New proposed rules were issued on October 9th, 2019 to provide more flexibility to healthcare providers entering into value-based payment arrangements.
The Department of Health and Human Services (HHS) along with the Office of Inspector General (OIG), governing the Anti-kickback Statue and Civil Monetary Penalty, and the Centers for Medicare and Medicaid Services (CMS), governing the Stark Law, were the agencies responsible for taking major steps to transform provider alignment models. These agencies are seeking comments to facilitate the healthcare industry’s movement from fee for service to value-based care. In the combined 719 pages of discussion, Fair Market Value (FMV) is mentioned 186 times! New potential definitions and parameters around how both FMV and commercially reasonable are determined are discussed at length.
Redefining the healthcare industry’s rules for how FMV is established at this point in history makes a lot of sense. The old rules prohibited, in many ways, collaboration. This limits the success for coordinated care which is paramount to lowering cost and improving quality. Since aligning physicians is critical to coordinating care, a shift in acceptable payment arrangements, and how physicians interact with other parts of a patient’s continuum of care must change. Meanwhile, payments must still be FMV to prevent fraud and abuse related to directing referrals.
The previous regulatory guidelines made innovative strategies seem risky and administratively burdensome. Further, the government defined FMV and CR in ways that could be roadblocks to coordinated care. Therefore, some of their historical guidelines fundamentally make the move to value-based care challenging, which has been the catalyst for these new proposed rules. Although, anyone who has substantial experience in the healthcare industry understands proposed rules are just that – proposed.
That said, many of these concepts will stick. Numerous comments specifically address Safe Harbors which are a provision that provides protection, or may reduce liability or penalty, under specific situations. The following are a few of the more likely changes related to FMV that could fundamentally change how healthcare executives pursue new alignment strategies and their FMV policies.