October 9, 2019

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued today two highly anticipated proposed rules to reform the Stark Law and Anti-Kickback Statute (AKS) regulations.

Efforts to modernize and clarify the fraud and abuse laws began last year as part of the Regulatory Sprint to Coordinated Care Initiative. Agency officials have emphasized the need to reform the physician self-referral law and AKS to facilitate innovative arrangements for coordinating care consistent with a shift to a value-based health care system.

The agencies emphasized that the proposals offer health care providers more flexibility to coordinate and improve care for patients, while maintaining important guardrails that prevent overutilization and fraud and abuse.

The Stark proposed rule would create new, permanent exceptions to the Stark Law for value-based arrangements, according to CMS. These exceptions would apply broadly to care provided to all patients, not just Medicare beneficiaries, CMS said.

The 300+ page proposed rule also includes additional clarifications and guidance on key statutory terms and other technical compliance requirements. For example, CMS is proposing to revise the definition of fair market value “to eliminate the connection to the volume or value standard.” The agency also is proposing to define commercially reasonable to mean “that the particular arrangement furthers a legitimate business purpose of the parties and is on similar terms and conditions as like arrangements.” The proposal specifies that “[a]n arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.”
The AKS proposed rule would create three new safe harbors for certain remuneration exchanged between or among eligible participants: care coordination arrangements aimed at improving quality and outcomes; value-based arrangements with substantial downside financial risk; and value-based arrangement with full financial risk, according to OIG.

OIG is proposing a new safe harbor for all innovation models that CMS sponsors, reducing the need for separate fraud and abuse waivers going forward. The rule also proposes modifications to the existing safe harbor for personal services and management contracts to add flexibility for outcomes-based payments and part-time arrangements.

In addition, the agencies are proposing a new safe harbor and exception for donating cybersecurity technology and services and removing the sunset date for the existing safe harbor and exception for electronic health records.

The AKS proposal also includes a proposed safe harbor for certain tools and supports furnished to patients to improve quality, outcomes and efficiency; proposed modifications to the existing safe harbor for local transportation; and a proposed amendment to the definition of “remuneration” that incorporates a new exception for telehealth technologies furnished to in-home dialysis patients.

CMS is specifically asking for comments about price transparency in the context of Stark, including whether to require cost-of-care information at the point of referral. “We believe that such information 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.”

“These proposed rules would be a historic reform of how healthcare is regulated in America,” said HHS Deputy Secretary Eric Hargan in a statement. “They are part of a much broader effort to update, reform, and cut back our regulations to allow innovation toward a more affordable, high quality, value-based healthcare system, while maintaining the important protections patients need.”

Commenters should watch the Federal Register for official publication of the rules, which will trigger the 75-day comment period.

AHLA volunteers are analyzing the rule for AHLA members and others. Stay tuned by following AHLA on Twitter and updating your email preferences for the latest information and updates.