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November 27, 2018

How providers want Medicare to ease its anti-kickback laws (and what it means for value-based care)

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    Earlier this year, the Trump administration asked for recommendations on ways to ease anti-kickback laws that limits where physicians can refer Medicare beneficiaries. Providers and lobbying groups responded in force—but some legal experts say any move to ease existing laws could increase fraud and abuse, Robert Pear reports for the New York Times.

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    About Medicare's anti-kickback rules

    In the notice, the Trump administration specifically asked for comments on creating "a new exception to the physician self-referral law," also known as the Stark Law. The law bans physicians from referring Medicare beneficiaries they are treating to entities in which they have a financial stake, a practice known as self-referral. The law includes certain exemptions, including one for "in-office ancillary services" that originally was intended for routine procedures, such as in-office blood tests, to allow for more efficient care delivery.

    The notice also asked for comments on "exceptions to the definition of remuneration." According to Pear, federal laws make it illegal to offer or pay any financial remuneration, which HHS under HIPAA defines as a "payment to a covered entity (or business associate, if applicable) from or on behalf of a third party whose product or service is being described."

    The laws are intended to ensure health care providers base medical decisions on the needs of their patients, not on the financial interests of providers. As such, they typically bar insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid beneficiaries.

    But providers and hospital executives have argued that the laws are complex and pose barriers to doctors transitioning toward value-based care. According to Pear, the penalty for violating those laws, whether intentionally or not, can be steep. Providers could face high fines under the False Claims Act and lose their ability to treat Medicare and Medicaid beneficiaries.

    What the health care industry is saying

    The Trump administration has received hundreds of letters from health care executives and lobbyists in response to the request for comment, Pear reports.

    According to Pear, two main themes emerged from the comments:

    • Current federal laws are inappropriately preventing insurers from rewarding Medicare beneficiaries for meeting certain health goals, such as weight loss, or taking medications as prescribed; and
    • Under current laws, hospitals are hesitant to financially reward doctors who cut costs or achieve clinical goals, such as improving the health of patients, reducing the length of hospital stays, or preventing readmissions.

    Commentators broadly encouraged officials to provider a broad legal exception for arrangements that support value-based care and care coordination, Pear reports.

    For example, James Madara, the chief executive of the American Medical Association, said the laws "impose undue burdens on physicians and serve as obstacles to coordinated care." He added that the laws were enacted during "a fee-for-service world that paid for services on a piecemeal basis."

    Melinda Hatton, senior vice president and general counsel of the American Hospital Association, said the laws hamper "many innocuous or beneficial arrangements" that could improve patient care and lower out-of-pocket costs.

    Legal experts raise concerns

    But not everyone is on board with rolling back federal anti-kickback requirements, Pear reports.

    Joel Androphy, a Houston lawyer who has handled health care fraud cases, said, "Good providers can work within the existing rules." He added, "The only people I ever hear complaining are people who got caught cheating or are trying to take advantage of the system. It would be disgraceful to change the rules to appease the violators."

    James Pepper, a lawyer outside Philadelphia who has represented many whistle-blowers in the industry, similarly said, "The administration is inviting companies in the health care industry to write a 'get out of jail free card' for themselves, which they can use if they are investigated or prosecuted" (Pear, New York Times, 11/24)

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