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Navigating Value-Based Care in Anesthesia: Enhancing Patient Outcomes Amid Legal Complexities

Value-based care (VBC) is a healthcare delivery model that prioritizes patient outcomes over the volume of services provided. This approach aims to enhance the quality of care while controlling costs by incentivizing healthcare providers to focus on delivering efficient, effective, and patient-centered care. The Centers for Medicare & Medicaid Services (CMS), state Medicaid agencies, and private payers have developed specific ways to implement VBC through what is often referred to as alternative payment models (APMs), including Accountable Care Organizations (ACOs), bundled payments, and penalty-based models. However, anesthesia providers are still in the midst of adopting value-based care reimbursement and advocating for CMS to be included in innovative models. This article looks at value-based care options for anesthesia providers, important metrics to consider when considering these arrangements, and legal considerations for contracting in this space.
 
Main Goals of Value-Based Care (VBC) in Healthcare
 
The primary goals of value-based care (VBC) in healthcare are to improve patient outcomes, enhance the quality of care, and reduce healthcare costs. VBC models prioritize patient-centered care by focusing on the following key objectives[I]:

1. Improving Patient Outcomes: Achieve better health outcomes by emphasizing preventive care, chronic disease management, and evidence-based practices.
2. Enhancing Quality of Care: Incorporate quality metrics to ensure that healthcare providers deliver safe, effective, and patient-centered care.
3. Reducing Healthcare Costs: By incentivizing efficient care delivery and minimizing unnecessary procedures, VBC seeks to control and reduce overall healthcare expenditures.
4. Promoting Care Coordination: Encourage collaboration among healthcare providers to ensure seamless and coordinated care across different settings and specialties.
5. Increasing Patient Satisfaction: VBC models emphasize patient engagement and satisfaction, ensuring that patients are active participants in their care decisions. 

Categories of APMs

Over the years, anesthesia practices have faced significant reimbursement cuts, primarily due to the traditional fee-for-service (FFS) model, which compensates providers based on the quantity of services rendered rather than the quality of care. This model has been criticized for incentivizing unnecessary procedures and tests, leading to escalating healthcare costs. In response, the healthcare industry is transitioning to VBC-APM models, which offer several reimbursement structures:
 
Bundled Payments and Incentives for Efficient and High-Quality Care in Anesthesia
 
Under this model, anesthesiologists, surgeons, hospitals, and other care providers involved in a procedure share a single reimbursement that covers the entire spectrum of care, from preoperative evaluations to postoperative follow-ups. This approach incentivizes efficient, high-quality care by aligning financial incentives with patient outcomes.[ii] However, it requires robust data analysis and coordination among care providers, which can be challenging for smaller institutions.

Bundled payments incentivize efficient and high-quality care in anesthesia through several mechanisms[iii]:

1. Alignment of Financial Incentives: By providing a single payment for an entire episode of care, bundled payments align the financial incentives of all involved providers. This encourages collaboration and coordination to deliver high-quality care efficiently.
2. Reduction of Unnecessary Services: Providers are incentivized to eliminate unnecessary tests and procedures that do not contribute to improved patient outcomes, thereby reducing overall costs.
3. Focus on Patient Outcomes: The fixed payment structure motivates providers to focus on achieving the best possible patient outcomes, as poor outcomes or complications can increase costs and reduce profitability.
4. Encouragement of Best Practices: Bundled payments promote the adoption of evidence-based practices and protocols to optimize patient care and recovery.

Accountable Care Organizations (ACOs)
 
ACOs are groups of healthcare providers who voluntarily collaborate to deliver high-quality care to their patients, particularly those enrolled in Medicare. Providers are incentivized to meet specific quality and performance targets, with shared savings programs offering financial rewards for achieving cost and quality benchmarks. [iv] The formal establishment and regulation of ACOs began with the passage of the Affordable Care Act (ACA) in 2010 and ACOs are still mainly driven by CMS participation. ACOs remain directed predominantly toward primary care. As a result, anesthesiologists and specialists, in general, do not have as much of a role in ACOs.[v]  
 
Penalty-Based Models
 
These models impose financial penalties on participants with high readmission rates for certain conditions. Besides reducing readmissions, the goals of these models include[vi]:

