , I, I attended it and it included some great case studies and, and hypotheticals. Um, also back in September of 2023 , uh, Tony and his McDermott colleagues authored an article , uh, called Value Add or Valiant Effort, examining how to use the value-based safe harbors and exceptions for physician arrangements. And that was in ALA's , uh, health law connections and did a , a good job of, of digging into these rules. And we'll refer to that I think through during the podcast, but I encourage you to find those resources , uh, because they were excellent. Um, and give a good background. We won't have time to get into the weeds here too much , um, and on this topic, so I'd encourage you to take a look at those. Um, thanks to Tony and and Jennifer for participating. Before we get started , uh, with some of the q and a , um, I'd , I'd like it if you could introduce yourselves, maybe starting with Tony and then Jennifer.
Speaker 3:Sure. Thanks Joe. Um, for the introduction and for participating today. I appreciate it. Um, as Joe said , um, I'm a partner at McDermott. Um, I'm based in New York, and , um, I'm one of the co-leaders of our healthcare regulatory and compliance practice. I mainly have a fraud and abuse, you know, counseling and government re uh , investigations practice , um, you know, with different , um, healthcare organizations sort of across the industry. And prior to McDermott, I was at the Inspector General's office for a number of years , um, in the , uh, administrative and Civil Remedies branch. And I'll kick it over to Jennifer.
Speaker 4:Thanks, Tony . And thanks, Joe. I am Jennifer Michael. I'm a partner at Bass Berry and Sims based in the Washington D office. My practice focuses on fraud and abuse and regulatory compliance. Prior to reentering private practice, I also worked at H-H-S-O-I-G, I was in the industry guidance branch. I was there for almost nine years. And the last two years there, I served as chief of that branch. And in that role, I oversaw the drafting of the proposed rule for value-based safe harbors. And I currently spend a lot of my time thinking about and working on value-based care arrangements.
Speaker 2:Great. Uh , thanks , uh, Tony and Jennifer, and again , I, I'm Joe Wolf. I share the ALA's Fraud and Abuse Practice Group. Uh, uh, I'm a shareholder at Whole Render . Um , I lead its healthcare regulatory practice group. Um, my day-to-Day client work focuses on , uh, healthcare provider and financial relationships , uh, physician compensation, stark and kickback work, and , and a and a lot of work in this space of value-based care. Um, I, I want to transition here a bit to just give some background. As I mentioned before , um, there's a lot of content out there. Tony and and Jennifer have , uh, spoken on this recently. I I think even at the most recent , um, a conference in New Orleans , new Orleans for HLA, there was another session on value-based enterprises and Care. I encourage you to look at that , um, as as, but we're gonna try to, I , I wanna start off just a very high level discussion of , of vbe. Um, the rules on, on value-based enterprises came out back in January of , of 2021. Uh, they gave us some new exceptions and safe harbors that focus on value-based care, again, at a high level. Um, as all of us that work in this space, you know, appreciate healthcare organizations receive reimbursement from federal healthcare programs. And because they receive that reimbursement , um, there's, they need to comply with the fraud and abuse laws to make sure that the care that , um, is referred and that is submitted for those claims , uh, is, is defensible. Um, so healthcare organizations often perform what I sometimes call the dual analysis, you know , uh, your stark exception aligned with your anti-kickback , uh, type safe harbor or anti-kickback analysis. And if you meet those for your , um, your arrangements, then the incentives should be okay for submitting those claims. And , uh, historically, our menu of exceptions focused on a few , uh, key requirements. And, you know, the terms and, and concepts. We often think of fair market value, commercial reasonableness, the prohibition on taking into account referrals, having to have a signature and a writing and set in advance. And all , all of those requirements are what we saw , um, in our, our normal exceptions. And starting in January, 2021, we sort of had a new menu of, of value-based rules. And essentially, in , in the government was saying that if your financial incentives are tied to value-based care, then you have a new framework, a new opportunity to , um, to defend your ultimate , um, incentives that you're paying out if you're aligned with these value-based care concepts. So , um, that mean meant back then that the government had to create some, some new terminology. And that's where , um, we , we see this new framework, these types of terms, things like , uh, the value-based enterprise. What is a value-based enterprise? What are value-based , uh, purposes? Uh, things like coordinating and managing care, improving quality, reducing costs , and transitioning from payment and delivery to, from, from volume towards value. Uh, that's where that terminology was developed. Um, value-based activities, taking an action refraining from taking an action. Um, and also the, the, the concept of a target patient population. Uh , because the government was developing this