Comparison Chart of Anti-Kickback Safe Harbors and Stark Exceptions -- Value-Based Arrangements with Meaningful/Substantial Downside Risk

Stark
Stark exception to the referral prohibition related to compensation arrangements that facilitate value-based health care delivery and payment – Value-Based Arrangements with meaningful downside financial risk to the physician 42 CFR 411.357(aa)(2) 

Anti-Kickback
Safe harbor to protect the exchange of anything of value between a VBE and VBE participant or between VBE participants pursuant to a value-based arrangement with substantial downside risk 42 CFR 1001.952(ff) 

A description of the nature and extent of the physician's downside financial risk is set forth in writing.

The value-based arrangement is set forth in writing, is signed by the parties in advance of, or contemporaneous with, the commencement of the value-based arrangement and any material change to the value-based arrangement.

The writing specifies all material terms including:

(i) Terms evidencing that the VBE is at substantial downside financial risk or will assume such risk in the next 6 months for the target patient population;
(ii) A description of the manner in which the VBE participant (unless the VBE participant is the payor from which the VBE is assuming risk) has a meaningful share of the VBE's substantial downside financial risk; and
(iii) The value-based activities, the target patient population, and the type of remuneration exchanged.

The methodology used to determine the amount of the remuneration is set in advance of the undertaking of value-based activities for which the remuneration is paid.

The remuneration is for or results from value-based activities undertaken by the recipient of the remuneration for patients in the target patient population.

The physician is at meaningful downside financial risk for failure to achieve the value-based purpose(s) of the value-based enterprise during the entire duration of the value-based arrangement.

The remuneration provided by, or shared among, the VBE and VBE participant:

(i) Is directly connected to one or more of the VBE's value-based purposes, at least one of which must be a value-based purpose
(ii) Unless exchanged pursuant to risk methodologies defined in this safe harbor, is used predominantly to engage in value-based activities that are directly connected to the items and services for which the VBE has assumed (or has entered into a written contract or value-based arrangement to assume in the next 6 months) substantial downside financial risk;
(iii) Does not include the offer or receipt of an ownership or investment interest in an entity or any distributions related to such ownership or investment interest; and
(iv) Is not exchanged or used for the purpose of marketing items or services furnished by the VBE or a VBE participant to patients or for patient recruitment activities.

The VBE participant (unless the VBE participant is the payor from which the VBE is assuming risk) is at risk for a meaningful share of the VBE's substantial downside financial risk for providing or arranging for the provision of items and services for the target patient population.

The VBE or VBE participant offering the remuneration does not take into account the volume or value of, or condition the remuneration on:

(i) Referrals of patients who are not part of the target patient population; or
(ii) Business not covered under the value-based arrangement.

The remuneration is not exchanged by:

(i) A pharmaceutical manufacturer, distributor, or wholesaler;
(ii) A pharmacy benefit manager;
(iii) A laboratory company;
(iv) A pharmacy that primarily compounds drugs or primarily dispenses compounded drugs;
(v) Except to the extent the entity is a limited technology participant, a manufacturer of a device or medical supply;
(vi) Except to the extent the entity or individual is a limited technology participant, an entity or individual that sells or rents durable medical equipment, prosthetics, orthotics, or supplies covered by a Federal health care program (other than a pharmacy or a physician, provider, or other entity that primarily furnishes services); or
(vii) A medical device distributor or wholesaler that is not otherwise a manufacturer of a device or medical supplies.

The remuneration is not an inducement to reduce or limit medically necessary items or services to any patient.

The value-based arrangement does not induce parties to furnish medically unnecessary items or services, or reduce or limit medically necessary items or services furnished to any patient.

The remuneration is not conditioned on referrals of patients who are not part of the target patient population or business not covered under the value-based arrangement.

If the remuneration paid to the physician is conditioned on the physician's referrals to a particular provider, practitioner, or supplier, the value-based arrangement complies with both of the following conditions:

(A) The requirement to make referrals to a particular provider, practitioner, or supplier is set out in writing and signed by the parties.
(B) The requirement to make referrals to a particular provider, practitioner, or supplier does not apply if the patient expresses a preference for a different provider, practitioner, or supplier; the patient's insurer determines the provider, practitioner, or supplier; or the referral is not in the patient's best medical interests in the physician's judgment.

