New Protections Under Anti-Kickback Statute: No Such Luck for Implantable Med Device Manufacturers?

Mollie Roth, Phoenix, AZ - A top priority of the Secretary of Health and Human Services (HHS) is transforming the health care system from a fee-for-service model, which rewards providers for the volume of care provided, to a more value-based payment model that rewards good outcomes. But such value-based arrangements require enhanced coordination between a variety of providers and entities in order to identify and track relevant health outcomes. Various prohibitions in the Anti-Kickback Statute have made this evolution difficult, if not impossible.

However, this month the Department of Health and Human Services proposed updated regulations that both modify existing safe harbor provisions and add new safe harbors to those previously enumerated. The goal: remove potential barriers to more effective coordination and management of patient care between or among clinicians, providers and other entities. Read more here.

That is, if you are a medtech company.

HHS is largely focusing these new rules on the remote monitoring of patients, allowing more digital health technologies to coordinate and manage patient care. The rule does not address purchase and sale arrangements for covered items and services. The HHS Office of Inspector General has indicated its hesitation to make the new rules more broadly applicable to medical device manufacturers.

According to HHS, because device manufacturers' largest incentive is to simply sell more devices, they are concerned that the manufacturers may misuse value-based arrangements to disguise improper payments, or improperly use such arrangements to tether clinicians to a specific device that may not be the most clinically effective for the patient. Specifically, HHS said its fear is that implantable medical device companies may use value-based arrangements as kickbacks to ambulatory surgical centers or hospitals to induce them to purchase devices they produce.

But the entire premise of value-based payment arrangements is that outcomes will prove the value of the technology. Understandably HHS does not want to introduce more fraud into the system, but they are taking a very narrow view of what value-based pricing is. While allowing greater coordination of care through remote monitoring would be an improvement, patients would benefit more if the rule were broader. Medical device manufacturers are eager to engage in innovative and outcome-based arrangements with hospitals that are tied to patient benefits but are stymied by the current Anti-Kickback Statute.

The proposed rules should be expanded to provide tailored protection for value-based and outcomes-based contracting for device manufacturers. HHS is accepting comments on the proposed rule through mid-December 2019.

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