Are Fraud and Abuse Laws Stifling Value-Based Care? image

NEJM Catalyst , September 12, 2018
Carmel Shachar (Executive Director)

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While health care delivery and financing should not be a free-for-all, designing the exemptions to explicitly conform to specific regulatory programs does not best serve the system. Even when a medical provider decides that a value-based care program is worth the legal headaches, the limited exceptions may unduly influence the shape that the arrangement will take. An illustrative example is that of the above-mentioned Medicare Shared Savings Program, which was intended by the drafters of the Affordable Care Act to promote the implementation of value-based care through accountable care organizations. The relevant regulatory agencies then issued a rule waiving the application of the Stark Law, the AKS, and the beneficiary inducement civil monetary penalties law, to these new entities.

These waivers are very helpful to entities that want to form an accountable care organization that complies with the program’s requirements. But for entities that might be interested in further pushing the envelope, these waivers will not provide a sufficient safe harbor. For example, one of the requirements that must be met for an accountable care organization to be eligible for a waiver is that the organization not include any distributors, durable medical equipment suppliers, home health suppliers, pharmaceutical manufacturers, or device manufacturers.

However, we know that value-based care has a role in delivering pharmaceuticals and devices to patients, as demonstrated by the rise of value-based care contracts between companies such as Novartis, Cigna, and Aetna for heart-failure medication, Merck and Aetna for diabetes medications, and Novartis, Eli Lilly, and Harvard Pilgrim, also for diabetes medications. Because fraud and abuse exceptions are tailored to specific regulatory programs, we may be losing the ability to come up with creative new structures to deliver value-based care.

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