1. Improving Care Coordination: Encouraging better coordination of care during and after hospital discharge, ensuring that patients receive appropriate follow-up care and support.
2. Enhancing Patient Outcomes: Reducing readmissions is associated with better patient outcomes, as it indicates that patients are receiving effective care and are less likely to experience complications or relapses.
3. Promoting Accountability: Through holding participants accountable for the quality of care they provide, the model incentivizes them to implement strategies to prevent readmissions and improve overall care quality.
4. Reducing Healthcare Costs: Preventing unnecessary readmissions helps to lower healthcare costs by avoiding the expenses associated with additional hospital stays and treatments. 

Again, the model types are general categories. Each individual arrangement entered can come with its own contractual requirements that are not listed above.
 
American Society of Anesthesiologists on VBC
 
The American Society of Anesthesiologists (ASA) is a strong advocate for value-based care, emphasizing the importance of high-quality, cost-effective healthcare. ASA believes that anesthesia providers play a crucial role in achieving these goals due to their expertise in perioperative care and patient safety.[vii] They are responsible for preoperative assessments, intraoperative management, and postoperative care, making them key players in care coordination and patient safety. ASA has been actively involved in developing guidelines and initiatives to help anesthesiologists adopt value-based care practices. For instance, ASA's Perioperative Surgical Home (PSH) model is designed to improve care coordination, enhance patient outcomes, and reduce costs.[viii] This model has been implemented in several hospitals, demonstrating significant improvements in patient satisfaction and financial savings. ASA also has developed guidelines around evidence-based practices that align with value-based care principles. These efforts include targeted preoperative screenings, postoperative delirium prevention strategies, and enhanced recovery protocols.[ix] 
 
ASA has engaged with the CMS to advocate for the inclusion of anesthesiologists and APMs that focus on VBC. In 2024, ASA offered qualified support for the Transforming Episode Accountability Model (TEAM) episode-based payment model proposed by CMS that is mandatory for specific hospitals. [x] The organization agrees with the model's principles, such as better care coordination and improved patient outcomes. ASA emphasized to CMS in public comment the need for anesthesiologists to be included in financial arrangements and decision-making processes within the TEAM model.[xi] The organization argued that anesthesiologists are often excluded from APMs despite their significant contributions to patient care and cost savings.[xii] Unfortunately, CMS did not revise the model to allow for anesthesia provider involvement. However, VBC arrangements can still be pursued with commercial insurers and other private entities.
 
Incorporating Value-Based Care into Perioperative and Postoperative Care
 
In the context of anesthesia, VBC models frequently are incorporated into perioperative and postoperative care. Below are highlighted specifically where anesthesia providers have the potential to incorporate VBC metrics and analytics.
 
Preoperative Optimization: Anesthesiologists engage in preoperative assessments to identify and mitigate potential risks, optimize patient health, and develop personalized care plans. This includes managing chronic conditions, addressing nutritional deficiencies, and implementing opioid-sparing techniques. Perioperative medicine is a multi-disciplinary approach that encompasses the entire continuum of care for patients undergoing surgery, interventions, or invasive procedures. The goal of perioperative medicine is to improve patient outcomes and reduce morbidity and mortality rates throughout the perioperative period. Perioperative medicine emphasizes coordination among anesthesiologists, surgeons, nurses, specialists, and other medical professionals involved in any phase of perioperative care.[xiii]
 
Postoperative Care: Enhanced Recovery After Surgery (ERAS) Protocols pathways integrate evidence-based practices across the entire surgical journey, from preoperative preparation to postoperative recovery.[xiv]  These protocols aim to optimize patient outcomes, reduce recovery times, and minimize hospital stays. Anesthesiologists play a crucial role in implementing ERAS protocols by managing anesthesia, pain, and symptoms throughout the perioperative period.
 
Legal Challenges in Adopting VBC

A legal reason for adopting VBC is to allow certain flexibilities under laws that are not commonly found. However, VBC models present several legal challenges for anesthesia practices in upfront compliance planning to meeting Stark, Anti-Kickback Statute (AKS), and traditional contractual considerations.
 
