The Value Based Enterprise Safe Harbors and Exceptions

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In recognition that the prior versions of the Stark Law and Anti-Kickback Statute (AKS) rules were not designed for a value-based health care delivery system, the new value-based safe harbors and exceptions (released in late 2020) focus on quality and efficiency instead of preventing overutilization.

Of course, the U.S. Department of Health and Human Services (HHS) has experimented with providing waivers to these laws (and others in connection with certain Centers for Medicare and Medicaid Services (CMS)-driven innovation models). Prior CMS waivers, however, have been limited since they were tied to specific CMS models. Now, providers may be able to take advantage of operating outside the purview of many traditional fraud and abuse safeguards. For example, note that several of the new safe harbors and exceptions do not contain a requirement that an arrangement be set at fair market value, do not require that compensation or other remuneration under an arrangement be set in advance, do not contain a broad prohibition on remuneration under an arrangement taking into account the volume or value of referrals, but do allow for directed referrals of patients to specific providers.

While these flexibilities provide exciting new opportunities for payors and providers, careful review and understanding of these requirements is required.

An important initial consideration is that stakeholders must navigate the requirements under regulatory regimes for both the Stark Law and the AKS. In general, CMS provides more flexibility for the value-based exceptions under the Stark Law, given its strict liability standard. In contrast, the HHS Office of Inspector General (OIG) felt it was appropriate for the AKS—which is an intent-based law—to serve as “backstop” protection for arrangements that implicate both laws.

Both Final Rules are designed to protect remuneration only occurring under a “value-based arrangement” with a “value-based purpose,” which must relate to one of the following:  

1. Coordinating and managing the care of a target patient population;
2. Improving the quality of care for a target patient population;
3. Appropriately reducing the costs to or growth in expenditures of payors without reducing the quality of care for a target patient population; or
4. Transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.

As a practical example, a protected value-based arrangement can be thought of as the network of participants engaging in value-based activities in a relationship with a third-party payor, such as a Medicare Advantage Plan. Such arrangements might include an accountable care organization or clinically integrated network, although various structures are permissible.

It is still early, and the full extent and usefulness of these new exceptions and safe harbors are to be determined. Nevertheless, providers and payors should be aware of and consider the new, potentially more flexible, opportunities.