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HHS Proposes Far-Reaching Changes to Stark and Anti-Kickback Laws

October 11, 2019

The United States Department of Health and Human Services issued two sweeping new proposed rules designed to ease regulatory burdens on providers.

On Oct. 9, HHS submitted its changes to the Medicare Physician Self-Referral Law, more commonly known as the Stark law, and the Federal Anti-Kickback Statute. The department said its proposal will “modernize and clarify the regulations” of the outdated health care laws.

Modernizing the Outdated Stark Law

The Centers for Medicare & Medicaid Services advised that the proposed rule supports CMS’s “patients over paperwork” initiative. The changes aim to reduce regulatory burden on physicians and other health care providers, while also protect patients from unnecessary, lower quality or more expensive services based on physicians’ financial interests. 

With these proposed changes, CMS said the agency hopes to improve:

  • A patient’s ability to understand treatment plans and make empowered decisions;
  • Providers’ alignment on an end-to-end treatment approach;
  • Incentives for providers to coordinate, collaborate, and provide patients with tools to be more involved; and
  • Information-sharing among providers, facilities, and other stakeholders in a manner that facilitates efficient care while preserving and protecting patient access to data.

CMS said the Stark law needed modernizing. The law was drafted in 1989 and was based primarily on a fee-for-service health care payment model. CMS said the Stark law is antiquated and did not evolve to address value-based and coordinated-care payment models. 

According to CMS, the proposed rule does the following:

  • Proposes exceptions to the Stark law for certain value-based compensation arrangements between or among physicians, providers and suppliers;
  • Creates a new exception for certain arrangements under which a physician receives limited remuneration for items or services provided by the physician;
  • Creates a new exception for donations of cybersecurity technology and related services;
  • Amends the existing exception for electronic health records, items and services; and
  • Provides clarifying and necessary guidance for physicians and health care providers and suppliers whose financial relationships are governed by the Stark law and regulations.  For example, the proposed rule provides additional guidance on how to determine if certain compensation arrangements are “fair market value” under Stark.

CMS is also soliciting comments about the role of price transparency in the context of the Stark law and whether the government should require “cost-of-care information at the point of a referral for an item or service.”  Both President Trump and CMS have made clear that price transparency is necessary to transform America’s health care system. CMS said that such pricing information “could empower patients to have conversations about cost with their physicians at the point of care and serve as an additional safeguard at the point of referral.”

Updating the Anti-Kickback Statute to Promote Payment for Value and Coordinated Care

The HHS Office of the Inspector General also issued a proposed rule to update the regulations implementing the Federal Anti-Kickback Statute and the civil monetary penalty for beneficiary inducements.  The OIG acknowledged that the broad reach of these statutes potentially inhibits “beneficial arrangements” that could advance the transition to value-based care and improve coordination of patient care among providers and across care settings.  According to the OIG, the proposed rule will “promote coordinated patient care and foster improved quality, better health outcomes, and improved efficiency.” 

The new regulation would create:

  • Three new safe harbors to protect certain value-based arrangements;
  • A new safe harbor for certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency;
  • A new safe harbor for remuneration furnished in connection with a CMS‑sponsored model, intended to reduce the need for separate fraud and abuse waivers; and
  • A new safe harbor for donations of cybersecurity technology and services.

Also, the proposal would modify or amend:

  • The existing safe harbor for the donation of EHR items and services to add protections for certain cybersecurity technology, to update provisions regarding interoperability, and to remove the sunset date;
  • The existing safe harbor for personal services and management contracts to add flexibility with respect to outcome-based payments and part-time arrangements;
  • The existing safe harbors for warranties to provide protection for bundled warranties;
  • The existing local transportation safe harbor to expand and modify the mileage limits for rural areas and for patients discharged from inpatient facilities; and
  • The definition of “remuneration” under the Anti-Kickback Statute related to exceptions for Accountable Care Organization incentive programs and telehealth technology furnished to in-home dialysis patients. 

The Stark law and Anti-Kickback Statute proposals will receive a lot of attention from stakeholders over the next several months. Stakeholders who desire to file a comment on the proposed Stark or Anti-Kickback rules may do so by filing a comment with CMS or the OIG, respectively, by no later than Dec. 31. 

If you have any questions regarding the proposed changes or would like to comment on the proposed rules, please contact one of the health care lawyers at Phelps Dunbar.