The value-based arrangement does not:(i) Limit the VBE participant's ability to make decisions in the best interests of its patients;

(ii) Direct or restrict referrals to a particular provider, practitioner, or supplier if:

(A) A patient expresses a preference for a different practitioner, provider, or supplier;
(B) The patient's payor determines the provider, practitioner, or supplier; or
(C) Such direction or restriction is contrary to applicable law under the Medicare or Medicaid programs

Records of the methodology for determining and the actual amount of remuneration paid under the value-based arrangement must be maintained for a period of at least 6 years and made available to the Secretary upon request.

For a period of at least 6 years, the VBE or VBE participant makes available to the Secretary, upon request, all materials and records sufficient to establish compliance with the conditions of this safe harbor.

“Meaningful downside financial risk” means that the physician is responsible to repay or forgo no less than 10 percent of the total value of the remuneration the physician receives under the value-based arrangement

Substantial downside financial risk means:

(A) Financial risk equal to at least 30 percent of any loss, where losses and savings are calculated by comparing current expenditures for all items and services that are covered by the applicable payor and furnished to the target patient population to a bona fide benchmark designed to approximate the expected total cost of such care;
(B) Financial risk equal to at least 20 percent of any loss, where:

(1) Losses and savings are calculated by comparing current expenditures for all items and services furnished to the target patient population pursuant to a defined clinical episode of care that are covered by the applicable payor to a bona fide benchmark designed to approximate the expected total cost of such care for the defined clinical episode of care; and
(2) The parties design the clinical episode of care to cover items and services collectively furnished in more than one care setting; or

(C) The VBE receives from the payor a prospective, per-patient payment that is:

(1) Designed to produce material savings; and
(2) Paid on a monthly, quarterly, or annual basis for a predefined set of items and services furnished to the target patient population, designed to approximate the expected total cost of expenditures for the predefined set of items and services.

Meaningful share means the VBE participant:

(A) Assumes two-sided risk for at least 5 percent of the losses and savings, as applicable, realized by the VBE pursuant to its assumption of substantial downside financial risk; or
(B) Receives from the VBE a prospective, per-patient payment on a monthly, quarterly, or annual basis for a predefined set of items and services furnished to the target patient population, designed to approximate the expected total cost of expenditures for the predefined set of items and services, and does not claim payment in any form from the payor for the predefined items and services.

Manufacturer of a device or medical supply means an entity that meets the definition of applicable manufacturer in 42 CFR 403.902 because it is engaged in the production, preparation, propagation, compounding, or conversion of a device or medical supply that meets the definition of covered drug, device, biological, or medical supply in 42 CFR 403.902, but not including entities under common ownership with such entity.

Target patient population means an identified patient population selected by the VBE or its VBE participants using legitimate and verifiable criteria that:

(A) Are set out in writing in advance of the commencement of the value-based arrangement; and
(B) Further the value-based enterprise's value-based purpose(s).

Value-based activity means any of the following activities, provided that the activity is reasonably designed to achieve at least one value-based purpose of the value-based enterprise:

(1) The provision of an item or service;
(2) The taking of an action; or
(3) The refraining from taking an action

Value-based activity does not include the making of a referral.

Value-based arrangement means an arrangement for the provision of at least one value-based activity for a target patient population to which the only parties are:

(A) The value-based enterprise and one or more of its VBE participants; or
(B) VBE participants in the same value-based enterprise.

Value-based enterprise or VBE means two or more VBE participants:

(A) Collaborating to achieve at least one value-based purpose;
(B) Each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise;
(C) That have an accountable body or person responsible for financial and operational oversight of the value-based enterprise; and
(D) That have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s).

Value-based enterprise participant or VBE participant means an individual or entity that engages in at least one value-based activity as part of a value-based enterprise, other than a patient acting in their capacity as a patient.

Value-based purpose means:

(A) Coordinating and managing the care of a target patient population;
(B) Improving the quality of care for a target patient population;
(C) Appropriately reducing the costs to or growth in expenditures of payors without reducing the quality of care for a target patient population; or
(D) Transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.