In November of 2020 the Centers for Medicare & Medicaid Services (“CMS”) finalized value- based exceptions under the Stark Law and the Office of Inspector General (“OIG”) finalized value- based safe harbors under the Anti-Kickback Statute, in an effort to accommodate and facilitate the evolution of value-based care arrangements among health care providers. “Value-based care” is the phrase often used to describe health care provided by collaborating health care providers that produces higher quality services while lowering or controlling costs, and at the same time improves the patient experience. Methods of compensating those collaborating providers for producing value-based care is usually called “value-based compensation.” Providers and payors have been experimenting with variations of value-based payment arrangements for several decades, with limited success largely due to regulatory restraints.
Initially efforts toward value-based care were ad hoc arrangements among health care providers or payors to implement value-based care payment arrangements to the extent possible within the existing regulatory framework. Most of the regulatory restraints were applicable to the Medicare Program and other federal payment programs. In 2010, during the Obama Administration, Congress passed the Affordable Care Act (“ACA”). The ACA was the first major federal legislation designed to encourage providers in the Medicare Program to move towards value-based payment arrangements. The ACA provided some limited relief from the regulatory restraints that impacted the Medicare Program, including regulatory waivers for participation in an accountable care organization (“ACO”) or a bundled payment program. However, these waivers were limited in application and did not provide sufficient regulatory modifications to facilitate the healthcare industry, as a whole, to move towards value-based payment arrangements.