Key Value-Based Care Developments to Watch in 2024

The goal of value-based care (VBC) is to promote better care for individual patients and improved health outcomes for communities at reduced costs. This is an important and admirable purpose as many VBC stakeholders attempt to tackle inherent challenges within the healthcare sector. In 2023, VBC grew and evolved as healthcare providers, payers and policymakers sought to improve patient results while containing costs. Expect to see more of the same investments and trends in VBC in 2024.

Last year, healthcare providers continued to move away from traditional fee-for-service (FFS) models in favor of alternative payment models – such as the use of bundled payments, capitation and shared losses and savings arrangements – in an attempt to deliver high-quality, cost-effective services by linking payments for those services to actual outcomes. The trajectory for growth of VBC in healthcare, however, is not a straight line. For all the industry chatter about the 2030 deadline established by the Centers for Medicare & Medicaid Services (CMS) to transition the vast majority of Medicare and Medicaid spending to accountable care, real progress toward meaningfully shifting existing care models has been slower than expected. Still, expect market forces, combined with the looming 2030 deadline, to spur real action and widespread adoption in this space as VBC expands to additional provider lines of business and sites of care.

Building upon considerable activity over the past year, the following are anticipated to be the most meaningful VBC trends and developments for 2024.

1. Payment Models Expected to Transition to VBC at an Even Faster Rate

Expect an even faster shift toward how healthcare services are delivered and paid for through risk-based contracts and other alternative payment arrangements that prioritize outcomes and quality over sheer volume in 2024. This transition is steering the industry toward a more patient-centric approach as providers focus more on preventive care and the overall health and wellness of each patient. The projected growth in VBC, from $500 billion currently to a potential $1 trillion, underscores this momentum. The combination of increased patient engagement, along with the development of newly refined contractual and financial arrangements, suggests that the evolution of VBC will reach a tipping point this year.

Nearly 70 percent of Medicare Advantage enrollees opted for VBC providers in 2022, highlighting growing patient preference for healthcare providers that prioritize value and outcomes. In light of these trends, it is critical that stakeholders recognize that where financial incentives may be tied to improved outcomes, arrangements must be carefully structured to help ensure compliance with state and federal healthcare fraud and abuse laws and regulations such as the federal Anti-Kickback Statute (AKS) and Stark Law. Risk-based payment arrangements must also be carefully analyzed and structured under state insurance laws, where states may set forth different requirements for the types and levels of risk a provider may take, either directly from a payer such as a health maintenance organization or from a network or intermediary such as an independent physician association. In some states, providers or intermediaries may be required to hold risk-bearing entity licenses from their respective state insurance departments. In addition, the growing prevalence of VBC arrangements within the healthcare sector is bound to raise practical concerns related to noncompete and exclusivity provisions within one VBC partnership over another. Still, legal and business challenges can continue to be managed, as the industry relies even more on VBC and its emphasis on the improvement of quality, efficiency and outcomes in patient care.

2. Payer and Provider Consolidation Restructures Relationships Among VBC Stakeholders

The healthcare industry is witnessing a surge in payer consolidation efforts, and health plan mergers are anticipated to continue in 2024 as payers seek to optimize resources and strategically align on the delivery and payment of healthcare services. In addition to ongoing horizontal consolidation among plans, expect a much greater emphasis on vertical integration as payers continue to actively acquire and grow their provider business. These partnerships are often focused on VBC and closer management of the entire continuum of care and reimbursement. Payers that directly participate in the provider space could also free up resources to move money more directly to providers based on quality incentives tied to improved patient outcomes. Finally, expect the focus this year to shift toward specialist versus primary care in order to better align with VBC initiatives that are already underway. Similarly, expect further efforts to fold post-acute care into value-based initiatives.

Still, antitrust issues should be carefully considered with such planned transactions, particularly given the strong activity of the Federal Trade Commission (FTC) in reviewing and challenging healthcare consolidation. VBC also often involves establishing provider networks or accountable care organizations (ACO) to coordinate care delivery. As a result, the formation of these networks may involve complex contractual arrangements that require compliance with federal and state laws, including antitrust regulations and state insurance laws. Healthcare organizations must navigate these legal requirements to avoid additional regulatory scrutiny and legal challenges that could inhibit real progress in VBC initiatives.

3. Leveraging Data and Technology to Manage Patient Health

Sophisticated data management and technology can support complex transformations toward VBC. These alternative payment models require frequent measurement, data analysis and reporting to be shared with respective stakeholders in order to both proactively manage patient cases and closely track quality and performance metrics. This may include clinical data financial performance and information that supports social determinants of health, as well as pharmaceutical adherence, compliance and effectiveness data. Payers and providers will need data collection plans that consider subsequent, compliant downstream use of collected data for multiple purposes such as reporting outcomes, benchmarks, evaluation of protocol effectiveness, and alternative payment model contracting and modeling. Without a comprehensive and integrated dataset at the individual patient and patient population levels, it is virtually impossible to deploy advanced VBC models that depend on these inputs. Yet, difficulties remain for the access to and use of this data due to, for example, the lack of connectivity between electronic health records, low adoption of health information exchange, and data security and patient privacy considerations.

