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AHLA's Speaking of Health Law
Value-Based Care Arrangements and How to Operate Within the Stark and AKS Safe Harbors
James L. Burke, Hall Render Killian Heath & Lyman PC, and Carmen Johnson discuss how to use value-based enterprise (VBE) within the Stark and Anti-Kickback safe harbors to advance health systems’ needs. They cover the four components of VBE, the Stark and Anti-Kickback VBE rules, and how creating a VBE can be a good strategy and significantly reduce risk. James and Carmen spoke about this topic at AHLA’s 2024 Institute on Medicare and Medicaid Payment Issues in Baltimore, MD.
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Speaker 2:This episode of A HLA speaking of health law is brought to you by A HLA members and donors like you. For more information, visit american health law.org.
Speaker 3:Hello and welcome. My name is Jim Burke , and I'm joined here today with my friend and colleague Carmen Johnson. And the two of us spoke recently at the A HLA Institute on Medicare and Medicaid payment issues back in March in Baltimore, Maryland. And so today is a, is a podcast following up on that presentation and, and just giving an outline of some of the material we covered. So let me introduce my, my colleague Carmen Johnson.
Speaker 4:Hey , thank you, Jim. Um , my name's Carmen Johnson. I'm an attorney , uh, with 11 years of experience in the healthcare regulatory space. Um, I've had the pleasure of serving in both compliance and legal roles for mid-size health systems during my career. Um, had , uh, the opportunity to kind of see the whole , uh, life cycle of physician relationships from manage just the management of them, to drafting them myself, to auditing them and dealing with post , uh, postal compliance concerns. So , um, when we start talking about this value-based , uh, landscape for those that have been in the industry for a while , it's, it's really exciting subject. So I'm excited to continue our conversation.
Speaker 3:That's great. Thanks Carmen. And I'm Jim Burke. I am an attorney, A-C-P-A-M-B-A . I work as an attorney at Hull Render Killian Heathen Lyman, and I also work as a consultant in their advisory services department. So I have worked at three different health systems in-House for the last umpteen years. Uh, various roles as a regional general counsel , general counsel , and then most recently a , a stint as the , uh, C-I-O-C-O-O of a small health system. So Carmen and I did have the pleasure of overlapping at a previous job briefly, and, and I'm excited to be able to present with her. So , um, today we're gonna cover a little bit about the , uh, use of value-based enterprise and how we can use them within Stark and any kick , uh, any kickback safe harbors to , uh, advance a health system's , uh, needs in terms of , uh, payments around value-based enterprise. So, Carmen, I'm gonna , uh, kick us off here with next slide. So really, whether you're a , a hospital , uh, a hospital system, a hospital, a physician practice, independent physician practice, or an employed medical group, we're all facing similar challenges. And that's really the disruption in, in business school. We'd say , uh, disruptors entering our space. And, and in order to deal with that, we're gonna have to, across the country as providers, we're gonna have to learn to assume risk managed care better , uh, work on size, scale, and essentiality essentiality, that's Carmen , uh, term, Carmen taught me. And so , uh, and explore vertical integration and allow physicians to lead. So, Carmen, what are you seeing in, in your work in terms of these disruptors?
Speaker 4:Yeah, I'm seeing a lot of , um, kind of twofold, right? The health systems that are a little further along on their electronic health record implementation, right? That they're able to do , um, more analytics and data , um, for those others that are maybe a little bit further behind it is just kind of this rush, right rush to get caught up and really get to the point where we can do some of this value-based care that is being pushed by the payers, right? Um, and getting physicians involved in a way that is meaningful to them. I think historically we've been able to do things like have at-risk contracts, but the physicians didn't have the same sort of upside potential, right? As a hospital. So if a hospital can get throughput through their ed, they're able to bill and collect for each of those additional ED visits, whereas a hospitalist on the floor who might be the person admitting those patients, yes, their group is gonna do better, they'll have admissions, they just don't have the same upside potential. And I think that vbe e really kind of levels that space. Um, and by you, Jim , what have you, I know in your consulting work, you're, you're getting it from all over the nation. What have, what have you seen and what have people come to you with?
Speaker 3:Yeah, you know, it really is a struggle to , um, to kind of rework our relationship with physicians and refocus on that triple or quadruple aim of , of trying to improve care at the same time, lower cost and, and, and really care for patients longitudinally across different care settings and, and different stages of, of their life. And so , um, a lot of work being done around the country to try to figure out how to incorporate physician leadership into that. We all realize that without physicians, none of this will get done. And by the same token, the, the regulatory framework that we've had for 20 plus years, it's really been at , at times a barrier and , and impediment to, to trying to form new or innovative relationships. And so a couple years ago, right at the tail of COD , we, we had , uh, CMS and OIG publish new rules, value-based enterprise rules. That gave us a , a completely new way of, of approaching that relationship with physicians. And so , uh, we, we still hear them described as the new VVE rules, even a couple years on, and you, and I'll talk a little bit about why we, why they still feel new, but, but Carmen, I'm gonna let you introduce our, our, our VVE concept for the, for the audience.
