By Daniel Patten and Jennifer Rangel

In its simplest form, value-based care (VBC) represents a shift from the traditional healthcare delivery model designed around a reimbursement concept tied to quantity of services (i.e., fee-for-service) to one focused on the true quality of the care provided, including an emphasis on the overall health of the patient. This shift offers exciting potential to both patients and providers. VBC-based concepts are designed to promote flexibility and spur innovated approaches.

As providers implement new approaches or models outside the traditional fee-for-service framework, they may find new operational, cultural or legal obstacles that the “standard playbook” does not address. 

Here are five key areas that warrant careful consideration when entering into VBC arrangements.

Anti-Kickback Statute and Stark Law: Developed to combat healthcare fraud and abuse, the federal Anti-Kickback Statute and Stark Law prohibit healthcare providers from offering or accepting financial incentives in exchange for patient referrals or ordering certain healthcare services. In a VBC model, where financial incentives may be tied to improved patient outcomes or shared savings, the arrangement must be carefully structured to ensure compliance with these laws as well as similar state anti-kickback, self-referral and fee-splitting laws. Failure to do so can result in substantial civil and criminal penalties and adverse legal consequences.

Data Privacy and Security: VBC relies heavily on the collection, analysis and sharing of patient data to drive patient care decision-making, assist in the coordination of care and measure outcomes. The increased use of data inherently raises risk regarding data privacy and security. Healthcare organizations must comply with stringent regulations such as the Health Insurance Portability and Accountability Act (HIPAA) to protect patient information as well as state privacy and security laws. Any mishandling or unauthorized access to patient data can lead to reputational damage, legal actions and significant penalties for violating HIPAA.

Risk Adjustment and Coding Accuracy: Accurate risk adjustment is crucial in VBC models to ensure fair compensation based on the severity of patient conditions. There is a risk, however, of intentional or unintentional upcoding or inaccurate coding practices that can result in inflated reimbursement and potential legal liability, including False Claims Act liability. It is essential for healthcare organizations to have robust documentation and coding processes in place to support the accuracy of risk adjustment calculations, including how diagnoses are identified and included in risk adjustment.

Provider Network Arrangements: VBC often involves establishing provider networks or accountable care organizations (ACOs) to coordinate and deliver comprehensive care. The formation of these networks may involve complex contractual arrangements and require compliance with federal and state laws, including antitrust regulations as well as state insurance licensing requirements for acceptance of risk. Healthcare organizations must navigate these many state and federal legal requirements to avoid violations and legal challenges related to anti-competitive behavior or monopolistic practices. In addition, it is vital to structure risk-sharing arrangements in compliance with applicable state insurance laws.

Patient Engagement and Informed Consent: In a VBC model, patient engagement and involvement are critical to achieve desired outcomes. However, implementing patient engagement strategies may raise legal concerns related to informed consent and patient rights. Healthcare providers must ensure that patients are adequately informed about their participation in VBC programs, the potential risks and benefits, and the patient’s right to opt in or opt out. Failure to obtain proper consent or address patient concerns can result in legal disputes and erosion of patient trust. Furthermore, it is vital to ensure that providers participating in VBC models – such as providers providing care coordination and remote patient monitoring – are operating in compliance with any state law requirements applicable to licensing and scope of practice.

While VBC holds promise in transforming healthcare delivery, it is essential to address the associated legal pitfalls. Compliance with laws such as the Anti-Kickback Statute, Stark Law, HIPAA and antitrust regulations, as well as similar state laws including state insurance laws, fraud and abuse laws, fee-splitting rules, and privacy and security laws and regulations, is crucial. Healthcare organizations must also prioritize data privacy and security, ensure accurate risk adjustment, establish compliant provider network arrangements and engage patients while respecting their rights. By proactively addressing these legal challenges, stakeholders can navigate the transition to VBC and contribute to a more efficient and patient-centered healthcare system.

Daniel Patten is a partner in Holland & Knight’s Nashville, Tennessee, office. Jennifer Rangel is a partner in the firm’s Austin, Texas, office.