new kind of framework , um, we needed this, this new terminology , uh, to , and , and I, I've seen this terminology sort of take hold more over the last, last few years. Um, and then beyond that, the government created some exceptions and safe harbors that are, are driven by a concept of risk . So if a healthcare organization , uh, develops a care model , um, or is servicing a target patient population and is at full risk, it has , um, uh, a, a, a new menu of , of, of a , a new exception and safe harbor. Um, if there is meaningful downside risk to the physicians and other , uh, exception is available , um, if there is in kind or remu remuneration for care coordination , um, there, there could be a new safe harbor . So there , there really is this kind of dual analysis now has some new tools, and we're not gonna get into those , uh, maybe Tony and Jennifer will when they react, but , um, we just have this new set of, of , um, arrangements and safe harbors , uh, that, that help illustrate , uh, the government's thinking on, on these new rules. And when you look back at the, the government's , um, uh, examples in the rural rollout, I, I continue to go back to a really strong government example , uh, where the government talked about a hospital that developed this new cancer screening protocol. And the , the hospital thought physicians were ordering a, a dual modality or single modality cancer screening, and that perhaps a dual modality cancer screening , uh, may be better. And it develops , uh, guidelines and a, a , a value-based enterprise to encourage physicians to order this , uh, dual modality cancer screening because it's better for patients. And in that example , um, it, it really jumped out at me that that's just such a different way to think about , um, uh, healthcare and , and how we structure arrangements. And in , in that example, the value-based enterprise was the hospital and the identified community physicians, the target patient population was patients in the hospital service area that would receive the screening for the particular disease . The value-based activity that was being encouraged was adherence with the hospital's revised care protocol , um, and by ordering that dual modality cancer screening, and then the value-based purpose was to , um, was to , um, improve the quality of care for patients in the hospital service area by detecting more cancers and avoiding potentially unnecessary overtreatment of false positive results. So I , as a , as a way of example, you know , that's a , a a different way of thinking about this kind of regulatory analysis. And I think there's lots of opportunity in this space, and that's why, you know, we have Tony and Jennifer on today to talk about , um, this opportunity and what they're seeing in the market. So that's a bit of high level background. Again, new exceptions and safe harbors that help us to protect incentives that are focused on , um, some aspect of taking on risk , but don't, not, don't necessarily have to take on risk , um, in using that new terminology. But now I'm gonna transition. I want to talk to Tony and Jennifer , um, about what they're seeing in the industry. And I'll start off by , uh, you know, posing a question to Jennifer. You know, Jennifer, what trends are or opportunities are you seeing , uh, in the value-based care space in your practice?
Speaker 4:So, I'm seeing as far as trends , um, I'm seeing clients focus on care gaps and opportunities for care improvements. So for example , um, looking at gaps, those could be geographical gaps such as underserved rural communities or , uh, socioeconomic gaps such as dual eligible beneficiaries who aren't accessing the right type of care at the right time. As far as care improvements, I'm seeing a focus on , um, frequently on disease states. So, for example, an entity that is really good at, at driving patient engagement , um, in diabetes, in the diabetes space, or in the physical therapy space. Um, as well as a focus on a, a stage of care, whether that be, you know, post discharge from a hospital , um, an entity that's really good at that, you know, post 60 day discharge, making sure patients are adhering to their discharge plan of care , um, or something like palliative care, which is a stage , you know, making sure patients are considering all of their options and accessing palliative care when appropriate. Um, so, so really it's, it's looking for those , um, those types of arrangements where the potential ROI of, of improving care is really compelling. Um, as far as opportunities , um, I'm seeing, you know, with the growth of continued growth of managed care, I think we're going to continue to see more delegation of risk in the managed care space. Um, oftentimes, you know, entities can rely on the managed care safe harbors, but the , those don't always work for every arrangement. And the value-based safe harbors allow more flexibility with as far as patient engagement. Um, and the other big opportunity I'm seeing is the growing relevance of ai. Um , especially for things like pattern recognition, so much like how the government uses data analytics to identify outliers for purposes of enforcement entities can use those same data analytics to identify outliers for purposes of either identifying a , a target patient population or identifying individuals within that target patient population who perhaps need , um, tools or, or supports.