Speaker 4:Yeah. So , um, for those that may not be familiar, really , um, the main idea behind the new exceptions to both star G kickback is there's this concept that you can have a value-based enterprise. And what that's really getting down to where there are two or more participants that are coming together to identify a target patient population, and they have a goal in mind. And that goal has to be value-based purpose. Um, you have to have a governing document that describes what your VBE is and how the , uh, participants intend to meet that value-based purpose. Um, but outside of that, they left it intentionally broad , um, which I thought was nice, right? Um, but at the same token, I think has created a little hesitancy in the healthcare space because you don't wanna be first to be audited, right ? Um , Jim , what have you seen on the consulting side?
Speaker 3:Yeah, so, you know, you and I both have, have , uh, talked about this, have , have done some work together. And the, the perception is, and , and rightly so, these, this , this exempt , these new exemptions and safe harbors, the VE rules really do open up com almost complete flexibility in , in some ways when it comes to , uh, compensating physicians for, for working on innovation and, and helping to, to, to build in population health into our care delivery models. But that open-endedness that kind of choose your own adventure here, that that really does bring a lot of , um, discomfort, right? We're used to writing, write an agreement, get a fair market value opinion, have, have all of the elements of a particular exception or safe harbor covered, or in the case of safe harbors as many of them as we can. And then, and then we move on and, and the agreement is implemented and , um, you know, our health systems do the best they can to follow them. And, and we usually end up with , uh, pretty, pretty close compliance and, and , um, and fair market value pay because we've done the work upfront . That's not vbe e at all. VBE is , um, meeting some, some threshold guidelines and then operationalizing that compliance. And so you trade, you trade the certainty of upfront compliance opinion with the uncertainty of how it's going to unfold from an operational standpoint. So it's, it's really become , um, people are intrigued, but they're also a little concerned or wary of being the first out of the gate. So we we're seeing across the country, probably Carmen, the , the biggest application early on has been to take arrangements that had evolved into things that where we were less comfortable and really recast them the way they, they needed to be as value-based enterprise arrangements. So the innovation we were doing prior to VBE is catching up now. And, and so that's the, probably the first round is to, is to apply it backwardly backwards looking to relationships we've had forward looking to new and innovative approaches. We are seeing some of the biggest health systems in the country take those on. Um, seeing it less so in in smaller or midsize mid-size markets. So probably Carmen worse going through what the, what the outlines are for the stark exceptions and the a KS safe harbors. Um, both of them use , uh, some key components that you covered in the , in the introduction of EBE, and they are value-based activity, a target patient population, a value-based purpose. And then to wrap it all, all up a value-based enterprise. So regardless of whether you're talking about , uh, stark exception or in any kickback safe harbor, those are the four basic components of any VBE value-based activity for a target patient population to achieve a value-based purpose, all wrapped up within , uh, a documented VBE with, with , uh, two or more participants. So you've got your components and you've also then got your risk that you're , that the VBE is assuming you can do no risk arrangements, and those are , um, somewhat limited in, in the application of, of how you can use them and much greater requirements for record keeping and, and demonstrating performance. If you're not taking any risk, then you've got some meaningful downside risk is kind of the intermediate , uh, the rules for , uh, stark and a KS are slightly different there, and we'll go over that , uh, as we move along. And then you've got full risk arrangements. The best example I can give is for many health systems is your Medicare Advantage plan. So if you're in a Medicare Advantage plan, things related to that are part of a full risk arrangement and, and can easily fall on , fall into that full risk , uh, exception for , uh, for A VBE Carmen, in terms of our four , uh, base components, value-based value-based activity for a target patient population to achieve a value-based purpose all wrapped up in A VBE, I know you're gonna, you're gonna start us off here and explain what we mean when we say all wrapped up in A VBE.
Speaker 4:Yeah. So to be , um, kind of wrapped up in a value-based enterprise, you have to have one or more legal entities, right? So for the example you gave with an accountable care organization or a managed care plan, right? That, that legal structure is a great place to start, but for those that don't, don't have that, it can be as simple as the contract you already are gonna put in place with a physician. A lot of us over the years have drafted contracts that already have upside downside risk, right? So that makes it even easier to capture the two parties or the two parties to the contract that are participating. And then it's memorializing kind of within that arrangement, what the value-based activity that you're gonna come together to meet. What's that goal? Who's gonna be responsible for the oversight? Um, if it's a separate legal entity that's gonna structure your VBE, then that separate legal entity might have a board or, or a committee of the board that manages that. But if it's just two parties to a physician relationship, it can be as simple as nominating the CFO of one of the legal entities to, to be that person that provides financial and operational oversight. The key is just really making sure that based on the size and the scale of the vbe e you're forming that that accountable body is proportional, right ? Um , and then you have to have a governing document that describes , um, describes your VBE, what its purpose is, and , um, walk through , um, what , um, sorry, what your VBE is and the participants and its intended value-based pur purpose. And that can really just be wrapped up within your contract. Um, within the Stark Law commentary to the vbe e exception, it discusses kind of that concept. They intentionally didn't make it very prescriptive because they wanted to allow for flexibility. And , and they even went in so far as to say you're used to writing contracts, right? So this is just a contract. You have to build in those parameters on how your VBE looks, how it will operationalize itself, what its purpose is , and how each of its accountable arrangements will interact. So the interesting thing about A VBE, and I think some of the, the back and forth when you look at the, the questioning answers in the commentary are really just the idea of, well, is it static? Well, no, it doesn't have to be, right? Um, so if you have a physician group that , um, is a large physician group in the recruiting and retaining physicians, you can have a process very similar. Um, I think Jim, when you and I talked about this in the past, right? Really similar to having like an accountable care organization where you're having that party come in and acknowledge their participation as part of that. And as long as each time you add a different VE participant, they're independently meeting the legal requirements to fit within that stark exception that's permissible. Um , how have you seen folks kind of handle that governing document process?
