As hospitals and physicians increasingly move toward value-based care and take on risk in contracts, they need to work together more closely.

However, the regulatory structure in the industry hasn’t been changed over the years to support that level of collaboration. Current regulations are structured to prevent collusion between vendors or to ensure that organizations don’t offer incentives to referring clinicians to admit patients for care.

The way providers currently are paid does not support hospitals and physician practices in implementing the shared electronic health record infrastructures that are needed to support coordinated care, the American Hospital Association notes in a new report.

“Public and private payers are using financial incentives to drive behavior to achieve quality outcomes, clinical efficiencies and cost savings—the goal of value-based models,” according to AHA. “At the same time, the legal framework controlling how, if at all, hospitals can share the risks and rewards has remained static.”

In the report, AHA calls for the modernization of laws governing financial collaboration to enable hospitals to subsidize start-up IT costs for physicians, to bring regulations into line with current market realities.

Three core laws governing fraud and abuse in the healthcare industry—The Anti-Kickback Statute, Stark Law and Civil Monetary Penalty Laws—have become key impediments to collaboration, according to AHA. These rules were intended to prevent financial relationships between providers, seeking to ensure that various types of providers performed patient care in separate, distinct and uncoordinated ways, with each provider being paid separately based on services provided, the report states.

Existing laws presumed that any shared financial incentive was suspect. Now, new alternative payment models have advanced “only because Congress authorized and the HHS Secretary has repeatedly issued waivers of the fraud and abuse laws,” the hospital association notes.

In particular, the Stark Law has become increasingly unnecessary and a significant impediment to valued-based care that Congress, Medicare, Medicaid and commercial insurers are promoting, according to the report. “The risk of overutilization, which drove the passage of the Stark Law, is largely or entirely eliminated in alternative payment models.”

Further, current oversight of compensation arrangements is for an outmoded system where physicians were self-employed, hospitals were separate entities and the payment system treated them as operating in distinct silos. “It micromanages the circumstances in which a compensation arrangement is permitted, the amount paid and the manner in which compensation is calculated,” according to AHA.

This outmoded system also affects health information technology initiatives to support value-based care, the association contends.

“The fraud and abuse laws place unreasonable constraints on how hospitals may finance the needed infrastructure,” the AHA report contends. “Any financial support by a hospital for establishing the shared infrastructure creates a financial relationship under Stark and is remuneration under the Anti-Kickback Law.”

For example, current rules enabling hospitals to provide an EHR to other clinicians do not enable the hospital to bear the full cost. Physicians must pay part of the cost, regardless of the contribution they make to a collaborative initiative. Hospitals also cannot provide data analytics tools to help physicians make treatment decisions. Because infrastructure investments are a starting point for adopting new payment models, AHA calls for the Stark and Anti-Kickback Laws to be modernized to enable hospitals to subsidize start-up costs for physicians.

AHA further asks for adjustments to many other regulatory barriers covering care teams. Those restrictions include using non-physician practitioners; providing care coordination when a patient leaves the hospital; assisting patients with discharge planning; and prohibiting certain types of financial assistance to patients, such as transportation vouchers or in-kind contributions such as a meal scale. The report, which includes several examples of how coordinated care can improve outcomes if barriers are lifted, is available here.

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