Speaker 2:Thanks. Uh, thanks Jennifer. Appreciate , uh, those thoughts. And Tony, a similar question for you. What are you seeing , um, with healthcare organization? How are they using the value-based rules?
Speaker 3:Yeah, I think in many ways it , in many ways , um, similar to some of the things that Jennifer said, I think probably the most common use is around patient engagement and trying to address social determinants of health, particularly by an entity that has taken on payer risk. Um, I see a lot, you know, whether it's, you know, the , an entity that a primary care practice that is taken on risk or it's an a CO that is, you know, that has a number of members that could be a value-based enterprise. All of those members could be, you know, value-based participants. And then looking at what are the care gaps? Or, you know, now that we're responsible for the cost of care for this target patient population, how can we, you know, help those patients? You know, what are , in some ways this is the low hanging fruit, right? The , the easy fixes towards getting people to, for, to, to improve outcomes and quality of care. Um, could be as simple as making sure the patient has transportation to their doctor's appointments. Um, there's a transportation safe harbor, obviously, but then there's, you know, that you could also use value-based safe harbors as well. Um, the patient engagement safe harbor or, you know, expanding beyond that to look at, well, what else does the patient need? Or what else could we provide the patient that otherwise would potentially create beneficiary inducement and kickback concerns? But in the context of the, of the value-based arrangement, you, you have more flexibility. Um, I think the second way is, is related in terms of those then those entities that are either partnered together in NACO or sin or , um, you know, different entities inside a larger corporate family, figuring out how to, or exploring how to share resources amongst each other , um, with the goal of still being to better coordinate care amongst those entities. Um, or, you know, and , and , and in order, and for that, there is, you know, the care coordination safe harbor. Um, you know, there is, you know, there that has a 15% contribution requirement that, you know, sometimes creates some issues or, but there, there's, you know, there there is a pathway or that presents a pathway in order for organizations to share resources together in a way that, you know, frankly, you know, one might have been able to justify prior to these rules, but now that we have these safe harbors , um, you're able to, you know, look to them as well. And then the third thing I think would be around physician compensation and sort of contract, you know, the , uh, you know, contract or relationships in general. Um, one of the safe harbors that you , you, which would put in this value-based bucket is the personal services, the , uh, the amendments to the personal services safe harbor that include an outcomes-based compensation. Um, you know, that is something that I've looked to, to create incentive or to work on developing incentive compensation for independent contractors. You know, you still have , um, you know, you still have FMB and other requirements in that particular instance, but it can be a helpful vehicle.
Speaker 4:And how about you, Joe? What are you seeing have , uh, value-based enterprises been used as, as you expected?
