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Newly-Released White Paper Says Reform of Federal Fraud, Abuse Laws Necessary to Advance Value-Based Healthcare

Paper Recommends Legislative, Regulatory Actions to Clear Pathway toward Quality-Driven, Cost-Effective Care Improvements

WASHINGTON – A white paper released today asserts that the transformation of the nation’s healthcare system from conventional fee-for-service care to value-based delivery and payment models will be accelerated if current healthcare fraud and abuse laws are reformed to enable actions that improve patient outcomes and reduce healthcare costs.

The paper, focusing on the federal anti-kickback statute and the physician self-referral law (known as the “Stark law”), was released today by the Healthcare Leadership Council, a coalition of chief executives from all sectors of healthcare. It was authored by Jane Hyatt Thorpe, JD and Elizabeth Gray, JD, MHA of The George Washington University’s Milken Institute School of Public Health Department of Health Policy and Management.

The paper notes, “New delivery and payment models represent a shift to fee-for-value, designed to reward improved outcomes and efficiency and encourage cross-provider coordinated care across the care continuum. However, implementing these models within the confines of the current federal fraud and abuse framework is challenging.” It adds, “the fear of potential liability due to the complexity of the legal framework potentially stifles innovation and impedes progress toward a value-based system.”

Progress toward more patient-centered care, the paper observes, has been made in this arena including, for example, Congress’s passage of the Medicare Access and CHIP Reauthorization Act (MACRA), which calls for the Secretary of Health and Human Services to consider possible modifications to legal frameworks to better align with integrated care delivery and payment models, but there are additional legislative and regulatory steps that could be taken to speed progress.

These recommendations include:

  • Extending waivers to the federal anti-kickback statute and the Stark law to all accountable care organizations and to entities implementing other alternative payment models that meet certain value-based requirements.
  • Extending exceptions to these laws to include donations and financial support for a broad range of health information technology and training, including cybersecurity programs.
  • Congressional action to expand the HHS Secretary’s MACRA-mandated report to specifically address whether these fraud and abuse laws create unnecessary barriers to integrated care delivery and payment, and whether they should be modified to effectively limit fraud and abuse without blocking activities aimed at providing better care at lower costs.
  • Legislation to grant the Office of Inspector General and the Centers for Medicare & Medicaid Services increased discretion to develop exceptions to these laws that are consistent with cost-and-quality policy objectives.

The paper makes it clear that, despite recent improvements, the current legal framework is still incompatible with the potential to achieve significant improvements that patients desire through value-based care.

“The failure to modernize the fraud and abuse framework threatens to impede meaningful progress. Unwilling to risk penalty under the Anti-Kickback Statute or the Physician Self-Referral (Stark) Law, stakeholders may be discouraged from entering into arrangements that could help achieve better outcomes for patients and support public policy goals regarding health system transformation,” the authors wrote.

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Addressing the Unintended Consequences of the Stark Law and Anti-Kickback Statute

In the new era of healthcare in which value-based care is steadily pushing aside the fee-for-service model, outdated rules and regulations continue to hinder the progress of healthcare reform. The Healthcare Leadership Council (HLC) has been focusing on what the barriers to innovation are and how the pathway can be cleared. HLC’s National Dialogue for Healthcare Innovation (NDHI), a platform that builds consensus among the health industry, patient groups, government and academia on issues affecting healthcare progress, hosted a webinar discussing one area considered to be a barrier, the Stark Law and Anti-Kickback Statute.

The Stark Law and Anti-Kickback Statute have been detrimental to the development of alternative payment models. There is agreement that updates are necessary in order for broader collaboration to occur among healthcare providers, without the fear of penalties. This uncertain environment has caused many organizations to hesitate in moving forward, and is delaying the switch from fee-for-service to value based payments. Stephanie Zaremba, of athenahealth, voiced concerns regarding this issue in a recent blog post.

NDHI released a report at the beginning of this year that offered up six viable solutions to transform healthcare, which included the Stark Law. Also earlier this year, the Senate Finance Committee held a hearing to examine possible ways to modernize the law. The interest and focus on this matter is growing, and HLC/NDHI will continue to engage with cross-sectoral stakeholders in developing recommendations. Stay tuned for the whitepaper being released in the near future.

