On Friday, November 20, 2020, the Office of the Inspector General for the Department of Health & Human Services (“OIG”) released a Final Rule aimed at reducing regulatory barriers and facilitating the move towards value-based care. This Final Rule gives healthcare providers and digital health companies more flexibility to enter into new business arrangements that incentivize care coordination and patient engagement as a means of improving outcomes and reducing the overall cost of care.

Nixon Gwilt Law will be taking an in-depth look at the various provisions of this Final Rule in separate articles, but below is a high-level overview of the Rule and what it may mean for the future of healthcare.

New and Revised Safe Harbors under the Anti-Kickback Statute

The OIG Final Rule titled “Revisions to Safe Harbors under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements” is 1,049 pages long and creates seven entirely new safe harbors while modifying four of the pre-existing safe harbors, all in the name of allowing more effective coordination and management of patient care. The OIG Rule is centered around the notion of protecting “value-based arrangements” aimed at improving healthcare quality, outcomes, and efficiency. These new business arrangements are created through a vehicle called a “value-based enterprise” or “VBE,” whereby two or more “VBE participants” – which may include individual physicians/providers, various types of healthcare entities, and digital health companies – identify a specific target patient population and work together to coordinate care, improve quality, reduce costs, and/or transition from the Fee-For-Service model to a value-based model of care for that patient population. Such arrangements, which might typically be found in violation of the Anti-Kickback Statute, are eligible for protection under the new or modified AKS safe harbors.

A brand-new role for Digital Health companies in the era of Value-Based Care

These new protections allow players in the digital health space – including Remote Patient Monitoring companies, telehealth companies, and healthcare predictive analytics platforms – to take on an unprecedented role in helping healthcare providers move the needle on patient outcomes and costs by providing in-kind and even monetary remuneration to these providers in the form of free or reduced cost items/services or shared savings arrangements. The value-based safe harbors do not include the traditional requirement of Fair Market Value for goods/services or the prohibition against taking volume or value of referrals into account. For example, under one of the new safe harbors, a remote patient monitoring company could create a VBE and enter into value-based arrangements to provide participating healthcare providers with an embedded clinical staff member at no cost to the providers to help identify, onboard, and monitor patients in an RPM program.

The Six New AKS Safe Harbors

Care Coordination Safe Harbor (no assumed financial risk)

This is one of three new “valued-based safe harbors,” permitting in-kind remuneration exchanged among VBE participants for the purpose of coordinating and managing patient care activities. This remuneration may take the form of digital health technology provided by digital health companies, who are eligible as VBE participants. The VBE participants need not assume any financial risk in order to be protected by this safe harbor.

Safe Harbor for value-based arrangements with substantial financial risk

This value-based safe harbor protects in-kind AND monetary remuneration for items/services among VBE participants who are assuming substantial financial risk in their value-based arrangement. For example, a hospital VBE participant could share savings with a medical practice VBE participant for care of a target patient population.

Safe Harbor for value-based arrangements with full financial risk

This value-based safe harbor allows greater flexibilities for in-kind and monetary remuneration among VBE participants who are assuming full financial risk in their value-based arrangement; e.g. greater flexibility comes with greater assumption of risk. To be protected under this safe harbor, the VBE must implement a Quality Assurance program to protect against underutilization of items/services.

Patient Engagement and Support Safe Harbor

This new safe harbor pertains to patient engagement tools and support provided by a VBE participant to a patient in the target patient population. It includes a pathway for medical device and supply manufacturers – entities who are otherwise for the safe harbor protection – to provide digital health technology to patients.

CMS-sponsored models Safe Harbor

This new safe harbor applies to CMS-sponsored payment and delivery models and patient incentives that would otherwise require separate fraud and abuse waivers. The goal here is to provide greater predictability for participants and uniformity across models.

Cybersecurity Technology and Services Safe Harbor

The goal of this new safe harbor is to facilitate better cybersecurity in healthcare entities, allowing for remuneration in the form of cybersecurity technology and services.

Modifications to Existing Safe Harbors

Electronic Health Records Safe Harbor modification

The Final OIG Rule makes changes to update and remove provisions regarding interoperability, remove the sunset provision and prohibition on donation of equivalent technology, and clarify protections for cybersecurity technology and services included in an electronic health records arrangement with providers.  

Personal Services and Management Contracts Safe Harbor modification

Rather than requiring that the specifics of an arrangement involving personal services and/or management services to be set forth in detail and for a set period of time in a contract, this modification allows flexibility for part-time or sporadic arrangements and for arrangements where the aggregate compensation for services rendered is not known in advance.

Warranties Safe Harbor modification

This modification revises the definition of “warranty” and provides protection for warranties for one or more items and related services.

Local Transportation for Beneficiaries Safe Harbor Modification

This modification expands the mileage limitations for beneficiaries in rural areas to 75 miles, while eliminating mileage limitations for transporting discharged beneficiaries from the hospital to their place of residence. Transportation by ride share arrangements is permitted. 

Modification to the ACO Beneficiary Incentives Program under the MSSP

This modification provides a statutory exception to the definition of “remuneration” as it relates to the Medicare Shared Savings Program.

New Exception to the Beneficiary Inducements Civil Monetary Penalty

Telehealth Technologies for In-Home Dialysis Patients

The Final Rule creates an exception to the Beneficiary Inducements Civil Monetary Penalty for providing telehealth technologies for in-home dialysis patients. 

The Big Take Away

The COVID-19 pandemic necessitated significant changes to the healthcare regulatory landscape and created an inflection point for digital health and healthcare innovation in the U.S.  Major changes to the AKS and Civil Monetary Penalty regulations as announced in this Final Rule will continue the momentum in digital health and facilitate the shift to value-based care. 

To explore how these changes may benefit your digital health company or healthcare provider entity, please contact us for a consultation.