Speaker 3:Yeah . You know , Carmen, it , it's another example of how the , um, the regs around BE seem so open-ended that they create uncertainty or, or, you know, give folks a little , um, concern over whether or not they're actually meeting the requirements. And as you read the commentary, it really is the government means what they , uh, they put in these regs, it's open-ended, so it can be something as formal as a, as a joint venture among a number of participants in a newly formed entity all the way down to, you know, we're , we're seeing a lot of folks rewriting old co-management agreements that that really intended to, to get physicians involved in , in changing the delivery of care. And they didn't have the VPE structure in the past so that it could be very simple , uh, agreement between a , a hospital and a, and a single physician about one, one problem that they're trying to solve together, all the way up to a multi-state JV around , uh, value-based care. So a lot of opportunity that some of the keys that you mentioned, you have to have an accountable body. So however, however you're going to do this, it can be an individual, it could be the CFO, it could be , uh, anybody involved in the , in the , um, BBE can act as that accountable body. It can be a board like structure. We see that quite a bit where we put together , um, larger, more complex vvs and we have a board like structure. But it really does, it's important that, that that accountable body is going to be able to receive information about how , uh, how the VB is performing, whether or not it's hitting its metrics. 'cause as we said, the compliance comes on the backend of actually measuring, tracking and improving performance, not within the four corners of the document where we sign it and, and file it and, and move on to the next arrangement. So the accountable body here is a very important structure, as you said, Carmen, the , the entity or the, the underlying agreement that forms it pretty open-ended, and no reason you can't just use a contract.
Speaker 4:So I can say putting on my, my , uh, old compliance hat, the first thing <laugh> because somebody came to me and said, reforming A-V-B-E-I, I would say, and I'll just say it to you, Jim , like, how are you, let's say it's the CFO, right? In a small arrangement going to demonstrate that you're performing this. Have you, yeah . Have you seen anyone kind of take on and structure like what that looks like from a documentation perspective?
Speaker 3:Yeah, absolutely. And it's a great segue to the next , uh, the next of the four elements you have to have for VBE. You have to, you have, the whole thing has to be wrapped up into what the rigs call a value-based enterprise documented on paper, two or more participants. The requirements are for , for STA straightforward, although Open-ended, that entity, that value-based , uh, enterprise has to be engaged in value-based activities. And so these are a good faith beliefs that your value-based activity will achieve one , uh, at least one value-based purpose. It doesn't require that you have to be successful at that purpose. So if you set up a process and say, we're gonna try to change, fill in the blank , whatever, whatever you're trying to change in the, in the delivery of healthcare to make , uh, healthcare better, whether that's improving patient care, improving the health of populations, lowering the cost of delivering care, or moving from value-based , uh, from value volume-based payments to value-based payments, whatever you're doing to try to change the world has to be then documented in how are you gonna measure it? How are you gonna report on it? How are you gonna know whether or not you're succeeding? 'cause that's one of the requirements of EBE to keep track of it and adjust if you're not succeeding and double down when you are succeeding. So value-based activities are a key, one of the four key components to A VBE , and it really does. Carmen, you mentioned the implementation of , uh, IT systems. It really does come down to, do you have the data? Can you track the data and can you make, can you , can you complete the reports? Um, we're all familiar with arrangements we enter into physicians, and at the end of a period of time, the data is, is insufficient. And so we're left struggling to figure out what was accomplished that's really not gonna , uh, work under this new VBE rules. You trade that front end , uh, uh, confined answer of for compliance to a more open-ended answer that then requires this, this kind of tracking and reporting and BBE activities are the start of that tracking and reporting. What is is it that you're gonna do?
