Azar and Hargan on how anti-kickback changes will boost value-based care

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The Trump administration last week signed off on long-awaited changes to physician self-referral and anti-kickback rules that aim to boost value-based care by making it easier for providers, suppliers and others to work together.

Healthcare executives have warned regulators for years that providers are hesitant to sign up for value-based arrangements or coordinate care, in part, because they’re worried about breaking federal fraud and abuse rules.

During an exclusive interview with Modern Healthcare ahead of the announcement, HHS Secretary Alex Azar and HHS Deputy Secretary Eric Hargan discussed with reporter Mike Brady how the changes could affect the healthcare industry. Below is an edited transcript.

MH: Why did HHS decide to change the anti-kickback and physician self-referral rules now?

Azar: These well-meaning rules are there for a reason: to protect against fraud and self-dealing. And unfortunately, they froze in place a disaggregated care model when we know that what we need is coordinated care built around the patient. And so these reforms will, in a sensible way, enable value-based arrangements that let providers coordinate, let them share risk, let them help patients to improve outcomes.

Let me give you some examples. If you’re a patient at a hospital and you have diabetes, the hospital could contract with a diabetes care management company to provide free diabetes care management devices and services that their patients who are discharged from the hospital to help improve outcomes and prevent readmissions. You could have doctors be able to buy smart pillboxes for their patients or provide smart tablets to enable telemedicine and home-based care. You could have hospitals being able to provide cybersecurity support to physicians that they work with. So very sensible things, none of which we believe increased risk for fraud or self-dealing, but that allow healthcare providers to work together.

One of the ways to get around these rules is to be the same entity, because when you’re the same entity, you don’t have an anti-kickback issue. And so inadvertently the Stark and anti-kickback statutes, actually the way they’ve been implemented, inadvertently created an incentive to consolidation and enhanced provider market power in localized areas. And so we believe that an ancillary benefit of these rule changes is to enable virtual collaboration that is built around the patient without essentially requiring consolidation and common ownership.

Hargan: I think that people have been waiting for these reforms for decades. Essentially, under the old model and the current model of fee-for-service, you have to provide fraud protection, but we’ve moved so firmly towards value based models. But now in essence, these regulations are constraining the next development of value-based care. Right now, if you try to build these models, in many ways, you can’t without taking risks of either strict liability fines under Stark or possible criminal sanctions under the anti-kickback statute. So that’s really frozen, a lot of the experimentation and innovation in this space where hospitals and independent doctors, groups, or medical technology companies could try to collaborate.

Now we’re opening a way for them to do so. We’re providing a way for them to build what we’re calling a value-based enterprise. That’s where two or more entities or persons decide to collaborate with each other. We put guardrails in place. Like they have to have a written arrangement with each other. Somebody has to be in charge of monitoring.

MH: So obviously these changes have been a long time in the making. I’m wondering how quickly you think these rules could make an impact.

Hargan: We think very quickly. So there’s obviously a 60-day delayed date on the changes. But frankly, at this point, these make clear areas where there are safe harbors for action. Providers could effectively begin changing their conduct immediately because clearly we’re not going to be pursuing enforcement on that area. We’re hopeful, we’re going to get entities to come into the space very soon.

MH: How did the agencies decide which of the sort of various proposals that were in the proposed rule made it into the final versions and did COVID-19 affect what CMS and OIG decided to include?

Hargan: Well, the final rule is remarkably similar to the proposed rule. There have been clarifications on areas like medical technology in the proposal. We got a number of comments back from medical technology companies that thought that we hadn’t been as clear as we could have. We didn’t mean to open the door for places like data analytics programs and for people to be able to use these sophisticated programs to allow coordinated care and sharing of data analytics programs between hospitals and independent physician groups. We added an opening for cybersecurity because neither of the regulatory teams believed that there was any real possibility of abuse of donation of cybersecurity technology.

So a lot of times it prevents small solo practitioners or small physician groups from being able to share data with the hospital because the hospital would say you’ve got to have cybersecurity. And they said we won’t invest in it. So that’s prevented a lot of the ability of data transfer among physicians in hospitals.

So we’re hopeful that’s going to result in a lot more ability for patients ultimately to get coordinated care rather than them having to sort of redesign and manage their care at every single place they go. Some of these patients with chronic conditions have multiple places that they have to go for care. They shouldn’t have to try to manage their own care. Professionals are available to do this.

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