Substantial Changes Proposed to the Stark Law and Anti-Kickback Statute Regulations to Address Regulatory Burdens and Value-Based Care Arrangements

On October 9, 2019, the U.S. Department of Health and Human Services (“HHS”) released proposed changes to the physician self-referral law (the “Stark Law Proposed Rule”) and the Anti-Kickback Statute (AKS) and the Civil Monetary Penalty Law (CMPL) (the “AKS Proposed Rule”). These proposed changes to the Stark Law, the Anti-Kickback Statute, and the Civil Monetary Penalty Law contain some of the most significant changes to these laws in the last several years.

According to the Centers for Medicare and Medicaid Services (CMS) and the HHS Office of Inspector General (OIG), the Stark Law and AKS Proposed Rules propose new exceptions and safe harbors for certain innovative coordinated care and associated value-based arrangements between physicians, providers such as hospitals, and other healthcare suppliers.

These proposed changes to the Stark Law, CMPL and AKS Statute present significant opportunities for new alternative payment and value-based care arrangements, and may also require restructuring and revisions to current arrangements by healthcare providers and others involved in the healthcare industry. An in-depth analysis of these new proposed rules is being prepared by the BSW Healthcare group.

The Stark Law Proposed Rule

The Stark Law Proposed Rule includes new proposed exceptions to enable value-based care arrangements and proposed changes to the Stark Law regulations intended to address many of the most challenging aspects raised by the healthcare industry for compliance with the Stark Law. The following are some of the key proposed new exceptions and changes:

New Proposed Stark Law Compensation Exceptions

• Value-Based Care Exceptions. CMS proposes new exceptions for value-based care arrangements that satisfy a series of requirements, depending on the level of financial risk undertaken by the parties to the arrangement.

• New Exception for Limited Remuneration to a Physician. CMS proposes a new exception to protect compensation not exceeding an aggregate of $3,500 per calendar year if certain conditions are met.

• New Exception for Cybersecurity Technology and Related Services. CMS proposes a new exception to protect arrangements involving the donation of certain cybersecurity technology and related services.

New Defined Terms and Regulatory Modifications to the Stark Law

• New or Modified Definitions for Key Stark Law Terms. CMS proposes several new definitions of key concepts, including commercial reasonableness, the volume/value standard, and fair market value. CMS also proposes to modify the definition of designated health service (DHS) to make clear that an inpatient hospital service is only a DHS if the furnishing of the service affects the amount of Medicare’s payment to the hospital under the CMS Inpatient Prospective Payment System. This change has the potential to dramatically reduce the number of hospital claims that may be tainted by a prohibited financial relationship between a hospital and a physician where the physician is not the admitting physician.

• Clarifications to “Group Practice” Requirements. CMS proposes clarifications to the regulations defining a “group practice” for purposes of the Stark Law, including revisions that make clear that group practices may not use designated health service specific pods for purposes of distributing profits from a real designated health service.

• Modifications to Various Compensation Exceptions. CMS proposes a series of modifications to various compensation exceptions, including the space lease exception, recruitment exception, fair market value exception.

• Temporary Non-Compliance. CMS proposes to expand the 90-day grace period for certain writing requirements in state law exceptions.

• Period of Disallowance. CMS proposes to delete the conditions for when an entity would know the period of disallowance has ended under the Stark Law.

• Clarification for Electronic Health Records Items and Services. CMS proposes changes to the exception, including modifying the physician contribution requirement and permitting certain donations of replacement technology.

The Anti-Kickback Statute Proposed Rule

The Anti-Kickback Proposed Rule includes many important proposals that would modify existing AKS safe harbors, create new AKS safe harbors and create new CMPL exceptions.

New AKS Safe Harbors

• Value-Based Arrangements. OIG proposes to create 3 new safe harbors to protect certain remuneration among certain individuals and entities in a value-based arrangement. The three new safe harbors would vary in terms of the type of remuneration that could be provided, the level of financial risk the parties assume and the types of “safeguards” OIG proposes to include in each arrangement.

• Patient Engagement. OIG proposes to protect furnishing certain tools and support to patients by certain individuals and entities to improve quality, health outcomes and efficiency.

• CMS-Sponsored Models. OIG proposes to protect certain remuneration provided in connection with certain models sponsored by CMS which would reduce the need for HHS to issue individualized fraud and abuse waivers for each model.

• Cybersecurity Technology and Services. OIG proposes to create standalone protection for donations of cybersecurity technology and services.

Modifications to Existing AKS Safe Harbors

• Personal Services and Management Contracts Safe Harbor. OIG proposes to add greater flexibility for part-time and outcomes-based arrangements by removing the part-time schedule requirement and the aggregate compensation set-in-advance requirement.

• Local Transportation. OIG proposes to expand and modify mileage limits applicable to rural areas and for transportation-related to patients discharged from inpatient facilities.

• Electronic Health Records Items and Services Safe Harbor. OIG proposes to extend protection for certain related cybersecurity technology, update the interoperability provisions and make the safe harbor permanent by removing the “sunset” date.

• Warranties. OIG proposes to protect bundled warranties for one or more items and related services.

New Civil Monetary Penalty Law (“CMPL”) Exceptions

• Accountable Care Organization (ACO) Beneficiary Incentive Programs. OIG proposes to codify the Bipartisan Budget Act of 2018 statutory exception for ACO Beneficiary Incentive programs for the Medicare Shared Savings Program.

• Telehealth for In-Home Dialysis. OIG proposes to include the Bipartisan Budget Act of 2018 statutory exception for furnishing telehealth technologies to certain in-home dialysis patients.

Copies of the proposed new rules are located at Stark Law Proposed Rule and AKS Proposed Rule.

The proposed rules provide that comments for each of the proposed rules may be submitted within 75 days from the date of publication in the Federal Register, which is currently scheduled for October 17, 2019.

Written By: Clay Countryman

Countryman, Clay headshot

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