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Drug, Device Companies Urge Stronger Value-Based Payment Protections

Posted in Accountable Care Organizations, FDA, Fraud and Abuse, Legislation and Public Policy, Life Sciences, Medical Devices, Medicare and Medicaid, Pharmaceuticals, Reimbursement Matters

A March 21 article in Bloomberg BNA’s Life Sciences Law & Industry Report and other publications discussed the possibility that the existing safe harbors under the federal Anti-Kickback Statute may be modified or expanded to take into account alternative healthcare payment models. Eric Fader was quoted in the article.

A number of pharmaceutical and medical device manufacturers and associations have responded to the annual request by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services for proposals and recommendations for modifying the existing anti-kickback safe harbors, which were created at a time when fee-for-service reimbursement for healthcare services was the norm, or creating new ones. The existing safe harbors do not protect value-based pricing arrangements, which allow for price adjustments based on clinical outcomes, or value-based warranty arrangements, which allow manufacturers to repay providers when expected clinical outcomes aren’t achieved.

Eric told Bloomberg BNA that the OIG will likely work on potential new or modified safe harbors some time this year. “In the current regulatory environment, the likelihood of anything becoming law or adopted in regulation is dependent more than ever on it not offending anyone or triggering a partisan battle, and the value-based safe harbor proposals are generally straightforward and seem like good, constructive ideas,” he said.

Eric pointed out that the Centers for Medicare & Medicaid Services’ adoption of fraud and abuse waivers in 2015 to encourage participation in accountable care organizations demonstrates the federal government’s willingness to adjust long-standing law to accommodate the switch to value-based healthcare delivery and care coordination. “Although safe harbors by definition need not be complied with, their expansion will encourage even the more risk-averse companies to engage in these sorts of discussions,” he added.

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