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.