New Proposed Rules from the CMS and the OIG-HHS on Stark Law and from the Anti-Kickback Statute

On October 9, 2019, the Centers for Medicare & Medicaid Services (CMS) proposed a new rule to clarify Stark Law. Stark Law has not been updated since the law’ enactment in 1989 though there have been numerous regulations added to the law’s core provisions. The new rule aims to reduce what the CMS calls the “unnecessary regulatory burden” on doctors and healthcare providers while also helping ensure that patients are referred for services and treatments based on what’s best for the patients and not the financial self-interest of the physician. The rule, labeled the “Patients over Paperwork Initiative” provides for new ways for doctors to coordinate patient care by “allowing providers across different healthcare settings to work together to ensure patients receive the highest quality of care.”

CMS, according to the agency release, states the agency worked with the Office of Inspector General for the Department of Health and Human Services (OIG-HSS) to improve this coordination in the federal and commercial arenas. The proposed rule, in full, is open for comments through the end of 2019 – December 31, 2019.

HHS asserts that:

“The proposed rules provide greater certainty for healthcare providers participating in value-based arrangements and providing coordinated care for patients. The proposals would ease the compliance burden for healthcare providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse.”

The background of Stark Law

According to the CMS article, Stark Law was enacted when healthcare was essentially a fee-for-service operation. On this basis, legislators saw that doctors would be influenced in how the doctors provided patient care if the doctors had a financial stake in the services that were ordered. Stark law precludes doctors from self-referrals (referrals to a designated health service in which the doctor or an immediate family member has a financial interest) where the services are paid by Medicare. Stark Law does currently (and until any changes in the law are enacted) provide for numerous exceptions which an experienced California or other healthcare lawyer can explain.

Since the enactment of Stark Law, Medicare and the private market have begun to heavily use a value-based healthcare “delivery and payment system,” to respond to the high cost of the current volume-based pay-for-services system. Value-based means that pay is based on the quality of care the patient receives. The proposed rule aims to address this change to a value-based system by reviewing and changing some of the prohibited relationships.

CMS requested information on how Stark Law could alleviate “barriers to a value-based healthcare payment and delivery system” back in June of 2018. The proposed new rule is a response to the feedback received from that request.

What Medical Practices Should Know about the Stark Law

The Stark Law is named after California U.S. Congressman, Peter Stark. It seeks to regulate how physicians refer Medicare and Medicaid patients. The law is part of the Omnibus Budget […]

The rule proposes new Stark Law exceptions for arrangements that are value-based

The CMS claims the new exceptions will unleash innovation by encouraging value-based arrangements without fear of violating Stark Law. Violations of Stark Law are generally also considered violations of the Federal False Claims Act. The new exceptions will balance these value-based arrangements with the need to protect the public and patients from harm.

The CMS proposed rule also seeks comments regarding “the role of price transparency in the context of the Stark Law and whether to require cost-of-care information at the point of a referral for an item or service.” Price transparency, as defined by the Presidents Executive Order, “could empower patients to have conversations about costs with their physicians at the point of care and serve as an additional safeguard at the point of referral.”

The proposed new Stark rule would provide guidance on many parts of the Stark Law statute such as the definition of fair market value and technical compliance requirements. New exceptions in the proposed CMS rule would also provide flexibility for arrangements such as certain types of cybersecurity technology.

Examples of acts that would be protected from Stark Law violations under the propose new CMS rules

The formal CMS proposal for changes to Stark Law includes a broad array of definitions, clarifications, proposals, and other changes. Some examples of acts that Stark Law would approve under the new rule change include:

  • “In an effort to coordinate care and better manage the care of their shared patients, a specialty physician practice could share data analytics services with a primary care physician practice.”
  • “Hospitals and physicians could work together in new ways to coordinate care for patients being discharged from the hospital. The hospital might provide the discharged patients’ physicians with care coordinators to ensure patients receive appropriate follow up care, data analytics systems to help physicians ensure that their patients are achieving better health outcomes, and remote monitoring technology to alert physicians or caregivers when a patient needs healthcare intervention to prevent unnecessary ER visits and readmissions.”
  • Doctors could give their patients smart pillboxes so that patients are more efficient at remembering to take their medications. The medical practice could also work with home health aides who could help the patient and a caregiver for the patient understand how to use the pillbox. A smart pillbox could alert the doctor’s office when patients are not taking the medications that have been prescribed – when the patient needs the medications.
  • Hospitals could donate cybersecurity software to the doctors that refer patients to the hospital. Since hospitals and physicians already share a lot of patient information to advise the patient, the cybersecurity would help provide security against hackers and the software would help protect against computer viruses and leaks.
  • “To improve health outcomes for patients with end-stage kidney disease, a nephrologist, dialysis facility, or other provider could furnish the patients with technology that is capable of monitoring the patient’s health and two-way, real-time interactive communication between the patient, facility, and physician. In addition, the facility could equip the physicians with data analytics software to help the doctors monitor patients’ health outcomes.”

