Insights & Resources

Medicare/Medicaid Fraud & Abuse Resource Center

    Back To Medicare/Medicaid Fraud & Abuse Resource Center

    Stark Law: Value-Based Arrangements with Full Financial Risk -- 411.357(aa)(1)

    (aa) Arrangements that facilitate value-based health care delivery and payment -

    (1) Full financial risk - Remuneration paid under a value-based arrangement, as defined at § 411.351, if the following conditions are met:

    (i) The value-based enterprise is at full financial risk (or is contractually obligated to be at full financial risk within the 12 months following the commencement of the value-based arrangement) during the entire duration of the value-based arrangement.
    (ii) The remuneration is for or results from value-based activities undertaken by the recipient of the remuneration for patients in the target patient population.
    (iii) The remuneration is not an inducement to reduce or limit medically necessary items or services to any patient.
    (iv) 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.
    (v) If 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.

    (vi) 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.
    (vii) For purposes of this paragraph (aa), “full financial risk” means that the value-based enterprise is financially responsible on a prospective basis for the cost of all patient care items and services covered by the applicable payor for each patient in the target patient population for a specified period of time. For purposes of this paragraph (aa), “prospective basis” means that the value-based enterprise has assumed financial responsibility for the cost of all patient care items and services covered by the applicable payor prior to providing patient care items and services to patients in the target patient population.