The full athenahealth blog post can be viewed below:

A healthcare law held together by duct tape

By Stephanie Zaremba | August 12, 2016 | Opinion

The drive to fix healthcare is full of big ideas — major overhauls of how physicians are paid, patients are insured, health information is documented, and care is coordinated.

But some of the most important fixes might come from focusing on less exciting details. For example: How outdated fraud and abuse laws are squeezing innovation from the system.

Imagine our existing healthcare laws as a building. Ideally, it is well constructed at the outset, regularly maintained, and remains useful for decades into the future.

But when a law becomes riddled with exceptions — and then with addendums to close the loopholes to the exceptions — its integrity starts to fail. Pretty soon, it’s dilapidated, having exceeded its useful life, held together with a complex web of duct tape and a door that only opens if you know exactly where to kick it.

Our fraud and abuse laws — specifically, the Stark Laws and Anti-Kickback Statute — were written in the era of fee-for-service. They were essential, at the time, to addressing the fundamentally misaligned incentives created by a payment system that rewards physicians for volume.

The basic premise of the laws is simple: A physician can’t receive a financial benefit for referring a patient to another care provider or prescribing a drug, treatment, etc. As patients, we want our providers recommending care based on what is best for our health, not best for their wallets.

But as we shift away from fee-for-service and toward value-based care, Stark and Anti-Kickback are not keeping up. We increasingly see behaviors that are desirable but technically prohibited, such as a hospital paying for the electronic health record used by community physicians. So over time, each law has been subject to a few dozen exceptions and hundreds of advisory opinions carving out specific acceptable behaviors.

Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program receive broad waivers to Stark and Anti-Kickback in recognition of the fact that these laws directly prohibit what is required for ACO success: sharing of costs, infrastructure, and savings.

The Department of Health and Human Services has set aggressive goals for tying payments to value, not volume, and our fraud and abuse laws must be reformed for those goals to be realized. Currently, physicians and hospitals are prohibited from a long list of desirable behaviors under a value-based model: advising patients on the selection of a high quality post-hospital care facility; providing patients with cab rides to appointments or scales to help monitor their weight between visits; and paying for the cost of exchanging patient information electronically, to name a few.

When physicians are financially incentivized to coordinate care, they need a legal framework that encourages innovation around how healthcare providers organize, share costs, exchange information, and engage across the broad continuum of care.

But instead of reform, to date the policy changes necessary to implement this shift are piled on top of a rickety foundation and, as a result, innovation suffers.

The good news is that members of Congress are looking at ways to address problems with the Stark Laws and Anti-Kickback Statute. As they dive in, policymakers need to recognize this crumbling building for what it is: Something that needs comprehensive rebuilding, not another round of patches.

Stephanie Zaremba is director of government and regulatory affairs for athenahealth.

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Health Providers, Insurers, Drug and Device Manufacturers and Patient Groups Reach Agreement on Six Immediate Steps to Improve U.S. Healthcare

Report on ‘VIable Solutions’ recommends immediate actions to remove obstacles to innovation, improve healthcare system quality and value

See extensive media coverage of the VIable Solutions recommendations

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HLC chairman Susan DeVore, president and CEO of Premier, Inc., describes the group’s health reform recommendations at the February 17 Capitol Hill announcement.

WASHINGTON, DC – Leaders from all sectors of U.S. healthcare, working in collaboration with patient advocacy organizations, today recommended six steps – including Food and Drug Administration reforms, changes to fraud and abuse laws and accelerated progress toward a nationwide health information system – that the Obama Administration, Congress and the healthcare industry can begin implementing immediately to improve the nation’s healthcare system.

At a Capitol Hill briefing to announce the recommendations, health industry and patient advocacy leaders, under the auspices of the Healthcare Leadership Council’s National Dialogue for Healthcare Innovation initiative, emphasized that the reforms should win bipartisan support and can gain traction even in an election year permeated with partisan politics. The ‘Viable Solutions’ call for:

  • A firm date of December 31, 2018 to achieve nationwide health information interoperability with the private sector leading efforts to enable healthcare organizations to share data with each other;
  • A series of reforms to further improve the efficacy of the Food and Drug Administration, in part by reducing administrative burdens imposed on the agency, and bring innovative, life-saving treatments and technologies to patients more rapidly;
  • A series of reforms to further improve the efficacy of the Food and Drug Administration, in part by reducing administrative burdens imposed on the agency, and bring innovative, life-saving treatments and technologies to patients more rapidly;
  • Implementation by Medicare, insurers and healthcare providers of best practices to improve all aspects of care for chronically ill patients.
  • The federal government to reform outdated physician self-referral and anti-kickback statutes, as well as expand Medicare payment waiver policies, to enable better care coordination while protecting against fraud and abuse.
  • Congress, the Administration and states to standardize the nation’s privacy laws and improve access to patient data for quality healthcare and medical research.
  • The Centers for Medicare and Medicaid Services to improve its Enhanced Medication Therapy Management Model to help the program deliver on the promise of improving patients’ health.