Speaker 4:So the one , uh, the value-based activity that struck me the most when I was reading through the rules, and the one that I still have to remind myself is permissible in this new landscape is the taking of an action, right? Right. The government has come forward and said, you can pay a physician for ordering a test, which every person that's lived in this healthcare product abuse space, like it makes you cringe a little bit, right? The idea that you're gonna be able to, to live in this space, but it makes sense in the very limited circumstance of the intent of the value-based activity, right? Like if you know that evidence-based best practice is that when you have a patient present with this symptomology, you automatically order this test or order this medication and doing so would drive a change that is critically needed for your healthcare system under these new value-based rules. You can drive that pattern of behavior with a physician. Um, and so I think that's really interesting. Um, and my hunch is that's gonna be the one <laugh> one that is gonna be the hardest, hardest to see implemented. But I I could be wrong. Have you seen anyone take that on or have you have , have , have you seen it anywhere? Yeah ,
Speaker 3:Yeah. So, so Carmen, it's a, it's a great example right out of the regs, and we all get nervous, right? Um, you and I have , uh, have talked about this. You , you , you can't use, we even get uncomfortable when we have things that are kind of proxies for referrals and, and trying to encourage physicians with in-network utilization and things like that. It always made us so uncomfortable to, to be looking at, at that type of an arrangement, and even to see that kind of an undercurrent. Uh, the one purpose test doesn't have to be the main purpose, just one of the purposes here. We've kind of stripped all that away. And, and even in the regs themselves and the commentary, they gave an example that you're, you're referencing on imaging. And so dual modality imaging, the medical staff decides dual mod , dual modality for certain , uh, uh, uh, testing is better than the single modality that we used to use. So they write that up as a, here's the, the practice that we're gonna, we're gonna encourage, here's the ordering that we're gonna encourage, and we'll pay physicians X amount of dollars every time they use that, that dual modality , uh, uh, protocol instead of , uh, the older single modality, right outta the regs. We're paying physicians for making referrals in a certain way. The point is, it's in a certain way. And, and that's really the key is not just kind of open ref paying for referrals, but for tying that back to improving care, lowering costs, increasing care coordination, or moving to volume , uh, value-based arrangements. So really important point, Carmen, that, that we are able to pay physicians to take actions that would look like referrals under our, our old and would be referrals under our old compliance analysis that are now really geared towards pop health and, and moving , uh, uh, to new care delivery models. It's a great point, Carmen .
Speaker 4:And I think that for those that are interested, right, in getting in this space, because there are plenty of clinical decision making points that have come up where you're just trying to get people to follow evidence-based practice. And if, you know, you could do it, you could bring down, you know, some of those, those hospital acquired infections or, or whatever it is. And with this new role , you can do it. I think the key is if you're, if you're gonna go into this space, you need to make sure that your accountable body is active and engaged. You're monitoring the metrics. You have a solid way to get to them. You get the reports ahead of time. You run 'em, you look at 'em, and you only pay until a pattern has been established. And that , that's an interesting point they kind of brought out in the commentary, which is you are essentially paying to create a way of acting that it becomes second nature when this presents, I will do this. And once that second nature is kind of established, it's no longer appropriate.
Speaker 3:Right? And I think, so you , you have the dual modality as being , you know, the example from the regs, you decide dual modality is, is really a better word , way to care for patients. Um, you en you en uh , encourage physicians to pay attention to that decision that was made by qualified medical professionals, right? They've reached this decision as, as a patient care issue. And now once physicians adopt that, it becomes the norm. The VBE is supposed to move on to the next target, right? So that's , uh, it's important to keep in mind that this is intended to be an ongoing, evolving process, which to your earlier comment really relies on data. Without the data this is, is nearly impossible to pull off. And part of that data, Carmen, is looking at who you're doing this work for, right? You've got a group of , uh, providers that are, are joining together in the VBE, you've got an accountable body, you've picked some activities that you think are going to help change healthcare in your community and the delivery of healthcare and , and , um, the , the health of populations. Next, you gotta decide who specifically you're doing this for, right? We call it the target patient population or TPP sometimes you hear in conversations, tell us a little bit about that target patient population.
Speaker 4:Yeah. So the target patient population has to be identified in advance. It has to be set out in writing, which can just be like we've talked about before, just your underlying contract , uh, based on a legitimate and verifiable criteria. So by this they really mean the medical, like you could do anything that is medical health characteristics, geographic characteristics, payer status, or other defining criteria. There was some commentary that asked for a definition of legitimate and CMS was remiss <laugh> to , to , to do that. And really because they wanted to leave this in a way that allowed the flexibility that this changing model that both CMS and they're trying to bring hospitals and health systems along with on , uh, really going after quality. And I think the key is, when you think about the legitimate and verifiable criteria component, is they really, we're trying to get at that you can't define your patient population in a way to intentionally, they use the cherry, the word cherry picking and lemon driving in the commentary. But essentially you can't intentionally carve out of what would be your pa patient population if you defined it by a , by a diagnosis group or a geographic area to remove patients that may not be as compliant as other patients. Or set it up in a way that you're essentially just indirectly finding a way to use VBE to compensate a physician, right? It really has to be defined based on criteria that that is going after your value-based purpose, which is the last component. Is it as a value-based, right ? Purpose . And so just really ensuring that as you're selecting the group, it's defensible, right? Yeah. It doesn't have to be all of your markets, but if you're gonna say that we're doing it in my primary service area, right? It has to be everybody in the primary service area if you're doing it for those with diabetes, right? You have to, you have to handle the whole patient population regardless of payer class, unless, where I think it gets more interesting is really using like those at-risk models like an A CO and wrapping in your VPE activity. I mean, that would be permissible under the statute from my interpretation. And yeah , I'm assuming that's where most of the larger health systems are gonna go first 'cause it's the easiest direction to go. Um, what have you seen in this space as far as folks picking targeted pa patient populations?