Speaker 2:Yeah, thanks, Jennifer. Um, you know, I, I do think , uh, you know, I , as , as Tony said, I'm seeing a couple of different components , uh, to this. I , I say number one I'm seeing is especially more recently, more interest in business leaders getting educated about , uh, the , these value-based opportunities. Again, these rules are very different , uh, than what we had seen historically. So more interested in, in seeing how this fits into , um, an overall , uh, value-based strategy. I do think value-based care sort of lived in , um, in , in maybe just the managed care setting , um, before and , and now as we've seen the development of population health leaders and also , um, uh, value-based care leaders in , in organizations, and actually now there are VPs of population health. Um, they're , they're showing some interest in these tools , um, these tools and these new safe harbors , uh, because they , they allow for , um, targeted , uh, arrangements that address an issue like I just mentioned with that cancer screening example for the government, if a healthcare organization is encountering a specific problem that , uh, is be being driven by , um, issues related to care coordination or, or quality , um, or, or costs to a payer, they , they could develop , um, a, a , a targeted type arrangement. So , um, I think , uh, healthcare organizations are, are learning about this, trying to see how they can , uh, introduce it to their overall , uh, care delivery , uh, platform. Um, I've talked to a couple of clients about developing VBE committee structures that are focused on finding opportunities like this , um, much like we might think a quality committee would ha would carry that function before. So it shows that there's interest , um, regarding strategies. I think some organizations are, are looking to these rules as an additional layer of protection for more traditional incentives. I think Tony was, was alluding to that. Um, how does this align with and allow you to pay , pay physician compensation perhaps , um, in a, in a different way, a more , uh, creative way focused on, on value-based , um, situations. Uh, could it help mitigate risk under arrangements that have similar to features to what we have seen for years, but now we've introduced a , a value-based component and some outcome measures , uh, into that model. Uh , the others are really looking at this as a , an , an opportunity again, to develop something innovative , um, and, and perhaps novel to address an actual issue. Uh , I've talked to clients and worked with clients on programs focused on, for example, a , a surgical program , um, and where there is a need perhaps for , um, in kind care coordination along the continuum of care through the surgical program , uh, and how that enhanced , uh, staffing could , uh, be structured as a , a value-based enterprise if the , um, the physicians adhere to care protocols , uh, perhaps conduct post discharge meetings , um, achieve those kind of quality and outcome measures. Um, and as these rules are structured, there can be a component of , uh, referring within the target patient population within the vbe e as well, in order to, you know, make sure that you're in a position to achieve those outcomes. There could be opportunity there. Um, I think as Jennifer and Tony were both saying there, there could be an opportunity to focus on , um, A-A-A-A-A-A part of the population that , um, requires additional treatment support. Um, was talking to a client and , and working with a client that had identified , um, an at-risk patient population , um, and developed a, a unique patient-centered medical home by partnering with a private practice physician who had , uh, developed an innovative care model , uh, covered some of the costs related to that , uh, patient-centered medical home. Uh, then the independent physician operates the medical home , uh, provides proactive case management , um, service linkage , um, and support for that patient population and works to achieve outcome measures. So , um, I think there's, those are just two examples that I'm, I'm seeing. Uh, but another theme is sort of how does this fit within the whole delivery model? If you have an A CO and a clinically integrated network , um, in a physician enterprise, and you , um, are trying to put together your overall strategy, whether that's , um, using the a CO fraud and abuse waivers or the normal stark and kickback exceptions, does this fit within it , um, to somehow better protect or, or provide additional protection for the incentives that you're trying to develop to drive value-based care? Um, I'm seeing more discussion about how does this fit into an enterprise , uh, strategy as well. But I'd say most of the, the traction has been around getting educated and then also using targeted , uh, opportunities to use these rules. So thanks for the question. Uh, Jennifer , um, I , I wanna maybe let's move on to a question , uh, to Jennifer. Uh, Jennifer, in your sessions with Tony, you went through several hypotheticals of potential vbs. As you kind of think back, is there a , a hypo or an example you've worked with through since , uh, since you gave that session or that perhaps a , a good illustration of, of the VBE rules?
