Value-based enterprises after OBBA: More room to share, more risk to manage

Hospitals, physician groups, and ambulatory platforms facing reimbursement pressure, staffing strain, and rising operating costs are looking for alignment models that do more than reward incremental volume. In the wake of OBBA/OBBBA-related funding pressure and broader reimbursement cuts, many health systems and market participants are looking for creative ways to partner, co-manage service lines, preserve access, and stabilize struggling operations. Often, business conversations start with familiar terms such as “joint venture,” “co-management,” “alignment,” or “strategic partnership.” But in a number of those situations, what the parties may really be looking for is a value-based enterprise (VBE) contractual framework that can allow participants to share certain payments, infrastructure, and performance incentives around a defined patient population and defined value-based activities if the regulatory conditions are met. This article aims to translate that idea into plain English by showing when a VBE may be the right tool, what additional flexibility the value-based exceptions and safe harbors can offer, and why careful Stark and Anti-Kickback analysis still matters even when the arrangement is designed to promote value rather than volume.

Defining and creating a VBE

A  VBE is not just a business label. It is largely a regulatory construct created by the Stark Law value-based exceptions and the Anti-Kickback Statute value-based safe harbors, with the core definition appearing at 42 C.F.R. § 411.351 and 42 C.F.R. § 1001.952(ee)(14)(viii). At a minimum, a VBE requires two or more VBE participants collaborating to achieve at least one value-based purpose, with each participant party to a value-based arrangement with at least one other VBE participant, an accountable body or person responsible for financial and operational oversight, and a governing document describing the VBE and how the participants intend to achieve its value-based purpose. In other words, a VBE is the legal framework the Stark and AKS rules use to permit certain value-based arrangements; it is not simply another name for a partnership, co-management agreement, or joint venture.

Creating a VBE is only the first step. Once the parties define the participants, target patient population, and value-based activities, they still need to decide what kind of regulatory path they are trying to follow. In practice, that usually means deciding how much financial risk, if any, the parties are willing to build into the arrangement, because the Stark value-based exceptions and AKS value-based safe harbors are structured around different levels of downside risk. A low-risk arrangement may fit only a narrower pathway, while an arrangement with meaningful or full financial risk may open the door to broader protection for monetary alignment and shared incentives.

Value-based rules advantages

The practical appeal of the value-based rules is that they can give hospitals, physicians, and other participants more lawful room to structure shared incentives around improving care, coordinating patients, and reducing avoidable cost growth, rather than relying only on fixed fees, subsidies, or volume-based compensation models. Under Stark, the general value-based arrangement exception at 42 C.F.R. 411.357(aa)(3) can protect remuneration paid under a value-based arrangement even without a minimum downside risk threshold, provided the arrangement satisfies the required safeguards and the remuneration is for or results from value-based activities for the target patient population. Once the parties decide how much financial risk they are willing to take on, that choice helps determine which AKS safe harbor may be relevant. At the low-risk end, the care coordination safe harbor generally protects only certain in-kind support for coordinating care. If the parties are willing to take on real downside financial risk, the substantial downside risk and full financial risk safe harbors can protect broader monetary arrangements, including more robust shared-savings or risk-sharing models.

That additional flexibility can matter operationally. A VBE can support not only traditional fees, but also shared analytics, care coordination infrastructure, performance pools, and other forms of support that are genuinely tied to improving outcomes or reducing unnecessary cost growth for the defined population. For boards and executives, the practical appeal is straightforward: a VBE creates a more defensible path to align resources around measurable value rather than simply increasing subsidies or paying for more volume.

Risk tiers and why they matter

The Stark value-based exceptions operate on a sliding scale. One exception applies where the VBE has assumed full financial risk from a payor for all patient care items and services covered for the target patient population during the defined period. A second applies where the physician is placed at meaningful downside financial risk, generally requiring the physician to be responsible to repay or forgo at least 10 percent of the total value of the remuneration received under the arrangement. A third, more general exception applies to value-based arrangements without a minimum downside-risk requirement, so long as the arrangement satisfies the applicable safeguards.

The AKS framework is narrower and more explicitly tied to real risk assumption. The care coordination safe harbor can protect in-kind support used to coordinate and manage care, but it does not protect cash-only transfers and includes conditions such as contribution and monitoring requirements. The substantial downside risk and full financial risk safe harbors permit broader monetary alignment, but only where the VBE and participating parties take on the degree of risk required by the regulations. As a result, one of the first design questions in any VBE is whether the parties are seeking only a Stark pathway, a Stark-plus-AKS pathway, or a more limited structure in which some elements remain outside a safe harbor and must be defended under general AKS principles.

From a governance standpoint, even where the general Stark value-based exception would permit an upside-only structure, many organizations should consider putting at least a modest portion of VBE-related physician compensation at risk for failure to achieve agreed quality or efficiency metrics. That does not convert every arrangement into a formal downside-risk safe harbor structure, but it can help demonstrate that the model is intended to change behavior rather than merely repackage referral-related payments in modern language.

