Stark, AKS and the Regulatory Sprint to Coordinated Care

The most recent changes to the Stark Physician Self-Referral Law (Stark) and the Anti-Kickback Statute (AKS), described previously here, create a new lexicon and framework to guide healthcare providers from payment for volume-based services to payment for value-based healthcare. These value-based rules go into effect on January 19, 2021.

The value-based changes center on a new Stark exception and AKS safe harbor for an acceptable “value-based arrangement” based on the arrangement’s financial risk profile. CMS and OIG both define a “value-based arrangement” as:

an arrangement for the provision at least one value-based activity for a target patient population to which the only parties are: (A) the value-based enterprise and one or more of its VBE participants; or (B) VBE participants in the same value-based enterprise.

These final rules focus heavily on process and purpose, not outcomes. For example, a value-based activity does not have to achieve value-based care or the stated value-based purpose to be acceptable. Instead, the value-based activity must be “reasonably designed” to achieve value-based care, and the parties must have a good faith belief that the value-based activities will achieve the intended value-based purpose.

Each of the emphasized words in the definition above are defined in the new rules. In this article, we will unpack two of these key value-based definitions—“value-based purpose” and “value-based enterprise.”

Value-Based Purpose (VBP)

A “value-based purpose” is defined under the new regulations as:

• Coordinating and managing the care of a target patient population;
• Improving the quality of care for a target patient population;
• Appropriately reducing the costs to, or growth in expenditures of, payors without reducing the quality of care for a target patient population; or
• Transitioning from healthcare 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.

The agencies intended the definition of VBP to be flexible as the agencies declined to specify criteria to measure the achievement of the VBP. The final rule did provide some examples of VBPs, such as coordinating and managing the care of patients who undergo lower extremity joint replacement procedures (a target patient population) or reducing the costs while improving or maintaining the quality of care for patients who undergo lower extremity joint replacement procedures.

CMS declined to implement and finalize some concepts requested by the healthcare community. CMS denied including the reduction in costs to, or growth in expenditures of, “healthcare providers and suppliers” as VBPs. CMS believed the purposes already stated are sufficiently inclusive to allow for innovative value-based arrangements as long as improving quality of care is the focus. The agency also declined to define “coordinating and managing care.” Commenters to the proposed ruled noted the term is self-explanatory and defining the terms could inadvertently limit or interfere with innovation.

Value-Based Enterprise (VBE)

A “value-based enterprise" is defined under the new regulations as comprising two or more VBE participants:

• Collaborating to achieve at least one value-based purpose;
• Each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise;
• That have an accountable body or person responsible for financial and operational oversight of the value-based enterprise; and
• That have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s).

Physician groups, physicians, hospitals, home health agencies and others can be “VBE participants” which are broadly defined as an individual or entity that engages in at least one value-based activity as part of a value-based enterprise. A VBE is intended to include only organized groups of healthcare providers, suppliers, and other components of the healthcare system collaborating to achieve the goals of a value-based healthcare delivery and payment system. However, CMS and OIG both noted in the final rules their intent for the definition of VBE to be broad and flexible, allowing for a wide range of participation and business.

Additionally, VBE participants may join and leave a VBE throughout the VBE’s existence, but the VBE must always have at least two participants. A VBE is not required to conform to a particular structure or be a separate legal entity with contracting powers. Rather, networks of physicians, entities furnishing designated health services, and other components of the healthcare system collaborating to achieve the goals of a value-based healthcare system may qualify as a VBE. Additionally, OIG provided flexibility regarding an accountable body or person by allowing the oversight to be structured based on the size of the VBE.

CMS explains “whatever its size and structure, a VBE is essentially a network of participants that have agreed to collaborate with regard to a target patient population to put the patient at the center of care through care coordination, increase efficiencies in the delivery of care, and improve outcomes for patients.” The agencies are focused on the function of the VBE and not hindering innovative structures. Existing structures that meet all of the requirements of the definition could qualify as a VBE such as integrated delivery systems, accountable care organizations, or comparable entities. The rule still requires complete compliance. A VBE does not automatically obtain protection under the value-based safe harbors if the remuneration that is exchanged does not meet all of Stark’s conditions.

OIG provides some guidance for creating a governing document as the definition does not prescribe a specific format or content requirement and commenters requested guidance. OIG explained the governing document should be a single document that includes a description of the VBE and how the VBE participants intend to achieve the VBP. An example of an already existing document could be a payor contract which could qualify as a governing document so long as it describes the VBE enterprise and how the VBE participants intend to achieve the VBP.