Compliance with Stark and AKS
 
The shift to VBC involves financial incentives that can potentially conflict with existing fraud and abuse laws, such as Stark Law and the AKS. These laws were designed to prevent financial considerations from influencing medical decision-making.
 
The Stark Law, also known as the Physician Self-Referral Law, prohibits physicians from referring Medicare patients for designated health services (DHS) to an entity with which the physician or their immediate family member has a financial relationship unless an exception applies.[xv] Violations of the Stark Law can result in significant penalties, including denial of payment for services, refunds of amounts collected, and civil monetary penalties. It is important to note this is a strict liability statute and intent is not considered for violations.
 
The AKS is a federal law that prohibits the exchange of remuneration—anything of value—with the intent to induce or reward referrals for services or items reimbursable by federal healthcare programs, such as Medicare and Medicaid.[xvi] It is also a criminal statute, meaning that violations can result in severe penalties, including retraction of federal payments, fines, exclusion from federal healthcare programs,  imprisonment, and exclusion from federal healthcare programs.[xvii] The AKS specifically prohibits offering, paying, soliciting, or receiving any remuneration. This includes any form of payment, whether direct or indirect, overt or covert, in cash or in kind.[xviii] The statute targets arrangements where remuneration is intended to induce referrals of patients or the purchase, lease, or order of any item or service that may be paid for by a federal healthcare program. The AKS is an intent-based statute where the conduct is done "knowingly and willfully."[xix] This means that the person must have acted with knowledge and intention for at least one purpose of the remuneration was to induce referrals or generate business reimbursable by federal healthcare programs.[xx] The statute does not require proof that the defendant had specific intent to violate the AKS itself. Instead, it requires that the defendant intended to engage in conduct that is prohibited by the statute.
 
To provide clarity and protection for certain business arrangements that could otherwise be subject to scrutiny under Stark and AKS, the Department of Health and Human Services (HHS) has made certain revisions to the laws to allow for VBC which will be discussed under “Possible Exceptions and Safe Harbors for VBC” below.
 
Required Value-Based Definitions
 
To understand and apply the value-based exceptions and safe harbors, it is essential to grasp the following definitions and ensure these are satisfied prior to implementing a VBC arrangement to meet any protections under Stark and AKS these definitions must met. The definitions are mostly the same for both Stark and AKS.[xxi]

1. Value-Based Purpose (VBP): Includes coordinating and managing the care of a target patient population, improving the quality of care, appropriately reducing costs without reducing quality, and transitioning to payment mechanisms based on quality and cost control. 
2. Value-Based Activity: An activity reasonably designed to achieve a value-based purpose, which can include the provision of an item or service, taking an action, or refraining from taking an action.
3. Value-Based Arrangement: An arrangement for the provision of at least one value-based activity for a target patient population between the VBE and one or more of its participants or among VBE participants. 
4. Value-Based Enterprise (VBE): Two or more participants collaborating to achieve at least one value-based purpose, with an accountable body or person responsible for financial and operational oversight and a governing document describing the VBE and its value-based purpose(s). 
5. Target Patient Population: An identified patient population selected by a VBE or its participants based on legitimate and verifiable criteria set out in writing in advance of the commencement of the value-based arrangement.

CMS and OIG Interpretations of Definitions
 
CMS provides more flexibility for Stark Law exceptions, given its strict liability standard. The Stark Law exceptions are designed to protect physician compensation arrangements that align with value-based purposes, even if they do not involve significant financial risk. CMS also noted that a VBE can be an informal affiliation and the definition of a VBE is meant to encompass a wide range of structures.[xxii] OIG's safe harbors under the AKS are more restrictive, reflecting the intent-based nature of the statute. The safe harbors are designed to protect arrangements that involve significant financial risk-sharing and are directly connected to value-based purposes. OIG emphasizes the importance of ensuring that remuneration does not induce referrals or limit medically necessary services.
 
Generally, CMS gives flexibility for Stark Law exceptions, as the statute has strict liability. OIG leans more restrictive for AKS as it is an intent-based statute and not meeting a safe harbor doesn’t have automatic liability.
 