Speaker 3:Yeah, you know, so, so your comments are, are spot on in that the narrower the target patient population, the , uh, easier it will be to collect data. The , um, the more focused your activities will be to achieve a value-based purpose. And so really a smaller target patient population is probably an easier VBE to work with, but it also has smaller impact. So you're talking about fewer dollars, you're talking about less , um, less , uh, inclusive engagement from a wider group of, of providers. So there's nothing wrong with having a very narrowly ter tailored specific kind of focused VVE, but the ones we're seeing really make, make headway quickly. Carmen are the ones that are, are larger arrangements. It, it might have been A-A-P-S-A , you know, did one with PSA with a, with a , uh, large primary care group and the health system. Uh, they were, they were full-time. PSA contracted. And that group was participating in Medicare Advantage and other value-based arrangements that were just becoming a bigger and bigger and bigger chunk of their compensation. And so, as that group , they were, they were really great examples of, of managing care, doing great on their , um, HDA scores, their, their , uh, their annual wellness visits, their transitional care management, all the things we'd wanna measure, you know , primary care group they were doing fabulously at, but also their comp was starting to, to creep up when you , when they were getting paid outta those value-based arrangements and paid for their productivity. So we split them out and , uh, you know, we, we took that, that target patient population was the, was the group that was the panel for that , uh, independent physician group. And we used that to, to come up with the VBE on those value-based payments that were really starting to tip the scales exactly what this is designed for, right? Pick a , pick a specific target patient population and keep ratcheting up that goes quality and and cost , um, initiatives. And it does bring us, go ahead.
Speaker 4:So that's a really , um, a really great point, Jim , and it's, it's interesting 'cause I don't know how much , um, I know that in, in different iterations, I've, I've heard of it, but really exploring how we can use VVE to help address physician burnout, right? Right. 'cause as you're talking, you're talking about worked VUS and how do we hit a target patient population within a managed care arrangement? And a lot of times it means a physician's stopping and filling out additional data points or spending more time with the patient. And right now, the way we're paying doctors, we're disincentivizing that disincentivizing that activity and, and this really opens up an ability to, to carry that pay for performance from the hospital to the , to the physician. Yeah . So I think, I think it's interesting .
Speaker 3:It really does . It really does. And hold that thought. 'cause when we go through our examples , um, at, at the end, we're gonna cover several examples of , uh, implementing VBE , and that's one of 'em that, that we really should come back to and, and how we can change physician compensation, the last of the four elements that have to be present. So we've got A-A-V-B-E that has come together. They've decided that there's some activities they can take for a specific , uh, panel of patients, target patient population. And, and then they've gotta decide what are the, what's the, what's the value-based purpose? What, what is that gonna achieve? We do this for this group of patients collectively as A VBE. What, what are the outcomes, the goals that we're trying to achieve? And, and that's your value-based purpose. It's the fourth element for A VBE. And the value-based purpose must include at least one of the follow following as to include care , uh, coordinating and managing of care and or improving quality of care , uh, or, and or reducing appropriately reducing costs to payers and expenditures within the healthcare system. And then the fourth is transitioning from payment BA mechanisms based on volume or value to instead, payment mechanisms based on , uh, the , the quality of care, control of costs and, and , uh, and , and the overall care coordination. So , um, for four opportunities for a value-based purpose, pretty wide open, right? Coordinating care, improving quality appropriately, reducing costs , uh, and then transitioning to, to value-based payments. Um, if we get all four of these elements, then we're left with trying to pick which risk model we'll be in. And we'll probably won't go into great de detail today about the risk models, Carmen , but they are no risk. Which, which again, you can, you can meet one of these exceptions and, and safe harbors with no risk, but what you're able to do is, is much more limited , uh, for the ana kickback side. You're not able to actually pay money directly. It all has to be in kind remuneration , um, examples of that across both of OIG and CMS with their stark and any kickback rules , differing a little bit, but you've got the no risk . You've got that, that meaningful kind of , um, mid, mid risk , which can in the , uh, stark side is 10% potentially upside downside for the physicians involved. And then of course, you've got your full risk arrangements. So if we've got all four of our elements, Carmen, we've got a a , a group coming together as a VBE, they've decided that they're gonna take certain activities for certain patients to achieve certain goals. We've got all the ingredients we need for a successful VBE and a compliant answer to changing delivery of healthcare. And it's interesting to talk about how this has been implemented across the country. I know you and I have talked about this several times and, and, and we're, you know, we've, we've talked about the, the potentials, but really exciting as you look back across your career, Carmen in healthcare, and think about all the times you had to say, we can't do it that way. That now maybe we can, right?
