Op-Ed: Federal Law Must Be Modernized to Foster Value-Based Payment in Health Care

Dean J. Paranicas | November 1, 2019 | Opinion
Physicians need greater flexibility to achieve better health outcomes for their patients
Dean Paranicas

All across New Jersey, leaders in health care, the biopharmaceutical and medical technology industries, associated industries and our state’s academic health care community are talking about the move to value-based payment for health care services.

The Affordable Care Act, which expanded access to health care coverage, also initiated fundamental, positive changes in how health care is delivered in this country, including the move toward a value-based payment system. The concept entails paying hospitals and physicians not for how many services they deliver, but rather for the value of those services and how well they help patients achieve and maintain good health.

There are obstacles, though, that are keeping this important objective from being achieved.

A volume-to-value transformation of our health care system requires physicians, hospitals, insurers, drug and device manufacturers, pharmacies and others to collaborate in coordinating patients’ care. Rather than simply pay for more tests, office visits and procedures, financial incentives should be used to achieve better health outcomes. The problem, however, is that these working arrangements are often impeded by outdated federal regulations on fraud and abuse. We need Congress and federal regulators to modernize these laws in order to achieve the full beneficial potential of the ACA.

The two pertinent federal statutes, which are the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute, were enacted to prevent and punish abuses in health care’s fee-for-service era, with the aim of blocking referrals and financial transactions that were performed for profit rather than the patient’s well-being. At a time when collaboration increasingly is essential to improving patient care, these laws can do more harm than good.

For example, consider a physician who has privileges at a particular hospital. That hospital, in order to reduce emergency-room visits and unnecessary readmissions, encourages the physician to establish a multidisciplinary team involving a social worker, dietician, advanced practice nurse and physical therapist to provide comprehensive, coordinated care to patients with multiple chronic illnesses (along the lines of a nationally influential model developed in Camden by Dr. Jeffrey Brenner, the MacArthur “Genius Grant” winner). Current federal fraud and abuse laws prevent the hospital from financially rewarding the physician for taking action that is going to make the patient better and reduce health care costs.

Outdated regulations

When patients are out of the hospital and back at home, physicians are eager to implement common-sense measures to help them stay healthy, but outdated federal laws have tied their hands. Doctors are barred from providing patients with useful tools such as blood pressure cuffs or digital “smart” pillboxes for fear of running afoul of anti-kickback statutes, which carry severe financial penalties. Health care providers need and deserve greater flexibility to implement practices that will help them improve the quality of patient care.

To be sure, no one would advocate for the elimination of laws that penalize bad actors. Anyone who tries to game the system for personal enrichment with Medicare dollars should pay a heavy price for doing so. However, these laws need to be modernized to permit patient-centered activities that are intended to improve care and reduce costs.

The Trump administration, specifically the Department of Health and Human Services and Centers for Medicare and Medicaid Services, recently proposed some regulatory steps to achieve this, but that is not enough. Congress also needs to act legislatively to make such changes permanent.

And, it is vital that these regulatory updates permit companies that produce medicines and medical equipment to participate in value-based arrangements, with appropriate restrictions. Biopharmaceutical and med-tech companies are among the most dynamic innovators in health care, and to exclude them from fully participating in the further modernization of health care would be a mistake.

Our nation has taken some important steps over the last decade to improve the state of American health care, but there is still work to be done. We talk a great deal about the high quality of health care in our country, as well as the relatively high costs associated with that care when compared with other countries. Making some sensible changes to existing laws can help us maintain that high quality while moving us further toward the value-based payment approach that is a key element of the Affordable Care Act’s mission.