The much-anticipated final rules modernizing the safe harbors under the Anti-Kickback Statute (AKS) and the physician self-referral exceptions under the Stark Law are officially under review by the Office of Management and Budget (OMB). The Department of Health and Human Services (HHS) anticipates publishing the final rules in August 2020, although that target date is subject to change. The final rules represent HHS’s efforts to remove barriers to effective care coordination and management as part of its “Regulatory Sprint to Coordinated Care” initiative. While the proposed rules made a sweeping effort to promote a value-based health care delivery system, they left notable and significant room for public comment on the various options under consideration by HHS’s Centers for Medicare & Medicaid Services (CMS) and Office of Inspector General (OIG) to achieve their goals. As a result, health care providers eager to benefit from the protections of these potential value-based changes to AKS and Stark will be interested in CMS’s and OIG’s final decisions in the following key areas.

  1. What Qualifies as a Value-Based Activity?

In their proposed rules, OIG and CMS developed three new tiered safe harbors and exceptions that offer increasing flexibility to value-based arrangements based on the level of financial risk accepted by each participant. As a gatekeeping matter, to be protected, any value-based arrangement must be for the provision of at least one value-based activity for a target patient population that is reasonably designed to achieve a value-based purpose and must be between a value-based enterprise and one of its participants, or between participants in the same value-based enterprise. As summarized in Reed Smith’s three-part series analyzing the proposed rules, this means two or more persons or entities must collaborate, and be accountable, to achieve improved care coordination, quality, or efficiency for a defined patient population by taking, or refraining from taking, an action tailored to that improvement.

The value-based arrangement safe harbors proposed by OIG required that the value-based activities directly further coordination and management of care for the target patient population. CMS did not similarly limit the scope of value-based activities in its proposed rule, and did not define the “coordinating and managing care” concept (but sought comment on whether it should). Instead, CMS only required that the value-based activities be reasonably designed to achieve a value-based purpose. Many commenters will be interested to find out whether CMS narrows its scope—or, alternatively, OIG broadens its scope—with respect to what will be considered a value-based activity protected under a value-based arrangement.

  1. Who Qualifies as a Value-Based Enterprise Participant?

The proposed rules sought to exclude pharmaceutical manufacturers; durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) manufacturers, distributors, and suppliers; and laboratories from qualifying as value-based enterprise participants—and considered adding pharmacy benefit managers (PBMs), medical device manufacturers, and other wholesalers and distributors to the list of excluded entities. If those exclusions are maintained in the final rules, they have the potential to significantly limit value-based care and activities that would otherwise benefit from the proposed safe harbors and exceptions.

For example, despite excluding DMEPOS manufacturers, distributors, and suppliers as potential value-based enterprise participants, OIG included health technology companies. Oftentimes, however, those two entities can be one in the same. Many medical device manufacturers and DMEPOS distributors, manufacturers, and suppliers have led the digital health era by creating technologies that give patients and providers real-time insight into the data collected by the products those patients use or wear. The care coordination efforts supported by these technologies could be hindered by taking away the device or DMEPOS manufacturer’s seat at the value-based participant table. While these manufacturers, distributors, and suppliers could still sell their products to other value-based enterprise participants at fair market value, the exclusion of those entities could have a chilling effect that prevents participants from wanting to buy. How OIG ultimately handles the list of qualified value-based enterprise participants in its final rule might foreshadow the extent to which digital health technologies will play a role in value-based arrangements and care coordination moving forward.

  1. Whether the Care Coordination and Value-Based Arrangement Protections Are Limited to In-Kind Remuneration.

In their proposed rules, OIG and CMS considered limiting their care coordination safe harbor and value-based arrangement exceptions to in-kind remuneration only. If finalized, these protections would be limited to items and services only, and would not be available for any monetary remuneration, such as shared savings.

This restriction could also extend to OIG’s proposed patient engagement safe harbor, which OIG proposed to only protect in-kind patient engagement tools, such as health-related technology, patient health-related monitoring tools and services, or supports and services designed to identify and address a patient’s social determinants of health. The safe harbor would exclude monetary remuneration such as gift cards, cash, and cash equivalents. That said, OIG solicited comment in its proposed rule about whether to include vouchers under the in-kind designation, and it floated whether to allow cash or cash equivalents, but with a cap. Accordingly, it remains to be seen how far the protections for remuneration will go in the interest of value-based care.

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The final rules, if published, are likely to have a significant impact on nearly every facet of the health care industry seeking to engage in value-based arrangements. Given their importance and the broad scope of considerations left open for public comment, industry stakeholders should keep in mind the three key areas discussed above when considering the ways in which the final rules could impact their organizations.

For additional information on the proposed rules, please refer to Reed Smith’s three-part client alert series.