“These steps aren’t revolutionary, but they are transformative,” said HLC president Mary R. Grealy. “Innovation is too often put on the back burner when we discuss healthcare policy, but it’s critical to elevating health system value, to addressing quality and cost challenges. There are viable, practical, common-sense solutions that can and should be implemented to help make our healthcare system more patient-centered and effective.”

HLC’s National Dialogue for Healthcare Innovation convened senior leaders from its membership comprised of companies from all healthcare sectors and engaged patient groups and key industry voices to develop the recommendations over a period of several months, following a national summit on innovation and value held in Washington, D.C. last March. The final report and recommendations were produced in partnership with NORC, the independent public policy research organization at the University of Chicago.

“It is a rare achievement to bring so many diverse stakeholders together in consensus on issues of such importance,” said Susan DeVore, president and CEO of Premier, Inc. and HLC chair. “There is a widespread understanding that, for all of our healthcare system’s considerable strengths, we need to make strides in providing high-quality care at sustainable costs. The six steps on which we have reached agreement will move us significantly in that direction.”

Ms. Grealy said the Healthcare Leadership Council has already begun meeting with congressional leaders regarding the recommendations and would continue those conversations in the weeks ahead.

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National Summit Will Address Healthcare Innovation, Cost Stability and System Sustainability

Leaders from Multiple Health Industry Sectors, Government, Business, Academia and Patient Groups Will Meet on March 2 to Develop New Approaches to Healthcare Payment, Delivery Systems

March 2, 2015 - The Healthcare Leadership Council (HLC), a coalition of chief executives from healthcare providers, payers, manufacturers and other health sectors, announced today that it will host a summit meeting on March 2 in Washington, DC to address how evolving healthcare payment and delivery systems can encourage innovation and achieve greater value and financial sustainability.

The summit, according to HLC President Mary R. Grealy, will include leaders from all health sectors as well as the legislative and executive branches of government, employers, academia and patient advocacy organizations. The meeting is part of HLC's National Dialogue for Healthcare Innovation (NDHI) initiative, a project designed to bring diverse interests together to develop consensus approaches on issues affecting healthcare progress.

"There are a lot of voices out there talking about healthcare costs, value, affordability and sustainability. We're never going to develop a pathway, though, that will incentivize innovation and strengthen health system value until we bring everyone to the same table," said Ms. Grealy. "The March 2 summit will, we hope, serve as a launchpad to develop ideas and policy directions that will bring sustainable value to healthcare payment and delivery systems."

Ms. Grealy said the March 2 summit will be accompanied by academic research. NORC, an independent social science research organization based at the University of Chicago, will investigate, among other subjects, barriers to innovation within the current health policy structure and possible payment and delivery system alternatives that can both encourage medical advances to improve health and achieve cost stability. Also, she said, HLC envisions that Summit participants will continue collaborating after the March 2 event, working toward consensus ideas on the complex questions surrounding innovation and value.

The steering committee for the HLC initiative reflects, Ms. Grealy said, the strong interest at all points of the healthcare continuum in bringing a collaborative approach to these issues. Steering committee members include Aetna, Amgen, Ascension, Cardinal Health, C.R. Bard, Edwards Lifesciences, Emdeon, Eli Lilly & Company, Health Care Service Corporation, Johnson & Johnson, Medtronic, MemorialCare Health System, Merck, Premier healthcare alliance, Sanofi, SCAN Health Plan and ZS Associates.

"The stakes here are incalculable," said Ms. Grealy. "Aligning modern-day leaps in healthcare progress with systems that are financially affordable and sustainable is not an option, it's an imperative. We need to begin defining a future for American healthcare in which all patients and consumers have access to the innovations in all health sectors that are saving, extending and transforming lives. It's time for all voices and interests to come together to meet this challenge."

The March 2 summit will take place at the Newseum in Washington, D.C.

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