Hoping to stimulate more interest in value-based care models, HHS issued much-anticipated reforms to self-referral and anti-kickback rules. But experts cautioned that the industry is a long way from fully embracing risk-based arrangements.
In two proposed rules from the CMS and HHS’ Office of Inspector General, the agencies said the current regulations limit data-sharing and care coordination in their attempts to root out fraud. Under the proposed framework, doctors and hospitals could more freely share data across the continuum, and hospitals could pay physicians incentives as part of CMS-sponsored models. The agencies also offered more clarity on fair levels of compensation, among other provisions aiming to ease compliance burdens and facilitate payment models where physicians and hospitals share the financial rewards for delivering lower costs and higher quality.
While the proposal would spur some value-based reimbursement, healthcare executives and industry experts noted that this is only one obstacle impeding risk-based arrangements. More broadly, there isn’t sufficient incentive to move from fee-for-service medicine, largely because the return on investment from alternative pay models is still minimal.
Regulators are urging providers to voluntarily take on risk in relatively unproven models that will diminish their current revenue stream, experts said. Few providers are taking on downside risk, which would leave them on the hook for missed quality targets.
Not-for-profit hospitals derived only 1.6% of their net patient revenue from capitated payment models in 2017, according to Moody’s Investors Service. And the AMGA found that risk-based payments accounted for just 28% of total revenue for medical groups in 2018.
There are issues associated with developing and agreeing on quality metrics; appropriately preserving patient privacy when measuring quality; and paying for data analytics necessary to compare outcomes against the agreed-upon benchmarks, said Taylor Jones, senior counsel at the law firm Akin Gump Strauss Hauer & Feld. “These will all likely remain obstacles to the widespread adoption of value-based arrangements,” she added.
The inability to manage the risk is the biggest impediment, with obscure pricing and data silos hampering progress, said Denise Burke, a partner at Waller Lansden Dortch & Davis.
Carving out protections for value-based care in the fraud and abuse laws probably won’t cause a sea change in the healthcare industry, added Dan Mendelson, founder and former CEO of Avalere Health.
“This won’t result in a flood of new (value-based) arrangements,” he said. “But it will make arrangements easier to structure and take away legal concerns that are slowing these structures down.”
And homing in on “value” has been a moving target. How it is defined, measured and delivered requires some flexibility, which the agencies offered in the proposals. That is why the CMS and OIG stipulated that parties in value-based contracts will have to continually monitor the success of their arrangements. If these deals don’t achieve the expected results or if the savings taper off, the arrangement either needs to be modified or ended, according to the proposed rules.
The CMS and OIG are giving more leeway for technical violations for things like missing documented agreements where providers didn’t intend to violate the law. That has been a pain point for providers who have had to repay Medicare, said Rose Willis, a member at law firm Dickinson Wright.
The idea is to create “additional flexibility in the system” to allow providers in value-based enterprises to create their own targets and decide how to measure progress, HHS Deputy Secretary Eric Hargan told Modern Healthcare. The role of the inspector general or the CMS would mostly be to make sure that providers in value-based arrangements are making progress towards their stated goals.