Artificial intelligence (AI) presents a significant opportunity to paint a more complete portrait of patient and population health. AI, for instance, can predict pharmaceutical adherence within a population or predict the need and likelihood of a patient getting a flu vaccine. This predictive modeling enables providers to take preemptive action in supporting vulnerable patients and move quickly to identify risks within their populations before their outcomes deteriorate. Of course, the use of AI and underlying data must be structured carefully in compliance with the Health Insurance Portability and Accountability Act (HIPAA), federal and state rules relating to drug and alcohol treatment, and other state privacy and security laws, in addition to accounting for the evolving regulations intended to apply to AI.

4. VBC Adjustments to Shifts in Care Settings

Patients are no longer being admitted for inpatient surgeries at rates that existed before the COVID-19 pandemic, and the result is decreasing revenue for inpatient procedures under traditional FFS payment models. In addition to persistent payer, physician and patient pressures that have driven down inpatient volumes for decades, new policies, advancements in healthcare delivery and competition are accelerating the migration of care delivery to ambulatory settings, into homes and onto digital platforms. This too will impact VBC arrangements to accommodate shifts in sites of care and implications for the types of payment structures and performance criteria to be used.

VBC stakeholders have focused on several key business and operational approaches to assist in this transition. First, enterprise data management technology and integrated electronic health records systems can help produce more comprehensive and robust clinical utilization trends and financial analytics that may inform care delivery. Second, payers and providers may more frequently rely on prospective bundled payment arrangements that align and incentivize quality care in lower-cost care settings. Third, population health management and care coordination tools can align care teams around care pathways and workflows to optimize compliance with treatment protocols and manage other services that may be required. These tools, however, are not substitutes for a provider's clinical decision-making and should be carefully adopted and utilized to support clinical determinations of care.

Finally, from a legal and regulatory perspective, the shift in locations of care raises numerous considerations, including state telehealth laws and regulations; licensing of clinical and clinical support providers who are practicing across state lines; Medicare, Medicaid and state reimbursement of telehealth; licensing and reimbursement of hospital at-home programs; home health licensing considerations for providers such as nurse practitioners and paramedics providing patient home visits; and many others. In addition, arrangements that involve the referral of services reimbursable under any government programs must be assessed for potential kickback and self-referral risks, particularly as relatively new safe harbors related to VBC may serve to protect arrangements that are compliantly structured.

5. Role of Patient Engagement in VBC

Actively engaged patients are more likely to adhere to treatment plans and achieve better health outcomes critical to the success of any VBC arrangement. However, the implementation of various patient engagement strategies – including the use of telehealth, mobile apps, remote patient monitoring tools and patient health portals – may raise legal and regulatory concerns related to informed consent and patient rights. Healthcare providers must ensure that patients are adequately informed about their participation in such programs, any attendant risks and benefits, and the patient's right to opt in or out of participation. Failure to obtain proper consent or appropriately address patient concerns can result in the erosion of patient trust and potential legal disputes.

Care management programs are often deployed for patients who have certain chronic conditions. Care management personnel – including social workers, dieticians, pharmacists and advanced practice providers – may engage with patients to review their medical history, explore treatment options with the patient's healthcare providers, provide medication therapy management services, monitor patient adherence and schedule and remind patients of appointments. Care management raises several legal and regulatory considerations, including:

• the appropriate or required licensure and qualifications of the various providers
• issues related to practicing across state lines
• scope of practice
• data sharing, which raises HIPAA and state privacy law considerations

It is vital that there is a clear delineation between care management recommendations to the treating provider and the physician's treatment decisions to avoid corporate practice of medicine and malpractice concerns.

In addition, any mobile apps and remote patient monitoring devices must be evaluated for compliance with U.S. Food and Drug Administration (FDA) medical device requirements, HIPAA privacy and security regulations, state privacy laws and the collection of patient consents. These technologies should come with clear terms and conditions to address these potential concerns, and any other considerations related to the practice of medicine and appropriate scope of clinical practice. It is also important to analyze any tools and technologies provided to patients for compliance with restrictions in the Civil Monetary Penalty Law (CMPL) against the beneficiary inducements, as well as the federal AKS. There are potential exceptions to the CMPL such as the "access to care" exception and VBC safe harbors to the AKS that may apply.

Finally, many patient engagement strategies include patient reward programs designed by a payer to incentivize patients for certain healthy behaviors or activities. Many variations of these reward programs have been reviewed previously by the U.S. Department of Health and Human Services' Office of the Inspector General (OIG), and Medicare Advantage plans have for many years followed specific guidance made available by CMS regarding the structuring of these programs. Providers may choose to follow prior OIG guidance that recognizes gifts of de minimis value as a low risk of beneficiary inducement under the CMPL, or they may structure such programs under other exceptions available through these laws in the interest of providing patient support and access to care.

Summary

As the Center for Medicare and Medicaid Innovation (CMMI) deadline approaches to have 100 percent of Medicare beneficiaries in an accountable relationship by 2030, the time is right for VBC. With 13 million Medicare beneficiaries covered by ACO or VBC arrangements in 2023, the demand for VBC will only increase as fiscal and demographic factors converge with CMMI's introduction of new VBC models and Medicare's projected growth in enrollment. As the nation's largest healthcare law practice, Holland & Knight works with a variety of organizations – providers, payers, digital health companies and more – which gives us a distinct vantage point. Our Healthcare & Life Sciences Team understands the nuanced relationships and the regulatory and reimbursement challenges and opportunities driving the transition towards VBC and stand ready to partner with organizations looking to be the drivers of change in this new environment.