Speaker 4:Yeah, no, it , it is really interesting. Um, I , I know we've had, you know, situations throughout healthcare, right? You, you develop as a health system, maybe a center of excellence, right? So it's a center of excellence for orthopedics, a center of excellence for cancer, whatever your service line is. And, and some of those even have, you know, recognition by accrediting bodies like Joint commission. And you engage in this activity with a physician who's actively engaged, right? And they're helping you develop the status and, and you're bringing it along. And I think historically, we haven't really been able to give those doctors an ownership interest, which I think creates a risk, right? Because then that physician has no more at stake in that center of excellence as any other employee. And I think , um, in the new frame of things, I think you'd be very prudent to think about if you're going to, to throw a lot of resources at developing or making a, a center or a space or just holding yourself out the c in the community as the person that does a thing . And it is tied to a particular provider or group that really giving them a within that, in ownership of that so that you, that you can continue to, to , to foster and develop that relationship in a meaningful way for both parties.
Speaker 3:Yeah, it's a great example, Carmen. 'cause you know, in those, in those arrangements in the past, we would've used, sometimes we would've used medical director agreements, sometimes we would've used co-management arrangements. Um, or a combination of both. And, you know, the medical director we're typically focused on ours , which is a, is a a a bit of a blunt instrument when it comes to trying to figure out whether or not you're making progress. And on the co-management arrangements, trying to get a fair market value opinion on the outcomes from some of these , uh, innovative ideas can be really difficult and, and can really challenge , uh, challenge health systems when they're trying to engage physicians to give up some of their, either personal life , uh, and spend more time focused on, on their, on their job or giving up direct patient care, both the financial and the personal rewards of, of providing direct patient care. It's hard to, to overcome those with those old either co-management or, or , uh, medical director arrangements here under the VBE. We're not bound by those fair market value considerations. And this is the point that all of us start to kind of our head and say, really? Um, yeah, really we're not there, there isn't fair market value and, and commercially reasonable as part of the test here. The test is whether or not you have a group of providers coming together in A VBE to take certain activities for a certain population that will achieve , uh, legitimate value-based goals. And so, you know, that center of excellence model you just described, Carmen, we we end up looking at a group of docs and, and coming up with arrangements that, that look , uh, somewhat like profit sharing . Um , but the, the goal isn't profit, the goal is success , uh, as a , uh, a center of excellence, as a destination for a specific type of care. And so really replacing those old models with models that don't require a focus on fair market value, you don't go and get a fair market value opinion. Um, you instead focus on the underlying four components and the risk you're taking and whether or not you're gonna change healthcare. And there's, there's really some great examples that, that we've talked through Carmen , you know , team-based care. You just brought this up , uh, a minute ago. When it comes to paying physicians, it's hard to get physicians to spend time , uh, mentoring, leading, guiding, advanced practice providers when all it means is they're gonna produce fewer worker views , fewer encounters, and, and get grief from, from the , uh, uh, the, the governance of the, of the medical group. And so value-based enterprise is a way that we can go beyond those normal stipends, collaboration stipends, and move really into a team-based care and a team-based compensation approach that wouldn't be possible without, without A BBE . And so interested in your thoughts on, on the applicability of that, in terms of what you've seen from a compliance standpoint.
Speaker 4:Yeah, I , I mean, I think that doing team team-based care to handle , um, value-based, value-based , um, team-based care approach to help with honestly physician burnout , um, really allowing mid-level providers is , is interesting. And the hospital <laugh> in a hospital side. I will say that as the mid-level providers get more scope of practice authority within the individual states, there is this interesting push and pull from a medical test staff perspective because the, the main providers, you know , wanna make sure that the investment they made in their career and their education and their expertise isn't then put it, I mean, for lack of a better word, put it risk, right? Right . Because now we're sharing, sharing activity and how do we, I don't even wanna say incentivize. How do we make it equitable, right? Right . Because there is, there is a difference. And allowing those folks to, to really take on the mentor role that we need them to do. They have the expertise there is, you know, there's not a replacement for experience and education and we need them to be the leaders, but at the same time they're one of one . Yeah. And there is a shortage in the community. So how do we essentially allow these providers to take on that leadership role that we need them to do in an equitable way so that they really are able to get a return on all the time, experience and education they put into this large investment of their healthcare career. Yeah. So that's really where I see it, see it really playing a pivotal role in the health, health system space, right? Because everybody knows it , right? You have a anesthesia, you need to use CRNAs, you have, I mean, I've seen some stuff even in the cardiology space, right? Getting a advanced practice professionals like expertise within, like those cardiac surgery spaces where they really can provide, even if it's post-care rounding or, and to , to allow those providers to do those very complicated cases that they, that they only have expertise on . So , um, yeah , it's interesting.