Speaker 4:Yeah, so , uh, the Tony , uh, alluded to one of them , um, and that is a data exchange among and between affiliated entities. So looking at the care coordination safe harbor , um, you know, I , a client, a couple of clients actually have , we're interested in, you know, as you alluded to, Joe, those business synergies that also can improve patient care. So, for example, a client that has a number of kind of related, but not, not directly related healthcare , ent uh , healthcare entities , um, one of them , like for example, if there's a , a personal care services entity is, is out there interacting with the patient on a frequent basis, can really keep tabs and monitor how the patient's health is doing on a day-to-day or week to week basis. And if they're seeing that the patient is maybe, like, for example, at the end of the month, the health out , you know, the health is patient's health is declining , um, maybe they are, that's when their SNAP benefits are running out, and so they're not getting as good nutrition, well, they can make a , um, a referral to an affiliated entity that does meal delivery systems. Um, so it's that data exchange that can be protected, that can raise some potential HIPAA challenges. But if that data exchange is done at the direction of a managed care plan, usually you can overcome those challenges and the fact that they're affiliated entities , uh, and it's the exchange of data really makes the 15% contribution less of an issue there. Um, the other one we talked about during our session , um, I I won't go quite as in depth , um, that I think is really interesting is, again, it involves that delegation of risk in the, in the MA space. And in this case there was a subcapitation, so a , a delegation of risk to a risk bearing entity , um, in a rural area. And in that, that area, there were , um, people who weren't getting the specialty care that they needed. The providers just weren't there. So there was a HOS one hospital , um, you know, they have the standard hospitalists, ER docs, primary care, but they don't have those specialists , um, needed to , uh, adequately treat the patient . So the patients either went without care or had to travel really great distances. So this entity entered into an arrangement, formed A VBE with a hospital, that hospital entered into agreements with specialty physicians , um, and just to set up a provider based department in the hospital. And then the , um, management company, the risk bearing entity in the hospital formed A VBE , um, and then the hospital for the, it , it would bill for the items and services provided by these specialty physicians and attribute its revenues to the VBE, which then the VBE could pay the hospital based on the, you know, the contractually agreed upon amounts and the management company could retain some as well. So I thought that was a really interesting way of addressing what is, you know, it was, it was critical to the community and, and it really improved patient care. So the , the VBE participants, in that case where the management company or the risk-bearing entity in the hospital, the value-based purpose was to improve the care of these, of these rural population, in particular , um, rural, rural residents who required , um, certain specialty services and the value-based activities were having these services be provided by the physicians , um, often via telehealth services.
Speaker 2:Great . Thanks, Jennifer. Appreciate all those, those examples. Uh , Tony, how about you? Do any of those example models stick out as as particularly helpful? Uh , have you developed other examples over the last couple of years you'd , you'd be willing to share?
Speaker 3:Yeah, I think the compensation one, I mean, you know, sort of looking back on 2023 too , I mean, we, I think saw several stark law related FCA settlements with health systems related to their employed physician compensation. Um, you know, some pretty large one, the particularly large one as well towards the end of the year. And it struck me that, you know, putting aside whether that there are other aspects of the sprint rules, particularly on the CMS side, that addressed or probably would have addressed some of those issues. But there is a , it sort of highlighted for me again, that it is helpful or the value-based stark exceptions do provide another avenue to, for employed physician compensation. Because of course, on the anti kickback side, you have a very broad employment safe harbor. And so you don't typically worry very much about the kickback statute when you're talking about your employed doctors. But on the Stark side, traditionally, you still have fair market value, volume and value requirements. And one of the things that we sort of talk that we talked about in the Connections article and is, you know, how do you, how could you use the stark exceptions to create, you know, to have a certain level of incentive compensation for your employee doctors in the way that you may not have been able to do before, such as setting up, you know , uh, uh, now you have to sort of build the infrastructure in the beginning. Um, you have to have articulated what the value-based purpose is, what sort of criteria, right? What you want the physicians to do in order to be eligible for that incentive bonus. Um, but CMS did, you know, say that employers could use these exceptions. And if you could follow, you know, if you want your physicians to implement certain care guidelines that are well established or , um, improve, you know, outcomes, you could potentially create, you know, an incentive pool that is based, you know, that is potentially based on in a way that might, you know, under the old rules at least, potentially indirectly vary with volume or value of referrals. But under these, under the new rules, you, you know, you, you, you have more flexibility in looking to the value-based exception for that type of compensation. Um, there's somewhat of a belt and suspenders thing too is you might want to try to rely on the employment safe harbor or the employment exception for, you know, your traditional compensation, but then rely on the , uh, value-based exception for incentive compensation. There's nothing to say. You can't necessarily, you know, look to multiple exceptions. Um, you know, and that is one thing I have seen. I mean, organ hospitals are not necessarily, you know, flush with cash today. And so there's is not necessarily , but , uh, the , you know, so that is an issue in terms of, there's still obviously, you know, concerns of, from a business perspective about how much you know about physician compensation levels. But I think there is, you know, there's, there's is, you know , both sides of this conversation have goals, and one of them is improving the care outcomes and, and particularly, you know, addressing readmission rates and other ways in order to have the care improvements instituted at the hospital. And compensation can be a tool to help achieve that.