The proposed safe harbor changes to the Anti-Kickback Statute and Civil Monetary Penalties Rules

The Office of Inspector General – Health and Human Services is also proposing new rules and safe harbors based on the agency’s request for comments that were submitted along the same lines as the request for comments by the CMS to Stark Law.

The federal AKS provides criminal penalties for anyone or any business that knowingly and willfully “willfully offers, pays, solicits, or receives remuneration to induce or reward the referral of business reimbursable under any of the Federal health care programs, including Medicare and Medicaid.”

Do You Know the Key Differences Between the 4 Ambulatory Safe-Harbors to the Federal Anti-Kickback Statute (AKS)?

There are four types of ambulatory safe harbors in the federal Anti-Kickback Statute. We explain the key differences between the ambulatory safe harbors to the federal anti-kickback statute (AKS)

Physicians and other entities can use “safe harbors’ as a means to comply with the AKS. If an arrangement does not fit within a safe harbor, the medical practice, doctor, or Health Company may be found in violation of the AKS. Each case is decided on a case-by-case basis.

The proposed rule is an effort to update the law to meet changing business and technology practices. The full OIG-HHS proposal can be found online.

The HHS Office of Inspector General Fact Sheet rules proposes the following safe-harbors:

  • Safe harbors for value-based arrangements between eligible participants where the arrangement fosters better patient care and better coordination such as:
    • Care Coordination Arrangements to Improve Quality, Health Outcomes, and Efficiency (§ 1001.952(ee));
    • Value-Based Arrangements with Substantial Downside Financial Risk (§ 1001.952(ff)); and
    • Value-Based Arrangements with Full Financial Risk (§ 1001.952(gg)).
  • Patient Engagement. A proposed new safe harbor (§ 1001.952(hh)) for certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency
  • CMS-Sponsored Models. A proposed new safe harbor (§ 1001.952(ii)) for certain remuneration provided in connection with a CMS-sponsored model (as defined in the proposed rule), which should reduce the need for separate and distinct fraud and abuse waivers for new CMS-sponsored models.
  • Cybersecurity Technology and Services. A proposed new safe harbor (§ 1001.952(jj)) for donations of cybersecurity technology and services.
  • Electronic Health Records Items and Services. Proposed modifications to the existing safe harbor for electronic health records items and services (§ 1001.952(y)) to add protections for certain related cybersecurity technology, to update provisions regarding interoperability, and to remove the sunset date.
  • Outcomes-Based Payments and Part-Time Arrangements. Proposed modifications to the existing safe harbor for personal services and management contracts (§ 1001.952(d)) to add flexibility with respect to outcomes-based payments and part-time arrangements.
  • Warranties. Proposed modifications to the existing safe harbor for warranties (§ 1001.952(g)) to revise the definition of “warranty” and provide protection for bundled warranties for one or more items and related services.
  • Local Transportation. Proposed modifications to the existing safe harbor for local transportation (§ 1001.952(bb)) to expand and modify mileage limits for rural areas and for transportation for patients discharged from inpatient facilities.
  • Accountable Care Organization (ACO) Beneficiary Incentive Programs. Codification of the statutory exception to the definition of “remuneration” related to ACO Beneficiary Incentive Programs for the Medicare Shared Savings Program (§ 1001.952(kk)).
  • Telehealth for In-Home Dialysis. A proposed amendment to the definition of “remuneration” in the CMP rules at 42 C.F.R. § 1003.110 interpreting and incorporating a new statutory exception to the prohibition on beneficiary inducements for “telehealth technologies” furnished to certain in-home dialysis patients.

Reactions from the AMA

The American Medical Association, in statements by Patrice A. Harris, MD, MA, the president of the AMA said that AMS approves of the overall need to update Stark Law and the AKS to help the health care systems move to a value-based system. Dr. Harris liked the ability under the proposed rules to coordinate care strategies instead of placing the burden on the patient to coordinate his/her own care.

Anders Gilberg, the senior vice president of Government Affairs for the Medical Group Management Association, said: “For those fortunate medical groups that can utilize the new value-based exceptions, this proposal is a step in the right direction. For medical groups that have been waiting years for relief from the complexity of the Stark law, this is not it.”

Gilberg added, “Existing Stark regulations are fundamentally hyper-technical from beginning to end. This rule adds layers upon layers to a regulatory scheme that was originally intended to provide bright-line guidance for medical practices, but never has. The new proposal fails to clarify fundamental issues related to group practices and confirms our longstanding position that Congress needs to change the law.”

Medicare  and the Department of Health and Human Services, through the current administration’s directive, is looking to expand the exceptions to Stark Law and the expand the AKS safe harbor rules to help doctors and medical practices meet the challenges of a value-based arrangements in addition to fee for service arrangements. The rules, if adopted, will give medical practices wider range in how the practice can work with patients, use technology, help provide transportation for patients, maintain electronic health records, and other medical-business arrangements.

Contact Cohen Healthcare Law Group, PC to discuss your regulatory compliance and statutory requirements if you have patients whose services and products are paid for by Medicare or any federal healthcare agency. The new value-focused Medicare and HHS proposed rules, if enacted, should expand opportunities for health providers – IF the providers comply with the rules’ specific requirements.

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