Pharmaceutical Manufacturers And Healthcare Leaders Cite Fraud And Abuse Laws As Obstacle To Value-Based Arrangements

As the healthcare industry moves towards value-based purchasing, pay-for-performance, and other payment reform models, industry leaders have identified federal fraud and abuse laws as a barrier to full implementation of such models. Last month, the Health Care Leadership Council released a White Paper entitled "Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral ("Stark") Law to Foster Integrated Care Delivery and Payment Models" ("HCL White Paper"), identifying current fraud and abuse laws as impeding transformation of the healthcare system. Pharmaceutical and device manufacturers have also taken advantage of the OIG's Solicitation of New Safe Harbors and Special Fraud Alerts ("OIG Solicitation") to advocate for more flexible fraud and abuse laws with respect to value-based arrangements.

The HCL White Paper focuses on the complexity of the fraud and abuse laws and how the severe penalties associated with such laws may be preventing parties from engaging in value-based arrangements. It also outlines potential regulatory and legislative changes to the Anti-Kickback Statute ("AKS") and Stark Law that could facilitate payment reform models. Examples of regulatory and legislative proposals set forth in the HCL White Paper include:

Extending the Medicare Shared Savings Program ("MSSP") for Accountable Care Organizations ("ACOs") to all alternative payment models participating in CMS-specific demonstrations and programs. Issuing new safe harbors or guidance to protect activities focusing on integrating and coordinating care. Revising the Stark Law penalties so that a violation of the Stark Law is not an automatic violation of the False Claims Act. Removing strict liability from the Stark Law and replacing it with an intent-based liability mechanism. Clarifying...