Speaker 4:How about you, Joe? Do you have any examples from presentations or from your client work that might help the audience?
Speaker 2:Yeah , Tony and , and , and Jennifer, those . Tony, I really appreciate those examples. Um, you know, one , one thing just kind of as I react here , um, the , when the government talked about , um, these, the design of these value-based arrangements , uh, there was some language that stuck out to me that the, that the arrangement has to be reasonably designed to achieve a value-based purpose. And so that means as , as I read the commentary there, that there's , uh, lots of opportunities to be , uh, creative. Um, and , and the examples what I thought the government did a really good job in, in both on the stark , the CMS side and the OIG side here of, they gave lots and lots of examples , um, in the commentary. And , um, I found clients are, are very receptive once they hear that the government actually, you know, had talked about and, and gave , uh, some examples. So there's some really good examples , uh, from the commentary I mentioned that cancer screening , uh, example earlier , um, if you work your way through the commentary, there's talk about , uh, shared savings and gain sharing and pay for performance , uh, types of incentives , uh, being on the table , um, incentives to refrain from ordering unnecessary care. Um , I mentioned that , uh, dual modality cancer screening example. In , in that example, the government said you could pay , uh, they , uh, indicated that that incentive was set up, so it was $10 for each dual modality cancer screening ordered. Um, there was talk about patient assessments, you know, paying for the completion of, of patient assessments , um, uh, compensating or providing incentives for physicians that participate in post-discharge meetings and follow-up services , uh, care transition types of incentives , um, sharing of certain kinds of internal cost savings. Uh, there was just lots and lots of examples getting into patient engagement as well. Um, one that stuck out to me was the government talking about a hospital providing a physician group with care managers that were tasked with identifying the physician group's high risk patients to help the , the, and , and the care managers would help the patient's care transitions and, and medication and home-based care and , and keep tabs on that to make sure that the patients receive the appropriate follow through and post discharge care. Uh , and that also would include some data analytics systems to help the group's physicians , uh, make sure their patients are achieving better healthcare outcomes. And then also some discussion of remote monitoring technology to alert the group's physicians when the patient needed a healthcare intervention. And, you know, thi this does get me thinking that, you know, this can be a solution to this continuum of care , uh, issue that a healthcare organizations can be a bit more creative as they think about how patients come down the, the care pipeline to make sure that those , uh, there , there isn't like a drop off of , uh, and , and actually sort of slower follow up care than is as necessary. Um, I , I've been talking and working with the clients , um, around a situation like this where we had one kind of provider that is seeing the patients earlier on in the care, but at, at some point in, in the normal care continuum, there is a handoff or a transition to a second type of provider. And , uh, the , the specific situation we were dealing with is one where the , the second provider , um, the , the patients weren't getting scheduled , uh, perhaps as quickly as they should have . And, and then also outcomes and, and , uh, patient experience was, was negatively impacted. And so in that situation, we , um, looked at A-A-V-B-E type model where , um, the, the, the healthcare organization would oversee the VBE and then develop some team-based metrics between these two categories of providers, and then perhaps develop and roll out care coordinators to make sure that this patient dropage didn't occur. And then , um, also developed some targeted incentives, a bonus type incentive , uh, focused on this care coordination and quality, maybe including , um, uh, metrics around how quickly that follow-up care happened. And then in turn, the physicians would , um, uh, be tasked with coordinating that care, participating in a work group , uh, along with those care navigators to better get their hands around this coordination of care. Um, and then also there could be, I think a , another layer where there is , uh, uh, a referral concept that ensure that these patients stay within the care pipeline to get these , uh, targeted outcome measures over time. So I think, again, this, this kind of illustrates the government's given us a lot of examples, and then we could look to some of those examples and expand upon them , uh, perhaps to develop really innovative , uh, care models as well. So , um, a couple of examples there. Um, I wanted to , uh, may jump to discussion of the value-based enterprise rules and how they interact with some other common , uh, concepts. And I , I think I'll turn this question to Jennifer. Uh, the Vbe rules themselves don't have a fair market value , um, or volume or value type standard. We alluded to that before. Um, and some don't have a commercial reasonableness component . And , and from your vantage point, why is that meaningful? Uh , maybe even from a practical standpoint?
