Chris Eades: Hello, and welcome to Hall Render’s Virtual Care podcast series. Today’s focus will be value-based enterprise more specifically, how and where value-based enterprise or VBE intersects with the concept of virtual care. My name is Chris Eades. I’m a shareholder here at Hall Render and a member of our firm’s virtual care team. I’m joined today by my fellow shareholder, Alyssa James, who has particular knowledge and experience with value-based enterprise. So Alyssa, before we dive in, why don’t you tell us a little more about you and your practice?

Alyssa James: Thanks, Chris. As Chris mentioned, my name is Alyssa James. I’m a shareholder in Hall Render’s Indianapolis office. My practice focuses primarily on fraud and abuse and regulatory compliance type matters. I work primarily with hospitals and health systems, as well as other types of healthcare organizations on various provider contracting matters, transactions amongst various healthcare organizations, and more complex Stark Law, Anti-Kickback Statute and civil monetary penalty, beneficiary inducement related analysis. In the current value-based landscape, I also work with clients to help them navigate these regulatory frameworks when implementing value-based, risk sharing, and other related arrangements.

Chris Eades: Great. Thanks, Alyssa. So when I look at and think about value-based enterprise at a very high level, 10,000 foot view, to me, there seems to be some clear overlap with the potential advantages of virtual care. We’ve certainly seen those advantages unfold over the pandemic. I think it started with the most obvious, which is the fact that virtual care allows distance in between provider and patient, which has had some obvious advantages during the state of emergency, but we’re also starting to realize, I think some of the other advantages of virtual care such as a better and increased care coordination, better means of patient follow-up, even following up with a patient in the patient’s home, remote patient monitoring, general efficiencies to be gained, and really all of these benefits strike me as very much in line with the operative definition for value-based purpose.

And so I do think it makes sense to really talk about VBE in the context of virtual care. And with that in mind, maybe we could start with you providing just a, kind of a general understanding or giving us a general understanding of what we even mean when we’re talking about value-based enterprise.

Alyssa James: Of course. So when we’re looking at a potential value-based opportunity, I like to frame the various definitions in terms of a who, what, when, where, why, how. Under this type of analysis, the VBE or value-based enterprise itself is the who. VBEs must consist of at least two participants. Those participants can be either an individual or an entity that engages in at least one value-based purpose and collaborate with each other to achieve those value-based purposes. When we’re talking about value-based purposes, those can be one of four things: coordinating and managing care for a target patient population, improving the quality of care for a target patient population, appropriately reducing costs and payer expenditures without reducing the quality of care to the target patient population, and/or transitioning from a volume-based care delivery system and payment mechanism to value-based.

You all may also be wondering what a target patient population is, and I know I jumped sort of from value-based enterprise to value-based participant. When we begin to scratch the surface of the relevant value-based frameworks, the definitions get a bit cyclical because each definition refers to other terms that are defined by the regulation. So bear with me here a little bit as we kind of get into this. But as I was saying, the value-based enterprise has to be engaged in trying to achieve at least one of those value-based purposes that I just mentioned. So in essence the VBE is a consortium of individuals (such as physicians or others) and/or entities (for example, hospitals, physician practices, or other healthcare organizations).

A VBE does not have to be a separate legal entity, but it does need to have an accountable body that’s in control of the VBE. So you don’t have to go out and form a new legal entity or a true joint venture, so to speak. But you do have to kind of come together through a contractual arrangement and allocate who is going to be responsible kind of for governing matters of that value-based enterprise as it works to achieve its goals.

Chris Eades: So, Alyssa, if we distill that down a bit, how would you summarize the general steps required to establish a VBE?

Alyssa James: So at a high level, when we’re looking at this in order to form a VBE, you need to identify the following and who the players are going to be…who your value-based participants are in that VBE. You need to identify the target patient population for which the VBE wants to focus its efforts. So a target patient population can be very broad. It could be all the patients in your health system or all the patients that are discharged from a particular hospital, or it can be very narrowly tailored to a certain diagnosis, a certain zip code, that sort of thing. And when we’re looking at that in that “who, what, when, where” framework the target patient population is the where. So, where are we focusing our efforts?

The “why” would be those value-based purposes that the VBE is going to strive to achieve. The “how” is what activities will the VBE engage in in order to try to move that ball forward, to have that impact on the care coordination or other value-based activities for that patient population. Once you identify all those things, the “who, what, when, where, why” then the parties need to enter into one or more value-based arrangements that spell out those goals of the VBE, any compensation that’s going to flow between the parties and other details of the arrangement to show how it’s structured and how it’s going to be implemented.

Chris Eades: So VBE is obviously a relatively new concept. At this point have you seen health systems, hospitals, or other healthcare providers actively pursuing VBEs or otherwise engaging this process?

Alyssa James: Yes. We’ve been fielding numerous inquiries from clients who are looking to what I’ll call exploring the art of the possible with respect to the VBE framework. I think folks are very excited about it. They’re wanting to kind of see what this framework allows them to do as far as a care coordination collaboration standpoint and how they can really focus in on some of these target patient populations that are applicable to their organization and improve care coordination and patient outcomes. In addition to the creation of VBEs more specifically, I think that these applicable Stark Law exceptions and AKS Safe Harbors that have been implemented under this construct are leading providers and other health care organizations to just generally evaluate other types of risk sharing arrangements or patient incentives that may or may not require the formal formation of a VBE, but fit within that same spirit and framework as care continues to shift from a more volume-based to a value-based model.