Common structuring issues in VBEs

• Scope. The value-based Stark exceptions and AKS safe harbors protect remuneration tied to the defined VBE and the defined value-based activities for the defined target patient population. These protections do not automatically sweep-in side arrangements, undefined payments, or compensation streams involving persons or entities that are not properly within the VBE structure. In practice, that means parties must be precise about who is a VBE participant, what each participant is doing, and which payments are actually being made under the VBE rather than alongside it.
• Traditional Analysis. Separate employment agreements, independent contractor arrangements, management agreements, medical directorships, call coverage, teaching stipends, leasing arrangements, and other side relationships may still require their own exception or safe harbor analysis, even when the VBE itself is well-designed. The VBE framework sits on top of the broader fraud-and-abuse map; it does not erase the need to analyze the rest of that map.
• Definitional Discipline. The target patient population, value-based activities, outcome measures, performance periods, and methodology for determining remuneration must be described with enough specificity that a regulator, auditor, or board member can understand what is being protected and why. Vague concepts such as “service line support” or “quality improvement” without defined activities, metrics, and accountability create both operational and legal weakness.
• Economic Credibility. Even where a particular value-based pathway offers more flexibility than traditional fair market value formulations, the economics still need to be commercially reasonable, tied to legitimate value-based purposes, and structured to avoid paying for referrals, recruiting patients improperly, or encouraging the reduction of medically necessary care. That is especially important where the arrangement includes shared savings, residual payments, or operational support provided by a management company or other intermediary.
• Governance and Data Integrity. A VBE needs an accountable oversight function, a process for monitoring performance, a mechanism for corrective action when outcome measures are not being met, and reliable access to the data used to support payment and compliance decisions. These are not just “good governance” features; they are core elements of the Stark value-based exceptions and AKS value-based safe harbors, which require ongoing monitoring and, in some cases, modification or termination of value-based activities that are not furthering the value-based purpose. Without that infrastructure, it becomes difficult to justify reliance on those exceptions or safe harbors, and the arrangement may look more like a relabeled bonus model than a genuine VBE.

Incorporating into a service line (Ex., anesthesia)

VBEs are a more defensible way to redesign physician alignment and service-line economics in financially stressed systems when pure fee-for-service support models or ever-growing subsidies are no longer sustainable. A VBE gives a defined, rule-based way to link physician compensation and support payments to measurable value for a specific population, instead of relying on informal subsidies or bonuses that are more likely to run into Stark and Anti-Kickback problems. That can be particularly useful when a health system is trying to preserve access, stabilize a pressured service line, integrate specialists more effectively, or justify targeted investments that would be difficult to defend as standalone payments in a purely volume-based model. A weak service line with poor demand or flawed operations will not be rescued by better documentation alone. But for systems trying to move from unmanaged subsidies to accountable alignment, the VBE framework can provide a more coherent path.

One practical example is anesthesia. Many hospitals face growing anesthesia subsidies, OR inefficiencies, and pressure to preserve coverage without simply increasing fixed support every year. A value-based anesthesia arrangement can use a VBE to define a surgical patient population, identify value-based activities (such as pre-anesthesia optimization, enhanced recovery pathways, and OR start-time improvements), and tie a modest portion of anesthesia compensation to measurable quality and efficiency outcomes rather than pure volume or informal subsidy. This illustrates how a VBE can supplement familiar anesthesia compensation structures with a more defensible, performance-linked overlay while still requiring careful Stark and AKS analysis of the underlying professional and support agreements.

Possibilities in ASCs

ASCs should also be part of the discussion. ASCs align naturally with many value-based care goals because they often offer lower-cost, efficient, and patient-centered care settings for appropriate procedures, which makes them relevant to bundled, episodic, and ambulatory-focused value strategies. A VBE structure may therefore be useful in ASC-adjacent settings where parties are trying to define a procedural episode, improve coordination, standardize supplies and pathways, or align incentives around quality and efficiency in the ambulatory environment. At the same time, the ASC setting adds its own regulatory complexity. ASC ownership rules, anesthesia economics, ancillary revenue streams, and other ASC-specific compensation structures can create separate AKS and Stark questions that are not automatically solved by placing part of the arrangement inside a VBE. The same lesson applies here as elsewhere: the VBE can be a useful overlay, but only if the parties define the covered participants and activities carefully and continue to analyze the surrounding relationships under the traditional fraud-and-abuse framework.

What boards and leaders should demand

A well-designed VBE should begin with a clearly defined strategic problem, a clearly defined target patient population, and a clearly defined set of value-based activities that can be measured over time. The parties should be explicit about which Stark exception they are relying on, whether any AKS value-based safe harbor is realistically available, and which other traditional exceptions or safe harbors still need to be satisfied for adjacent relationships and compensation layers. Boards should also insist on a governance structure with an accountable oversight body, regular performance review, data transparency, corrective action authority, and documentation sufficient to support the arrangement's economics and patient-protection safeguards.

The practical test is whether the arrangement can clearly explain what value is being created, how payment is tied to that value, how patient choice and clinical judgment are protected, and why each compensation stream is legally supportable. One practical way to strengthen that position is to build the regulatory theory directly into the VBE documents by citing the Stark exception and, where applicable, the AKS safe harbor the parties expect to rely on. Just as important, parties should keep an active VBE monitoring and documentation file, including the governing documents, metrics, oversight materials, corrective-action records, and data showing whether the arrangement is actually doing what the rules require it to do. If the arrangement is ever challenged, this is not the kind of structure that should be reconstructed from memory after the fact; the parties should be able to produce a file quickly that shows they had their ducks in a row all along. VBEs offer more room to share, more room to align, and more room to invest in coordination than many legacy structures, but they also require more precision, not less. If you are considering building a VBE, early structuring and documentation matter.