Speaker 3:Yeah. You know, and it's, it's easier listening to you. It , it reminds me it's easier in primary care, obviously, to think through team-based care is gonna , um, really allow our, a advanced practice providers to extend that physician across , uh, a greater patient panel and really create some synergies, even in states that don't require supervision of apps or certain categories of apps. Uh , we're finding clients come back and say, we have a , a more stable , uh, better clinic when we have that physician a PP partnership. Even if, even if the physicians are stretched across multiple clinics, it's still a better a , a better delivery model when it's a, when it's a partnership. And here we have the ability to change their comp from being their own productivity and some, you know, pay , pay for reading , uh, reviewing medical records and, and pay for time as a, as a medical director really to more of the holistic, here's what we're bringing in , you add an FQHC or a rural health clinic to that for some enhanced reimbursement. And you really do have a model for success, which is obvious, again, in the, in the primary care. But to your point, Carmen, we see this in hospital-based physicians. So whether you're talking about the ED and putting a provider in triage , uh, an A PP in triage and, and trying to , um, you know, make decisions about emergent medical conditions early and, and kind of decrease the backlog in your ed , um, that can work. And, and building team pay arrangements where physicians are, are working with apps and, and they're getting paid as a, a more of a group model that can work in your , uh, in your, in your specialties that work on procedural specialties. You, we see folks putting apps in the clinic, pre-screening patients for surgery, keeping the docs in the or. Uh , and of course they've always got their, their first assist that , uh, that we've had for a long time. But putting apps in the clinic to screen patients and do all the post-op is really , uh, a loop can be a lucrative model if you get physicians to accept that, that collaboration and partnership model. And, and to do that, they have to know that they're , one, it's the best for the patient. That's first, but second that it's not gonna , um, mean they get paid less for collaborating more. And VBE really does enable that, enables it without having to go back and get a fair market value opinion or prove that it's commercially reasonable. That's not the test anymore under A VBE .
Speaker 4:Yeah. And I think just kind of pivoting off of your ED example, I think the , and all the different experiences I've had, the consistent problem that, you know, hospitals I feel like always are trying to address is just ED backlogs, right? How do you get people in and out of your ed? How do you get patient to floor? How do you , uh, how do you handle holds? And I think BE adds an interesting component where if you have the right provider mix , um, you could address this in a bunch of different ways. And when we were talking previously, you , you brought up an interesting, interesting topic that is coming to mind to me right now. 'cause as I'm thinking through ED backlog, right? You have , uh, various groups of providers, you have the ED providers, you have the hospitalists, and a lot of times your hospitalists and ed groups kind of go together. And one of the things that, that you and I had talked about previously is kind of capturing those , uh, after visits and, and how can you use the hospitals model in that? Um, do , do you wanna talk a little bit more about that?
Speaker 3:Yeah. So the , the , on the ED side, we have a client that implemented a , just a , it's turned out to be a fabulously successful ED program. Independent , uh, group of docs came to the ED or came to the hospital and, and said, we have a program that we're managing care for patients. We think that we can help with your , um, with your behavioral health patients and your , uh, chemical dependency patients to put them in our care management program. Of course, you know, we've, we've tried to do this many times, but physicians took the lead in this physicians , uh, reached an arrangement with the hospital. And, and so we built a program with the hospital and the physicians were being paid for care management of those patients who we would've referred to, you know, unfortunately as, as frequent flyers 'cause they were in the wrong care setting there in the ed. That program has turned out to be dramatically successful, really dropping those, those non-acute non-emergent visits to the ed, particularly for behavioral health , ongoing behavioral health issues , uh, untreated acute mental illness and the chemical dependency issues that, that we constantly see in our, in our eds across the country. So really a very successful program that's on the ED side. On the hospital side, we've of course got our , um, transitional care management visits. So patients are discharged. Those TCM visits are extraordinarily , um, important. They're important to prevent readmission, they're important to prevent overall health , uh, for the patient , uh, kind of on a longitudinal , uh, basis, keeping them out of the hospital. And also they're, they're very lucrative , uh, visits for, for healthcare providers. So those CCM visits are some of the highest , uh, reimbursement visits. You can, you can have, many health systems are struggling to even get above the 50th percentile. And so creating a program where primary care or your hospitalist to set up post-discharge , uh, clinics where you can make sure that everybody gets their TCM visit, you can use advanced practice providers in that program and you can pay physicians for the overall success of the program really is a win-win. It's a win financially, it's a win for quality of care. It's a win for the overall health of, of your community. And in many ways it wouldn't have been possible. You can't pay a, a physician to make sure that somebody else does that visit , um, in , in our old compliance model. So really, really , uh, exciting opportunities if we're creative and we're really diligent about making sure we're gonna record the data, measure the data and follow up on the data.
Speaker 4:Yeah, that's a great point. I don't know if, if you've seen anyone tackle this yet, but what really came to what comes to my mind is when you think about one of those problems that's super complicated, <laugh> in a health system where you really do need to pay for behavior, I, I really think about, or utilization, right? Having people use their block time or give up their block time, having folks start on time, end on time, making sure people are available at the start time, right? So everybody, including the hospital, I , I mean, that seems like an area that's, that's just ripe for somebody to really think about how do we structure this under a VBE model? And it really will enhance care for the entire community, right? Yeah . So, or , or utilization and time is precious, and that's the difference between somebody getting in earlier and on time and, and we're having to wait for a surgery which might have obviously health implications. Yeah. Have you seen anyone tackle this yet?