Chris Eades: So if we take really that piece of the conversation in terms of what you’ve seen and we talk maybe a little more about where this intersects with virtual care, I know that I’ve seen as part of my practice, the concept of VBE come into play potentially in relation to, or at least a precursor to the provision of telemedicine equipment and platforms by maybe a distant site telemedicine provider to an originating site, location that’s going to be receiving those services. Can you maybe speak to kind of how you might see that come into play in the context of a VBE or maybe some of the potential benefits there?

Alyssa James: Sure. So in addition to the compensation arrangements that may be directly associated of with that VBE’s value-based arrangements, there are certain AKS safe harbors outside of that VBE framework that do lend themselves, I think, to various virtual health activities. For example, there’s a new AKS Safe Harbor for care coordination arrangements that improve quality, health outcomes, and efficiencies. This safe harbor allows for the provision of in kind remuneration. So not monetary compensation, but in kind remuneration amongst VBE participants. So you do still have to form a VBE in order to utilize this AKS Safe Harbor, but under this safe harbor, the recipient of this in kind remuneration can receive something from another VBE participant in the VBE.

The recipient is required to pay at least 15% of the offerors costs for that remuneration, but even so, I think this safe harbor may provide significant flexibility for the provision of virtual health or telemedicine equipment or software, or even staff, maybe for that originating site. If they need a technician or a nurse or something to that effect to help the virtual health platform operate, I think those are all options here under this safe harbor for this VBE to lend some of those things to other participants.

Chris Eades: Alyssa, do you see other potential intersections between VBE and virtual care?

Alyssa James: I do. So I think the intersection here is ripe for opportunity. I think as we’re beginning to scratch the VBE surface, we’re also sort of beginning to just unravel what opportunities are available. But in addition to opportunities amongst VBE participants, which Chris, I know you and I have touched on a little bit already, I think there are other increased opportunities for providing items and services to increase patient engagement. This of course is a very important component of care coordination. We can coordinate as much as we want, but if the patients aren’t buying in or aren’t able to access care, it doesn’t get us very far. And so, for example, there’s another new AKS Safe Harbor for arrangements for patient engagement specifically, this safe harbor is also only available to VBE participants, but it allows the VBE participants to provide in kind items, goods, and services to patients that are valued up to $500 per patient per year, for various patient engagement activities.

So typically when we’re talking about items or services that you can provide to patients, specifically Medicare or Medicaid beneficiaries, the Civil Monetary Penalties Law is much more limiting than that from a dollar value standpoint. But this AKS Safe Harbor allows VBE participants to provide items or services up to $500 per patient, which is huge, I think. And I think that these items and services, although they’re required to have a direct connection to the coordination and management of care of that target patient population that we talked about a little bit earlier, I think it can be a great way to provide maybe necessary technology to patients in order to facilitate their ability to access these virtual care platforms, whether that’s a tablet or increase Wi-Fi in their home, or something to that effect too. I think there’s a lot of opportunities here to make sure that not just that the providers have what they need for this virtual healthcare platform, but that the patients that we’re trying to reach do too.

These safe harbors give a lot of flexibility to VBEs beyond just what’s within the four corners of their value-based arrangements amongst each other.

Chris Eades: That’s a great thought and that will no doubt increasingly come into play. So I appreciate that information. So really at this point, Alyssa, if a health system or a hospital or other type of healthcare provider is interested in pursuing a value-based enterprise, what initial steps would you recommend?

Alyssa James: So I think the first steps are really to think critically about who you want to include, both as fellow participants in your value-based enterprise, as well as what patient populations do you really want to target? Do you want to have some sort of broadly defined target patient population? Do you want to at the outset at least, just focus on a couple of more specific subgroups of patients, whether that’s by disease state or comorbidity or something to that effect? The other thing to keep in mind is an organization or individual can enter into multiple VBEs and value-based arrangements. And so maybe it makes sense to partner with a few folks on one patient population, but then for a different patient population, maybe it makes sense to strategically partner with others. So something to keep in mind there, just kind of really brainstorming who you want to be involved and what patient population you want to target.

And from there, I think developing a plan for the actual arrangement construct and corresponding incentives that will follow, more of your contract terms and things like that. Depending upon the nature of the arrangement, there are different Stark Law exceptions and or AKS Safe Harbors that will be applicable, and each have their own specific set of, as you may imagine, criteria that must be met in order to meet the exception or safe harbor. So once you kind of get that general idea of what the goals are and what you’re trying to achieve, really then putting pen to paper and cross checking that with the applicable exceptions or safe harbors, to make sure that this arrangement is going to be in compliance with this new framework.

Generally speaking, the more significant the downside financial risk that each participant has, the fewer restrictions or burdens there are on the VBE and its participants. Value-based arrangements that don’t have a lot of downside financial risk are going to have a lot more obligations put on the participants, such as monitoring, documenting what is required to be in writing, and annual re-evaluations of whether you’re meeting those metrics. And that sort of goes without saying, right? That the less the downside risks, the more the government is going to make you have to do to prove that you’re not abusing any sort of relationship there. So, just something to keep in mind to make sure that you’re hitting all of those elements that are required for compliance purposes.

Chris Eades: Thank you, Alyssa. That’s helpful information. To our audience, I think we’ll conclude there for today. Thanks for joining us. If you or your organization have questions or topics you would like to share with us, please contact us on our website at hallrender.com or certainly feel free to reach out to me at ceades@hallrender.com or Alyssa at ajames@hallrender.com. As always, please remember that the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thanks so much.

Alyssa James: Thank you everyone.