Using a Value-Based Enterprise to Effectively Provide Value-Based Care

Reimbursement reform is a continuing effort by the Center for Medicare Services (CMS) to transition payments from fee-for-service to value-based payment mechanisms. CMS aims to move 100% of traditional Medicare beneficiaries and most Medicaid beneficiaries to some form of value-based payment arrangement by 2030. A value-based payment reflects the concept of the payment for a medical service being determined based on the quality and efficiency of the service rendered by a provider. More and more financial incentives are arising to draw providers to value-based payment arrangements. The lure to providers is to make more money when they provide high-quality services at lower costs. The ultimate transition from fee-for-service payments requires the providers to be responsible for delivering higher quality, more efficient services, making the payments they receive dependent on the outcomes they achieve.

Regulatory requirements governing Medicare and other government payment programs can be harsh and dangerous for providers that violate prohibitions concerning the government’s payment for medical services. These prohibitions include prohibiting payment to a party referring Medicare beneficiaries (the so-called Anti-Kickback Statute), and prohibiting physicians from maintaining certain financial relationships with entities to which they refer Medicare beneficiaries (the so-called Stark Law). The penalties for violating the Anti-Kickback Statute and Stark Law are draconian. They can put providers out of business if they do not comply with these legal requirements. In addition, these regulatory requirements inhibit models and arrangements that facilitate value-based payment arrangements. For value-based payment systems to succeed, providers must aggregate in models where they collaborate around patient service protocols and care pathways designed to develop high-quality and efficient outcomes. Financial incentives are necessary to encourage providers to refer to high-quality providers to achieve these outcomes and allow them to reap the rewards of participating in a system that encourages high-quality care. These needed financial incentives can be problematic under or outright violate the Anti-kickback Statute and the Stark Law.