Possible Exceptions and Safe Harbors for VBC
 
There are specific exceptions (for Stark) and safe harbors (for AKS) under which VBC arrangements do not implicate Stark and AKS. Additionally, a number of the traditional aspects of exceptions and safe harbors that restrict payments don’t apply, such as the ones below:
 

• The requirement that an arrangement be set at fair market value.
• The requirement that compensation or other remuneration be set in advance.
• Broad prohibitions against directed referrals of patients.
• Broad prohibition on remuneration taking into account the volume or value of referrals.

 
Below are the specific categories that the exceptions and safe harbors fall under and how they can be used. Note, that the below does not detail every requirement that is needed to fulfill these protections.

1. Limited or No Risk Share Arrangements[xxiii]

• AKS Care Coordination Arrangements- This safe harbor protects nonmonetary, or “in-kind”, remuneration that furthers patient care coordination purposes. This safe harbor requires no assumption of downside risk by parties to a value-based arrangement. A special requirement for this safe harbor is the recipient pay 15 percent of either the offeror’s cost or the fair market value of the in-kind remuneration. 
• Stark Value-Based Arrangements- This exception protects individual physician and group practice compensation arrangements, regardless of the level of risk undertaken through the arrangement.

2. Substantial/Significant/Meaningful Risk Share Arrangements[xxiv]

• AKS Value-Based Arrangements with Substantial Downside Financial Risk- This safe harbor protects both monetary and in-kind remuneration offering greater flexibility in recognition of the assumption of This safe harbor requires the value-based enterprise (VBE) to take on defined percentages of downside risk. 
• Stark Meaningful Downside Risk- This exception protects both the physician and VBE from paying a remuneration when there is significant downside financial risk. It is important to make this apparent in the agreement documents.

3. Full Financial Risk Share Arrangements[xxv]

• AKS Value-Based Arrangements with Full Financial Risk- Safe harbor is intended to protect arrangements (including in-kind and monetary remuneration) where there is “full financial risk” for a target patient population. 
• Stark Full Financial Risk Exception- Exception applies only to arrangements that involve a VBE taking on full downside risk in a value-based arrangement with an applicable payer. However, it does not require a physician participating in the arrangement to also assume financial risk. 

 
Both OIG and CMS requirements have that the remuneration within a value-based arrangement not be conditioned on referrals of patients who are not part of the target patient population or businesses not covered under the value-based arrangement. It is important to understand that this means that the VBC safe harbors and exceptions do not protect arrangements where one or both parties have made referrals or other businesses not covered by the value-based arrangement as a condition of the remuneration.
 
The Gainsharing Civil Monetary Penalties Law (Gainsharing CMPL)
 
Another item to consider in setting up a VBC arrangement is the Gainsharing CMPL, which prohibits hospitals from making payments to physicians as an inducement to reduce or limit medically necessary services provided to Medicare and Medicaid beneficiaries.[xxvi] Violations of the Gainsharing CMPL can result in significant civil monetary penalties as penalties for violating the Gainsharing CMPL can include civil monetary penalties ranging from $5,000 to $10,000 which may be assessed based on each patient who was involved in the prohibited arrangement.[xxvii] Initially, the Gainsharing CMPL broadly banned any payments that could incentivize physicians to reduce or limit services. However, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) revised the Gainsharing CMPL to focus on inducements that might lead to reductions in "medically necessary" care.[xxviii] This change opened the door for certain gainsharing arrangements that align with value-based care principles, provided they are structured to avoid reducing medically necessary care.

The Office of Inspector General (OIG) has issued several advisory opinions providing guidance on structuring gainsharing arrangements to comply with the Gainsharing CMPL[xxix]. Key considerations include:

1. Establish Regular Monitoring: OIG favors the establishment of monitoring committees that actively take measures to correct activities that try to cheery pick patients or lessen medically necessary care.
2. Credible Medical Evidence: Arrangements should be supported by credible medical evidence demonstrating that they are likely to enhance patient care without adverse effects.
3. Transparency and Accountability: Metrics and compensation structures should be clearly defined, and patients should be notified of the arrangement.
4. Safeguards Against Reducing Necessary Care: Arrangements should include safeguards to ensure that financial incentives do not lead to reductions in medically necessary services. This includes monitoring and tracking performance, prohibiting cherry-picking of patients, and maintaining documentation of services and costs. 