Speaker 4:Yeah, I think it's, it's meaningful because particularly if you are asking people to take on risk as, as they're required to do in the substantial downside financial risk in full financial risks , safe harbors, you have to give them a reason to , um, to take on that risk. And if , if you're capping payment at fair market value, that's just not gonna be enough, I don't think. Um, so, and, and you know, if, if the value based arrangement is particularly effective and really good, it's possible that you could have a significant , um, improvement in outcomes that could result in a significant savings amount to be distributed to VBE participants. And so you want to be able to, to offer , um, people that that's the hook, right? That there's the incentive to, to change your care protocols to take on that risk and to if, and if you believe in what the value-based activities are, that they really are going to improve patient care. Um, that's how you get them to participate. And the , you know, the value , the volume and value that's, that's really necessary because you have the defined participants in, in the VBE, and they're going to be referring to each other , um, and participating in these same care protocols. So , um, you , you know, you can compare that to the outcomes-based payment arrangements in the personal services safe harbor where there is a fair market value requirement, but that payment is only made if the outcome is achieved. So you can look to either one , um, but that, you know, getting rid of that fair market value cap is what is what the hook, I think, to, to convince , um, potentially reluctant , um, physicians and other practitioners and entities to sign up to, to take on that , that risk.
Speaker 2:Thanks, Jennifer. Um, Tony, what are your thoughts on those requirements? Um, and also maybe while you're answering if, could you provide some, you know, thoughts on the, the impact of the narrowness of the value-based enterprise safe harbors on the kickback side , um, and what that may mean?
Speaker 3:Yeah, I think that, you know, it , it sort of highlights, I mean, I think first of all , as an initial thought, it's helpful, particularly on this dark side, to not have those big three, you know, present all of the time. Um, you know , because that is where there can be a lot of, you know, those where there can be a lot of issues even with the change . I mean, I think the change in the volume value, the stark volume value standard was very significant in the sprint rule and was , and addressed a lot of the ambiguity around that standard. But it still is, you know, you still have fair market value questions and some of the enforcement actions we see, you know, continue to focus on fair market value. And so that is helpful to be eliminated. But some of those are still present in the kickback safe harbors, right? The, even the care coordination, the safe harbor, you have to determine the fair market value of the inkind remuneration that you're exchanging in order to calculate the 15% contribution, because that has to be either 15% of the offer's cost or fair market value of the inkind remuneration. So, and in the personal services Safe harbor, you still have , um, you know, FMV and uh , requirements. So I think what it does, you know, more sort of broadly is highlight , um, or repeat the , the place that we practitioners have been in and clients have been in with Stark and the United Kickback statute, which is, you know, the safe harbors are typically narrowly drawn. Um, many arrangements don't fit within a safe harbor, all of the elements. Um, I mean, fair market value is certainly usually an important element in a, in effects and circumstances analysis as well. Um, but you definitely, you know, the , the safe harbors themselves are more narrowly drawn than the stark exceptions because you have to meet a stark exception in order to have a legal arrangement. So, you know, we, you know, this, the value-based exceptions in safe harbor sort of continue that construct of the exceptions are easier to meet, you know, particularly in the value-based exceptions are easier to meet now because CMS removed some of these, you know, these el these elements, which are , you know, do create sometimes obstacles to compliance. But on the flip side, your , your safe harbors are more narrowly drawn. And so you may be looking at effects and circumstances analysis on the kickback side, which again, is not uncommon. And I think, you know, fair market value in particular, I think continues to play a role in that firm , in that facts and circumstances analysis. Um, and so, you know, while on some level there was relief there , you know, as a practical matter, I still think, you know, that continues to be a relevant , um, data point in , in an overall arrangement compliance analysis, risk profile.
Speaker 2:Thanks, Tony. Um, I think we're gonna get ready here to wrap up. Um, Jennifer, let's start with you. Do you have any final departing thoughts for our audience?
