October 10, 2019

How HHS wants to update anti-kickback rules to support value-based care

Daily Briefing

    HHS on Wednesday issued long-anticipated proposed rules to update anti-kickback and physician-referral regulations so they do not interfere with physicians' ability to participate in value-based payment arrangements.

    Your cheat sheets for understanding health care's legal landscape

    HHS said the proposed rules would update the Civil Monetary Penalties Law, the Federal Anti-Kickback Statute, and the Physician Self-Referral Law, which often is referred to as the "Stark Law."

    Background

    Health care executives and providers have long called for updates to the regulations, saying the laws are complex and pose barriers to doctors transitioning toward value-based payment models. 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, the laws typically bar insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid beneficiaries.

    For example, the Stark Law bans physicians from referring Medicare beneficiaries they are treating to entities in which they have a financial stake. The law contains 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.

    Stark Law violations can result in civil monetary penalties, and physicians can be held liable for unintentionally violating the statute. CMS Administrator Seema Verma last year acknowledged that the Stark Law can inhibit providers' transition toward value-based payments and said CMS was forming an interagency group to examine the statute.

    Meanwhile, the Federal Anti-Kickback Statute dictates criminal penalties for providers who knowingly and willfully ask for, offer, pay, and/or receive remuneration intended to generate or reward referrals for services that are paid for by federal health care programs. The statute includes certain safe harbors.

    The Civil Monetary Penalties Law allows for civil monetary penalties against any person who offers or provides remuneration to Medicare or state health care program beneficiaries if the person knows, or should know, that the remuneration likely could influence the supplier or provider the beneficiary selects, if that provider or supplier gives the beneficiary items or services covered by Medicare or the state health care program.

    CMS and HHS' Office of Inspector General (OIG) last year sought public feedback on ways to address regulatory obstacles to transitioning toward value-based payment arrangements.

    HHS issues proposed rules to update Stark and anti-kickback laws

    To address the issue, HHS on Wednesday released proposed rules that would update the Federal Anti-Kickback Statute and Stark Law. The department said the proposed rules would "provide greater certainty for health care providers participating in value-based arrangements and providing coordinated care for patients," and "would ease the compliance burden for health care providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse."

    Proposed changes to the Stark Law

    One proposed rule, issued by CMS, would update exceptions permitted under the Stark Law—which CMS noted has not been significantly updated since 1989—to allow certain exemptions for value-based care. According to CMS, the new exemptions would apply regardless of whether the value-based payment arrangements deal with care provided to Medicare beneficiaries or to patients covered by other payers.

    CMS in the proposed rule suggested payment arrangements that would qualify for the proposed exceptions would have to have a "value-based purpose" with central goals pertaining to:

    • Coordinating and managing patients' care;
    • Lowering costs or spending growth without reducing care quality;
    • Improving quality of care; and
    • Transitioning from volume-based payments to payments based on cost control and care quality.

    To qualify for the exceptions, health care entities would have to submit to CMS a written document that "spells out the arrangements between them and indicate[s] what patient population they are going to target and what outcomes they are going to measure in terms of what value they are going to produce here," Deputy HHS Secretary Eric Hargan said.

    CMS in the proposed rule said it expects most value-based payment arrangements permitted under the new exceptions would be related to coordinating and managing patients' care, Inside Health Policy reports. However, according to Inside Health Policy, the proposed rule does not state that compensation arrangements must be tied to care coordination or management to qualify as a value-based payment arrangement under the proposed exemptions.

    CMS in the proposed rule asked for public comments on "whether this approach—designed to provide needed flexibility for parties participating in alternative payment models (including those sponsored by CMS) to succeed in the transition to value-based payment—poses a risk of program or patient abuse that should be addressed through a revised definition of 'value-based arrangement' that requires care coordination and management." In addition, CMS said it is considering whether to exclude drugmakers, durable medical equipment makers and distributors, pharmacy benefit managers, and other distributors and wholesalers from participating in the arrangements because of concerns about program integrity.

    CMS said the proposed rule also would create new exemptions for other "non-abusive, beneficial" arrangements between health care providers, such as donations of cyber security technology.

    The proposed rule also would provide new guidance on several requirements providers must meet to comply with the Stark Law. For instance, the proposed rule would provide guidance on how to determine whether compensation from one provider to another is set at a fair market value, as required by the law.

    CMS in the proposed rule also asked for feedback on "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."

    CMS is accepting public comments on the proposed rule until Dec. 31.

    Proposed changes to anti-kickback laws

    The other proposed rule, issued by HHS' OIG, would update the Civil Monetary Penalties Law and Federal Anti-Kickback Statute to give providers more flexibility to coordinate patients' care and implement specific safe harbors for outcomes-based payment arrangements.

    According to HHS' OIG, the proposed rule would:

    • Amend the definition of "remuneration" under a section of the Civil Monetary Penalties Law to incorporate a new statutory exception to the ban on beneficiary inducements for telehealth technologies for certain in-home dialysis patients;
    • Codify a statutory exception to the definition of "remuneration" in relation to accountable care organization beneficiary incentive programs under the Medicare Shared Savings Program;
    • Implement a new safe harbor for certain remunerations provided under specific CMS-sponsored payment models;
    • Implement a new safe harbor for donations of cyber security services and technology;
    • Implement a new safe harbor for specific tools and supports provided to patients that are intended bolster efficiency, health outcomes, and quality;
    • Implement three new safe harbors for certain remunerations between eligible participants under "care coordination arrangements to improve quality, health outcomes, and efficiency"; "value-based arrangements with substantial downside financial risk"; and "value-based arrangements with full financial risk";
    • Modify the existing safe harbor for electronic health records (EHR) to include protections for certain EHR-related cybertechnology, update provisions related to interoperability, and remove the current sunset date;
    • Modify the existing safe harbor for local transportation to update and expand mileage limits in rural areas and for patients discharged from inpatient facilities;
    • Modify the existing safe harbor for personal services and management contracts to increase flexibility for outcomes-based payments and part-time agreements; and
    • Modify the existing safe harbor for warranties to update the provision's definition of "warranty" and include protections for certain bundled warranties.

    HHS' OIG will accept public comments on the proposed rule for 75 days after its Notice of Proposed Rulemaking is published in the Federal Register.

    Comments

    HHS Secretary Alex Azar said the proposed rules would facilitate "an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve."

    Hargan said implementing the proposed rules "would be a historic reform of how health care is regulated in America." He continued, "They are part of a much broader effort to update, reform, and cut back our regulations to allow innovation toward a more affordable, higher quality, value-based health care system, while maintaining the important protections patients need."

    American Hospital Association President and CEO Rick Pollack in a statement praised HHS for proposing changes that would "put[t] patients first and … modernize the rules so they support, rather than hinder, the teamwork among health care providers that is so essential to providing the best, most comprehensive patient care, … without sacrificing the law's original purpose—to prevent physicians from referring patients to facilities in which they have a financial stake" (Stein, Inside Health Policy, 10/9 [subscription required]; HHS release, 10/9; CMS fact sheet, 10/9; HHS OIG fact sheet, 10/9; Inserro, American Journal of Managed Care, 10/9; Teichert, "Transformation Hub," Modern Healthcare, 10/9; King, FierceHealthcare, 10/9; AHA statement, 10/9).

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