AHA: Healthcare Fraud Laws Impede Value-Based Care Success

July 06, 2016 - For alternative payment models under MACRA to succeed, the federal government needs to revise healthcare fraud and abuse prevention laws to work with new value-based care strategies, explained the American Hospital Association (AHA) in a recent study.

The report examines how legal barriers, particularly the Stark Law and Anti-Kickback Statute, prevent healthcare providers from engaging in more care coordination and providing financial incentives for implementing value-based care models.

“The fraud and abuse laws need to be adapted to support not hamper the new payment models,” stated the report. “To that end, Congress should create legal safe zones to support and foster arrangements designed to achieve the goals of payment-for-value rather than volume-based programs.”

Many of the healthcare fraud and abuse prevention laws were created in a fee-for-service world, explained the AHA, but these regulations have not adapted to the recent shift to value-based care. Instead, the laws view any shared financial incentive as suspicious and these keep hospitals and physicians from collaborating to improve patient outcomes.

The regulations, such as the Stark Law, were primarily designed to prevent overutilization by stopping providers from referring patients to other healthcare organizations with which it shared a financial relationship.

Anti-kickback statutes also prohibit remunerations that aim to influence a provider’s ordering of services or items that are paid for by federal healthcare programs.

Some providers in alternative payment models have been granted waivers, but the AHA stated that this has only created a patchwork of exceptions to these laws. To promote value-based care, providers must navigate existing waivers and devote significant resources to finding ways around the laws.

“Hospitals and physicians should not have to spend hundreds of hours or thousands of dollars in hopes of stringing together components from the existing exceptions and safe harbors or developing inefficient work-arounds to achieve the goals of APMs [alternative payment models],” the report explained.

The AHA explained that legal barriers have prevented necessary collaborative arrangements to achieve value-based care.

One of the challenges to care coordination is the regulatory barrier preventing financial incentives for improving patient outcomes and providing more efficient treatments. While value-based care is designed to pay providers for outcomes rather than volume of services, certain healthcare fraud laws prohibit compensation based on value or volume of services ordered and their potential to attract referring physicians to the hospital.

For example, hospitals cannot incentivize providers to redesign care delivery or follow care pathways for their patients since it rewards physicians based on value. Hospitals also cannot reward providers for ordering less expensive treatments because it could potentially lure referring physicians.

Under these laws, providers also cannot be compensated for performing care management and coordination efforts, even with a team-based approach. The fair market value stipulation under the regulations state that physicians can only be rewarded in an hours-work model that depends on time spent and resources consumed, not outcomes achieved.

Since an incentive program based on a team-based approach for care delivery would compensate providers for improving patient outcomes, this would violate the fair market value regulation. It could potentially be viewed as tying payments for physicians to the volume of possible referrals for services.

Similarly, the AHA explained that the Anti-Kickback Law prevents care coordination after the patient leaves the hospital because any support or incentive to a residential facility, like a skilled-nursing facility, could be taken as a remuneration that induces the care site to make referrals back to the hospital.

These regulations even create barriers to adopting certified EHR technology, reported the study. Hospitals cannot finance the infrastructure costs for implementing health IT at practices even though sharing an EHR system would allow for better health information exchange and patient care.

Additionally, the report examines several outdated legal barriers that limit a hospital’s ability to fully engage with alternative payment models.

CMS maintains patient discharge regulations that prevent a hospital from offering advice to patients on what providers they should select for post-hospital care. Hospitals can give patients a list of providers, but it cannot guide patients to providers that share the same incentives or goals.

The Anti-Kickback law may also negatively impact a patient’s post-discharge healthcare plan, stated the report. Hospitals cannot provide anything of value to encourage patients to order items or service paid for by the Medicare program, which has stopped hospitals from offering cab ride vouchers for follow-up appointments, scales to track weight loss, or blood pressure cuffs.

To resolve care coordination and financial incentive limitations, the AHA advised Congress to update healthcare fraud and abuse prevention laws to include more safe harbors.

“The safe harbor would be designed to foster collaboration in the delivery of healthcare and incentivize and reward efficiencies and improvement in care,” explained the report.

According to the AHA, the safe harbors would cover hospital incentive programs that increase accountability for quality, cost, and care for patients as well as coordinate care for patients. These safe harbors should also promote investment in infrastructure and care delivery redesign to improve quality and efficiency.

Another patient-specific safe harbor should also be established under the Anti-Kickback Law, the AHA suggested. This safe harbor should increase care access, support a range of healthcare needs outside the clinical setting, allow support that is financial (such as transportation vouchers) or in-kind (such as scales or meal preparation), and remove barriers that prohibit hospitals from offering post-hospital care advice.

The AHA explained that congressional action is necessary to update laws to reflect value-based care. With the HHS goal of tying 90 percent of Medicare payments to an alternative payment model by 2018, providers are moving forward with value-based care models.

Without changes to existing regulations, widespread adoption and success of alternative payment models could be impeded, stated the AHA.

Dig Deeper:

• How to Address Challenges of Alternative Payment Models

• For Truly Value-Based Care, Use Outcomes Instead of Processes