Speaker 4:Um, I would just add to what Tony said that yes, the, the value-based safe harbors, the anti-kickback statute are narrow. And so there is some continued tension between, you know , innovation and the fraud and abuse laws, which are designed to protect federal healthcare programs and, and, and bene or protect beneficiaries and the federal Fisk. Um, I'm , I'm still seeing so much room for, for ai. Um, and so, you know, think about having, these are another tool in your arsenal, and as you think about ai , um, think about how it can be integrated into a value-based arrangement at the same time. Um, you know, I , I'm seeing more and more , um, more bills and more FAQs every day. In January, Georgia proposed a bill to restrict the use of AI in healthcare, and just earlier this month, CMS issued a FAQ about the use of ai , um, with respect to MA organizations. So , um, keep your finger on the pulse.
Speaker 2:Thanks. Uh , Tony, any thoughts from you?
Speaker 3:I think that there still is, I think there still is room for innovation, you know, in , in , in this value-based construct. I think in particular, you know, there's, what is really an interesting area to explore that we are all exploring <laugh> is given the change in the marketplace, right? I mean, now we have over 50% of Medicare beneficiaries on a Medicare advantage plan. You know, fee for service is gonna be around for quite some time still in my view, but it is on the waning end of its life cycle . You know, the programs are moving towards a risk-based pro , uh, program structure. Um, and providers are following suit because they're gonna need to. And that's where there is a , you know, where providers are taking on financial risk for patients. You know, the , this value-based construct is , becomes even more important because it, it , it then provides a roadmap for how are you going to address the fact that you are now managing the, you've now taken on the risk of the cost of care and, you know, you need to find partners, and those partners are sometimes your own employees, but you also need to find partners outside of your organization in order to manage the cost of care, you know, and improve outcomes for that patient population. So I think, you know, this is where the, this is where the, the marketplace is heading. Um, and I think there's, you know, there's still a lot of opportunity , um, to use these org . These , uh, uh, I would also think that would be, it would start to be interesting to see , uh, advisory opinions from OIG on value-based arrangements that don't meet one of the safe harbors. Um, we haven't really seen that too much yet, in part because, you know, I think the, that the industry is sort of percolating these ideas. Um, and I think that is another avenue for OIG to provide some guidance to the industry about how do you really do facts and circumstances analysis with the value-based safe harbors when you're not, you know, when you're not squarely within them.
Speaker 2:Thanks for those , uh, thoughts. And I, I, I echo what both of you are, are saying, and I would only add like a , another final thought is that , um, I, I do think in, in seeing clients adopt these rules , um, the ones that I have seen be arguably more, most successful in , in going down that road have , have started with these, the , the concepts of, of value-based activities and purposes at the forefront, and have been successful at getting those concepts in front of not just legal and compliance, but those involved in, in business strategy and closer to the clinical , uh, solutions. Um, and I think that's because the , these new exceptions rely on this idea of being reasonably designed to achieve a value-based purpose, and leaving that as a legal compliance strategy , um, sets it up where a situation where it just might be reactive. Um, instead having it in, in front of the , those that are actually developing clinical strategy and are trying to drive care coordination and, and trying to improve quality and that's their, their, their function within the organization makes it , um, much more likely that if tested that you're gonna be in a position to show that you had a value-based purpose. Um, it's easier to show you had a value-based purpose if , um, those that were designing the strategy knew what, how these rules worked at some level, and that all the steps along the way were following , um, the , these guidelines of, of trying to create activities and having that kind of purpose. I think that's gonna make a much better record down the road if one of these arrangements is challenged. So , um, so I really appreciate your time. Thank you to , uh, Tony and, and Jennifer for tackling value-based care , uh, today. Um, to all of you listening in, thanks for your time as well. Um, and, and watch for future podcasts. Um , in our next podcast, we're going to be , uh, talking to , uh, Charles Oppenheim about the Stark Law , um, a supplement to the, his Stark Law , American Health Law Association , uh, uh, guide. And I'm looking forward to that discussion. Uh, if you're looking to get more involved in the practice group, reach out , uh, to , uh, me or to one of our vice chairs . Uh, we'd be happy to get you , um, involved in a future podcast or webinar. We're always looking for , uh, new voices , uh, on this platform. So , uh, Tony and Jennifer, thanks for your time , uh, and have a great day.
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