Traditional multi-asset portfolios make allocations to cap-weighted equity indices to benefit from good long-term risk adjusted returns. But this also exposes the portfolio to the drawbacks of market volatility, including extreme events and tail risks, limiting the allocation to equities in a multi-asset portfolio.
Traditional defensive strategies offered to investors have five common drawbacks.
They deliver negative exposure to other rewarded factors since most competitors do not account for negative factor interactions.
They are very often concentrated portfolios since stocks are either weighted using inverse volatility or determined through optimisation under ad hoc constraints.
They are often exposed to macroeconomic risks since they tend to have persistent sector and/or regional exposures.
Returning to our hospital-physician group arrangement above, the VBE could consider establishing a value based arrangement where the VBE assumed full financial risk from the payor with respect to the target patient population. The value based arrangement and the payments to the physician group would need to be structured and implemented, to comply with the requirements in the full financial risk exception. If successful, the remuneration paid by the hospital to the physician group for any value-based activity (
e.g. the hospital’s payment to the physician group for each post-discharge meeting a physician attends) would not violate the Stark Law.
Tuesday, February 2, 2021
On 2 December 2020, the U.S. Department of Health and Human Services’ (HHS) issued two Final Rules in conjunction with its “Regulatory Sprint to Coordinated Care,” which will markedly change the regulatory fraud and abuse landscape for “value-based” arrangements:
(i) The HHS Office of the Inspector General (OIG) published a Final Rule that introduces new safe harbor protections under the federal Anti-Kickback Statute (AKS) for certain coordinated care and risk-sharing value-based arrangements between or among clinicians, providers, suppliers, and others that squarely meet all safe harbor conditions (AKS Final Rule).
(ii) The HHS Centers for Medicare & Medicaid Services (CMS) published a Final Rule that finalizes similar exceptions to the Physician Self-Referral Law (Stark Law) for certain value-based compensation arrangements between or among physicians, providers, and suppliers (Stark Final Rule, and together with the AKS Final