Other Contractual Issues
 
Establishing VBC arrangements requires careful drafting of contracts to ensure compliance with legal requirements and to address potential risks, such as under-treatment or cherry-picking healthier patients. Contracts should include detailed coverage grids, specifying the number of anesthetizing locations, coverage hours, and call requirements. Provisions for expanding or reducing coverage, mutual decision-making for changes, and sufficient notice for staffing adjustments are also important. Hospitals now expect anesthesia groups to participate in a wide range of activities beyond providing anesthesia care, such as operating room management, quality improvement programs, and developing new service lines. These additional responsibilities often require more anesthesia providers, further straining resources if not contemplated in the planning phases. Lastly, both the anesthesia provider and hospital or ambulatory surgery center deciding the metrics to benchmark and establish the VBE and purpose should put considerable analysis into deciding the metrics to justify the Value-Based Activity and overall arrangement. Using the areas listed under “Incorporating Value-Based Care into Perioperative and Postoperative Care” previously in the article, metrics commonly used in anesthesia value-based arrangements include:
 

• Reasons for case cancellations.
• Average recovery times by procedure type. 
• Operating room turnover times.
• Patient satisfaction scores.
• Unusual occurrences.
• Hospital transfers.
• Patient callbacks.
• Postoperative pain and nausea/vomiting. 

 
This list is not comprehensive but examples. These metrics indicate items that could possibly benchmarked and help identify opportunities for improvement across the clinical workflow. However, whatever metrics are incorporated in the arrangement must justify the VBP.

Best Practice Tips
 
Transitioning to VBC in anesthesia offers the potential for improved patient outcomes and cost savings. However, it also presents significant legal challenges that require careful consideration and compliance with existing laws. By understanding the legal landscape and incorporating OIG guidance, anesthesia practices can navigate the complexities of VBC and achieve success in this evolving healthcare environment.
 
To comply with the Stark, AKS, and Gainsharing CMPL, anesthesia value-based care arrangements should incorporate the following elements:

1. Alignment with Safe Harbors: Ensure that the arrangement meets the conditions of relevant safe harbors. Involve legal counsel early to help determine if an arrangement meets all requirements of the safe harbors and exceptions, all of which are not detailed in this article.
2. Monitoring Committee: Establish a program committee to monitor and track the arrangement for regular oversight.
3. Inform Patients: For any patient seen as part of the arrangement, consider giving them written notice of the arrangement before the patient is admitted to the hospital.
4. Clear and Transparent Metrics: Define performance metrics clearly and ensure they are based on credible medical evidence. Metrics should focus on improving quality and efficiency without compromising patient care. Metrics must also clearly relate to the VBP.
5. Documentation: Maintain detailed records of services provided, costs incurred, and savings achieved. This documentation is crucial for demonstrating compliance and transparency. Create detailed written agreements that outline the value-based purpose, activities, target patient population, and remuneration methodology.
6. Avoiding Cherry-Picking: Ensure that the arrangement does not incentivize the selection of healthier patients or the avoidance of sicker patients. Implement safeguards to monitor patient selection and address any issues.
7. Maintain Records: Keep comprehensive records of the methodology for determining remuneration and the actual amounts paid, and make these records available for review by regulatory authorities. Note, that Stark and AKS have language regarding record keeping.
8. Ensure Commercial Reasonableness: Ensure there is language in the agreements that all arrangements are commercially reasonable and do not induce referrals or limit medically necessary services.
9. Engage in Corrective Actions: Audit records on a regular schedule. Develop and implement corrective action plans if monitoring indicates that the arrangement is not achieving its value-based purposes or is resulting in deficiencies in quality of care.
10. Data Analytics: It is crucial in the planning phases to decide metrics to have reliable data about metrics an anesthesia provider can support and metrics the hospital or ambulatory surgery center is looking to improve. To determine corrective action and maintain legal compliance with safe harbors and exceptions, data demonstrating the progress over time must be well maintained.

Incorporating additional medical specialties into VBC is more unchartered territory than for primary care and general medical providers, but with proper planning, VBC has the potential to relieve some financial stressors anesthesia providers have been experiencing with traditional reimbursement models. If you have questions about starting or entering into a value-based arrangement, please reach out to Rachel Carey at rcarey@whitefordlaw.com.