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The Regulatory Sprint to Coordinated Care: New Proposed OIG Rules Substantially Accelerate Post-Acute Care Coordination

Big changes were announced this past week in what Health and Human Services (HHS) has labeled a “Regulatory Sprint to Coordinated Care.” Foley will be breaking down many of the areas of the proposed rule and the effects on health care organizations. In this first post, we address the impact on post-acute care.

The new Office of the Inspector General (OIG) proposed rules would add new anti-kickback statute safe harbors, and modify existing safe harbors, to add several new safe harbor protections for certain value-based arrangements. These safe harbor protections include: 

  • Care coordination arrangements 

  • Arrangements with varying levels of downside financial risk

  • Outcomes-based payment arrangements

  • Protection for certain remuneration provided to federal health care program beneficiaries in the form of incentives and supports 

All were previously outside of published safe harbors and exposed providers to varying degrees of regulatory uncertainty. 

Being outside the safe harbors, as before, is not per se illegal, but having an expanded window of permissible activity for risk-sharing arrangements will encourage more creative and innovative care models that include some or all of a post-acute care (PAC) episode. PAC providers are well advised to study and collaborate with their discharge sources and payers to strategically position for increased use of value-based care arrangements which these rules encourage.  

Modification to Personal Services and Management Contracts Safe Harbor

The proposed rule now eliminates the requirement that the compensation payable under a contract be set in advance, but requires that the methodology be set in advance even though payments may be periodic. The requirements that the arrangement demonstrate fair market value (FMV), commercial reasonableness, one year term, written agreement and absence of payments for volume or value of referrals are all retained. This new definition of remuneration clears the way for MSO and related agreements that had bonus features or claw backs based on the achievement of certain clinical metrics that were previously uncertain.

Outcomes-based Payment Arrangements

Remuneration does not include an outcomes based payment arrangement as long the payment (amongst other criteria):

  1. Is made amongst parties to measurably improve the quality of care or reduce costs while maintaining or improving quality;

  2. The party receiving the payment demonstrates that one or more evidence -based outcomes are satisfied that improve quality, reduce or maintain costs with maintenance of quality based on clinical evidence or credible medical support;

  3. The methodology for payment is set in advance, FMV, commercially reasonable and does not take into account volume or value of referrals;

  4. Performance of the payment against patient care quality is monitored regularly;

  5. The outcome criteria of the agreement are “periodically” rebased.

Outcomes based payments exclude payments made by drug, device, pharmacy, Durable Medical Equipment (DME), Pharmacy Benefit Managers (PBM), and related parties.

Care Coordination Arrangements to Improve Quality, Health Outcomes, and Efficiency

Remuneration does not include the exchange of anything of value pursuant to a value-based arrangement if, inter alia:

  1. The Value-Based Enterprise (VBE) participants establish one or more specific evidence based, valid outcome measures against which the recipient will be measured and which the parties reasonably anticipate  will advance the coordination of care management for a target population;

  2. The value based arrangement is commercially reasonable;

  3. A writing describing the cost of the remuneration exists;

  4. The remuneration is in kind and targeted to care management;

  5. Is not funded by a party outside the VBE;

  6. Payment is not based on volume or value of referrals;

  7. The recipient pays at least 15% of the offeror's cost of the in kind remuneration (though the requirement is not applicable for VBEs involving substantial downside risk per below);

  8. Does not include patient marketing or recruiting;

  9. Includes annual monitoring by the VBE of progress.

Value-based Arrangements with Downside Risk

Apart from the co-investment and in-kind  requirement above (which do not apply), remuneration does not include value-based arrangements based on risk sharing, whether direct with payer, capitated, shared saving amongst VBEs, or bundled payment. The proposed rule goes into detail describing the various types of financial risk sharing which qualify for safe harbor treatment.

Patient Engagement Tools

Remuneration does not include patient engagement or support furnished by a VBE to a target patient population if it is:

  1. Furnished directly to the patient;

  2. No party outside the VBE contributes to the tool or support;

  3. Is in kind services or items such as technology, monitoring tools or services that addresses social determinants of health;

  4. Has a direct connection to care coordination;

  5. Does not include cash or gift card or equivalent;

  6. Does not include patient recruiting or marketing;

  7. Advances adherence, disease management, improvement of evidence based outcomes, or ensures patient safety;

  8. Value does not exceed $500 annually absent a good faith determination of financial need.

Takeaways

  • For providers unwilling or unable to take capitated risk, a shared risk inside an MSSP, or bundle, the new safe harbors provide avenues for customized outcomes-based risk sharing with payers or other providers where providers may feel they have more control.

  • Expanding home based chronic care management models, even outside of MA capitation should grow.

  • For PAC providers with various clinical stage subsidiaries (e.g. hospice, home health) under common ownership, language in the proposed rule that disallows the use of the safe harbors amongst commonly owned providers should be objected to (through the 75 day comment period) as long as the same elements apply to unrelated and related  parties in the same way.

  • Providers must be cautious in applying the safe harbors to characterize patient education as proper education/care coordination and not patient recruitment (for example by obtaining physician approval for services in advance).

  • “Rebasing” of outcomes measurements might cause providers to be cautious in objectives from inception of any VBE or otherwise rebasing creates a possible challenge and a “race to the bottom.”

  • Sharing care coordinator costs amongst providers on a commercially reasonable basis has now been encouraged.

The public has 75 days to comment before final rules are issued.

© 2019 Foley & Lardner LLP

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About this Author

Christopher J. Donovan, Foley Lardner, Partner, Litigation Lawyer
Partner

Christopher J. Donovan is a partner with Foley & Lardner LLP. He focuses his practice on advising companies and their investors and lenders in mergers and acquisitions, recapitalizations, buyouts and restructurings as well as advising on a broad range of commercial arrangements. Mr. Donovan has particular experience in the health service, particularly post-acute, and life sciences sectors. He has a unique blend of deep regulatory as well as corporate and finance experience to bring to a transaction as a result of his consummating dozens of health and life science...

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