Alternative pay models shouldn't set off kickback fears, hospitals say

Hospitals have urged HHS' Office of Inspector General to recognize that payments between providers in the same alternative pay models do not violate federal anti-kickback laws, warning they may not participate in the programs otherwise.

Alternative pay models can violate anti-kickback laws because they can include incentives and shared savings payment agreements to reduce the cost of care, which could influence a provider to use a certain vendor, refer patients to specific facilities or order more services that are paid for by federal healthcare programs.

But providers told the OIG that the laws are too broad and they're getting in the way of the move to value-based care.

Some providers called on the agency to create a so-called safe harbor for payments made between hospitals, physician groups and skilled-nursing facilities in value-based arrangements to allow them to split shared savings payments.

"This new safe harbor would allow hospitals and health systems to take steps that will improve care coordination, lower costs and improve quality," said Dr. Janis Orlowski, chief healthcare officer at the Association of American Medical Colleges. "Hospitals and health systems want to reward physicians who participate in the development of the care systems and adhere to pathways to achieve the best outcomes in treating their patients."

HHS should allow providers to share the cost of launching and defending new electronic health record systems, according to Barclay Berdan, CEO of Texas Health Resources. Currently, those payments could violate anti-kickback statutes because the physician groups receiving the money may feel obligated to send patients to the hospital providing the funds.

But Berdan said that providers in the same pay model must have interconnected IT systems to share patient information. Some providers don't have the resources to protect these connected systems from cyberattacks.

"This naturally causes concern on the part of some organizations when they look to connect with smaller, less sophisticated entities, which may not have any full-time information technology staff, let alone dedicated full-time IT security staff," he said in a comment letter.

Establishing a safe harbor for those payments would improve cybersecurity for shared IT systems.

Providers also want to protect payments to patients to address their social determinants of health. These payments may violate anti-kickback statute because a beneficiary could feel obligated to continue receiving care from that provider.

But patients are more likely to lose weight if they have a financial incentive, according to American College of Cardiology President Dr. Michael Valentine. If physicians can pay for food, clothing or even transportation to and from healthcare visits, that could improve patient health.

Valentine called for an expanded safe harbor that would allow physicians to pay patients to improve their social determinants of health.

Karen Ali, general counsel at the New Jersey Hospital Association, agreed that OIG should not penalize hospitals for these payments, as they could reduce unnecessary readmissions.

"Hospital responsibility for patient care no longer begins and ends at the hospital door," Ali said.

The comments are in response to a Request for Information issued by HHS' OIG this past summer. The agency asked providers how it could encourage value-based pay arrangements. It received more than 350 responses.

The CMS is also looking to soften anti-kickback regulations. It issued its own RFI to determine how it can minimize the regulatory barriers around the so-called Stark law.

That law prohibits doctors from referring Medicare patients to hospitals, labs and colleagues with whom they have financial relationships unless they fall under certain exceptions. Physicians and hospitals can be fined even if they didn't intend to violate the law, and those fines can be significant.

The OIG said it was issuing its own RFI after the CMS received significant feedback. The OIG has its own legal authority that could create different solutions.