Speaker 3:Oh, yeah. Um, a actually one of my colleagues who's kind of a NA nationally recognized expert on compliance issues and transaction issues, been a mentor of mine across my career, Steve Pratt. He , uh, he actually just recently did one that, that i, i , uh, was aware of and got to, got to be kind of a second set of eyes for him. But it was, it was an arrangement simply looking at or start times and, and looking at getting the , uh, anesthesiologists and the general surgeons and, and other , um, other surgeons as well. But I think it started primarily as a general surgery , uh, endeavor just to work on or start times together and just to have , um, some skin in the game in terms of , uh, being paid for helping to manage that, that process and be part of the solution instead of part of the problem. And , uh, and it really has been dramatically successful. And I'm not sure the money was really necessarily the, the, the key to it. It, it's the glue that holds the arrangement together. It causes us to keep track of things, it causes us to, you know, pay out for the success. But, but I think physicians want that kind of collaboration. We just put up so many barriers to, for them , um, that it's hard for them to, to, to deal with bureaucracy, deal with one another, deal with all the , um, regulatory framework. When we make it simple for physicians to do the right thing, it is what they want to do. And so these vvs really do allow us to not only pay for it, but to structure it in a way that kind of clears away some of the junk and lets physicians take the lead in a , in a way that's appropriate. Yeah . That , you know, we've, we've seen this in eds, we've seen this with hospitalists groups, we've seen this with , uh, primary care o obviously all the metrics we'd wanna see, pa , panel size , throughput , uh, all of that in primary care, but also with , um, transitional care management, annual wellness visits. We've done these in various chronic care management programs. Uh, we've done these as, as just old fashioned shared savings. You know, we, all of the arrangements that we looked at , um, supply chain arrangements, your preference packs in the or, all of these can be now built into A VBE. And we're not out trying to struggle to get a fair market value opinion and prove that it's commercially reasonable. We're, we're proving instead that it's gonna change either the cost of delivering care or the quality of delivering care or the health of patients overall, or help us move to volume-based , uh, I'm sorry , uh, value-based payments. So really a lot of opportunity. But coming back, Carmen , to our earlier discussion and to wrap it up, that , that the thought that we're really not seeing everybody adopt this very quickly because it's so open-ended because it, it creates uncertainty of, have I really checked all the boxes? Is this really compliant? It's such a sea change from what we've done before. And you've really, your , your career is focused on the compliance component of this. You've helped build compliance teams. So to gimme , obviously not on behalf of your employer, just your own personal take on the industry is, is this legitimate and is this gonna become a way of, of changing the delivery of care?
Speaker 4:Yeah, I definitely think it is. I think that the mindset that needs to kind of change is, it just feels overwhelming, I think for a lot of folks. Like, how do you start, how do you manage it? How do you track it? And I think a really good way to start, like if I'm thinking about how do I implement something like this, there are a lot of contracts that you might already have, right? Already out there with the physician, with your physician partners for professional services, right? Because that's always been a stark exception of PSA. And how do you go about, instead of reinventing the wheel, just making minor modifications. So if you already have an at-risk contract that's fitting under the PSA, how could you maybe potentially have it fit under PSA and VPE, right ? So even if you're distribu meeting two exceptions and a lot of those where you already have at-risk, you already have metrics you're tracking, right? So you're meeting that part too. So , um, I think that's kind of an, an interesting way to start taking a bite of the apple and moving forward and testing the waters without a , a ton of risk.
Speaker 3:Right? Right. Yeah. So we're seeing the same thing, Carmen, we're seeing that as, as health systems face challenges, VVE isn't surfacing as a , as a primarily an innovation idea, but many health systems are getting into vbe E because it's a , it's, it's addressing underlying compliance concerns that they might have, which is, which is acceptable. Um, as long as we then check all the boxes of our four components and, and clearly understand our risk profile , um, and how we're fitting into one of those exceptions and safe. So it's, it's an exciting time. It's a great opportunity to work with VBE and change the delivery of healthcare, put physicians in leadership roles that they can be paid for, and , uh, and focus on the clinical side of leadership where they, where they really do , um, excel and, and really bring about this shift from, from volume to value and , uh, and let hospitals remain kind of the center of that care delivery model as long as they find ways to partner with providers, with physicians.
Speaker 4:Yeah. Well said.
Speaker 3:Well , Carmen, it's been a pleasure to do the presentation with you and in Baltimore and to have this follow up podcast on, on the subject. And, and I know I get to talk to you , um, uh, routinely about our work. So , uh, thank you so much for, for joining me and thanks to everybody for , um, for tuning in.
Speaker 4:Yeah, thank you, Jim. I really appreciate , uh, partnering with you on this.
Speaker 2:Thank you for listening. If you enjoyed this episode, be sure to subscribe to a HLA speaking of health law wherever you get your podcasts. To learn more about a HLA and the educational resources available to the health law community , visit American health law.org .