6 Dallas Medical Journal May 2019
Kenya Woodruff, JD is a partner at Katten
Muchin Rosenman LLP. Her practice is dedicated
to health care regulatory counsel and the design
and execution of related merger, acquisition and
joint venture strategic partnerships. Kenya focuses
on the creation and maintenance of compliant
healthcare operations and structures for physicians,
hospitals, home health and hospice providers,
accountable care organizations and clinically
integrated networks. Her practice also includes
advice on compliance with Health Insurance
Portability and Accountability Act (HIPAA), the
Health Information Technology for Economic and
Clinical Health Act (HITECH Act), Stark Law,
Anti-Kickback Statutes and other applicable fraud
and abuse laws.
Navigating fraud and abuse laws
Although the Federal government
has expressed a desire to review
and amend the applicable fraud and
abuse laws, these laws have not kept
up with the value-based movement.
The parties to P4P and value-based
arrangements must be careful to
structure them in compliance with
state and Federal fraud and abuse
laws such as the Healthcare Fraud
Statute, False Claims Act (FCA), Anti-
Kickback Statute (AKS), Physician
Self-Referral Law (Stark), Civil
Monetary Penalties Law (CMPL), and
Travel Act. The Federal government
is using the Travel Act to transform a
general state law claim into a federal
criminal action because mail, email,
phone and wire transfer are used in
the operations of the relationship.
Arrangements structured to fit within
an AKS exception or to carve out
federal program patients may still
be at risk if they do not comply with
relevant state bribery laws, which
may not contain the exceptions or
safe harbors that are present in the
applicable healthcare laws. Stark
is the most challenging of the laws
because the parties must follow
provisions of the law specifically or
be found liable for a violation and
because it relates to the referral
of services that are central to
the practice of medicine such as
laboratory services, imaging and
pharmacy services. These services
represent the areas in which there is
a great opportunity for savings and
efficiency. However, the strict Stark
requirements limit the ability of the
parties to be creative in their delivery
method and compensation models.
AKS prohibits the knowing and willful
solicitation, receipt, offer or payment
of any remuneration, directly or
indirectly, overtly or covertly, in cash
or in kind, in return for either referrals
of federal healthcare program patients
or the arranging, recommending,
leasing or ordering of any item or
service reimbursed by a federal
healthcare program. Traditionally,
providers, payers and others have
sought to structure arrangements
to fit within one of the AKS safe
harbors. This often is not possible
with value-based care initiatives. In
the absence of safe harbor protection,
each value-based model is subject to
a facts and circumstances analysis
to determine whether the relevant
sources of payment are intended
to induce or reward referrals. The
tension here is that, in order to keep
a population healthy and control the
costs associated with their care, it
is imperative that the physician be
incentivized to get patients to utilize
services.
If there is an MSSP ACO involved
in the arrangement, some relief is
afforded from the fraud and abuse
laws, but those waivers are applicable
only to activities that further the ACOs
goals and activities. When utilizing
these waivers or implementing
any value-based arrangement, it
is recommended that the parties
undertake a specific analysis of the
physician’s services and that an
evidence-based assessment takes
place of the required activities and
responsibilities of the physician that
show the relationship between those
activities and the impact on the goals
of the endeavor.
The US Health and Human Services
Office of the Inspector General,
provides opinions and advice to
those who seek review of certain
arrangements. In several of the
opinions regarding value-based
arrangements, it has highlighted
the elements of arrangements that
they would not recommend that the
Department of Justice pursue for
AKS or CMPL violations. The most
common elements of those opinions
are: (1) the cost-saving actions and
subsequent costs saved were clearly
identified; (2) there was credible
medical support for the position that
implementation would not adversely
affect patient care; (3) there were
objective measures used to
establish baseline thresholds;
(4) the arrangement protected against
inappropriate reductions in services
by keeping all necessary services
available to physicians; (5) written
disclosure about the financial
relationship was provided to
patients prior to the procedure;
(6) financial incentives were reasonable
in duration and amount; and (7) the
arrangement specifically identified
the actions that generated the cost
savings.
Looking forward
As the healthcare delivery system
continues to evolve, the laws that apply
to it must also evolve. The Federal
government has acknowledged that and
has articulated its desire to consider
changes to Stark, as well as certain
patient privacy laws. In the meantime,
providers must innovate while keeping
a keen focus on compliance with the
laws as they are now. Even with these
restrictions, we see models in which
best practices, population health,
physician champions, efficient care
and great outcomes are rewarded. As
our ability to evaluate and extrapolate
intelligence from data grows, the
possibilities for more targeted and welldesigned
physician compensation will
expand as well. DMJ
Sources
1. See Pub. L. No. 111-148, 124 Stat. 119 (2010).
2. See Press Release, U.S. Dep’t of Health
& Human Servs., CMS finalizes bundled
payment initiative for hip and knee
replacements (Nov. 16, 2015), http://www.
hhs.gov/about/news/2015/11/16/cmsfinalizes
bundled-payment-initiative-hipand
knee-replacements.html.
3. See Pub. L. No. 114-10, 129 Stat. 87 (2015).
4. See, e.g., The Hospital Value-Based
Purchasing (VBP) Program, CMS.GOV, https://
www.cms.gov/Medicare/Quality-Initiatives-
Patient-Assessment-Instruments/Value-
Based-Programs/HVBP/Hospital-Value-
Based-Purchasing.htmlhttps.
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