HHS Proposes Stark Law Changes That Would Broaden Providers’ Maneuverability Under APMs

Oct. 9, 2019
On Wednesday morning, October 9, HHS announced major changes to the Stark Law that could allow providers greater scope to make changes to improve their ability to succeed under value-based payment contracts

On October 9, the Department of Health and Human Services (HHS) announced significant changes to the Physician Self-Referral Law, known as the “Stark Law,” and the Federal Anti-Kickback Statute, in order to allow for the leaders of patient care organizations participating in accountable care organizations (ACOs) and other value-based payment arrangements, greater leeway to create the structures they need to create, in order to thrive under alternative payment. Among the allowable activities will be the sharing of data analytics services between patient care organizations, more complex post-discharge care coordination, and data- and software-sharing around cybersecurity. Prominent associations are already applauding the move, which was published as a proposed rule.

The announcement, published on Wednesday morning on the HHS website, began, “Today, the Department of Health and Human Services (HHS) announced proposed changes to modernize and clarify the regulations that interpret the Physician Self-Referral Law (the “Stark Law”) and the Federal Anti-Kickback Statute. 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 proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which seeks to promote value-based care by examining federal regulations that impede efforts among providers to better coordinate care for patients.”

Secretary of Health and Human Services Alex Azar said in a statement contained in the announcement that “President Trump has promised American patients a healthcare system with affordable, personalized care, a system that puts you in control, provides peace of mind, and treats you like a human being, not a number. But too often, government regulations have stood in the way of delivering that kind of care. Regulatory reform has been a key piece of President Trump’s agenda not just for faster innovation and economic growth, but also better, higher-value healthcare. Our proposed rules would be an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve.”

And HHS Deputy Secretary Eric Hargan said in his statement in the announcement that “These proposed rules would be a historic reform of how healthcare is regulated in America. 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 healthcare system, while maintaining the important protections patients need. Here at HHS, CMS [the Centers for Medicare and Medicaid Services] and the Office of Inspector General recognized the need for reform and have acted to produce serious and thoughtful sets of proposals.”

CMS Administrator Seema Verma, in the announcement, stated that “We serve patients poorly when government regulations gather dust in the attic: they become ever more stale and liable to wreak havoc throughout the healthcare system,” said CMS Administrator Seema Verma. “Administrative costs are driving up the cost of healthcare in America – to the tune of hundreds of billions of dollars. The Stark proposed rule is an important next step in President Trump’s healthcare agenda for Americans. We are updating our antiquated regulations to decrease burden for providers and helping bring down these increasingly escalating costs.”

The announcement continued, The Stark Law’s new value-based exceptions, under the proposed rule issued by the Centers for Medicare & Medicaid Services (CMS), acknowledge that incentives are different in a healthcare system that pays for value, rather than the volume, of services provided. They include proper safeguards that ensure the Stark Law will continue to provide meaningful protection against overutilization and other harms, while giving physicians and other healthcare providers added flexibility to improve the quality of care for their patients. The proposed changes to the regulations related to the Federal Anti-Kickback Statute and the Civil Monetary Penalties Law issued by the Office of Inspector General (OIG) would, if finalized, address the longstanding concern these laws unnecessarily limit the ways in which healthcare providers can coordinate care for patients. The changes would offer flexibility for beneficial innovation and improved coordinated care through, for example, outcome-based payment arrangements that reward improvements in patient health. The changes would also make it easier for physicians and other healthcare providers to ensure they are complying with the law by offering specific safe harbors for these arrangements.”

The announcement stated that, “Below are examples involving coordinated care, value-based care, data sharing, and patient engagement activities that, depending on the facts, could currently be difficult to fit under existing protections and could potentially be protected by the Stark Law, Anti-Kickback Statute, or Civil Monetary Penalties Law proposals if all applicable conditions are met:

Ø 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.

Ø  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.

Ø  A physician practice could provide smart pillboxes to patients without charge to help them remember to take their medications on time.  The practice could also provide a home health aide to teach the patient and the patient’s caregiver how to use the pillbox.  The pillbox could automatically alert the physician practice and caregiver when a patient misses a dose so they could follow up promptly with the patient. 

Ø  A local hospital could improve its cybersecurity and the cybersecurity of nearby providers that it works with frequently.  To do so, it could donate, for free, cybersecurity software to each physician that refers patients to its hospital.  The hospital and the physicians often share information about their patients, so it is important that there are no weak links that might compromise everyone else.  The software would help ensure that hackers cannot attack the physician’s computers.  Improving each physician’s cybersecurity would help prevent hackers from spreading the attack to other physicians and the hospital.

Ø  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 them monitor patients’ health outcomes.”

A page linked to the main announcement, under the heading, “Modernizing and Clarifying the Physician Self-Referral Regulations Proposed Rule,” included the following: “he proposed rule would create new, permanent exceptions to the Stark Law for value-based arrangements.  Industry stakeholders have informed us that, because the consequences of noncompliance with the Stark Law are so dire, physicians and other healthcare providers may be discouraged from entering into innovative arrangements that would improve quality outcomes, produce health system efficiencies, and lower costs (or slow their rate of growth). The proposed rule would unleash innovation by permitting physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law. The exceptions would apply regardless of whether the arrangement relates to care furnished to people with Medicare or other patients.” Further, that page stated that “The new value-based exceptions include a carefully woven fabric of safeguards to ensure that the Stark Law continues to provide meaningful protection against overutilization and other harms. These proposals recognize that incentives are different in a healthcare system that pays for the value, rather than the volume, of services provided.”

And also this: “Commenters on the June 2018 RFI told us that they currently invest sizeable resources to understand and comply with the Stark Law, and requested additional guidance in this regard. The proposed rule would provide additional guidance on several key requirements that must often be met in order for physicians and healthcare providers to comply with the Stark Law. For example, compensation provided to a physician by another healthcare provider generally must be at fair market value.  The proposed rule would provide guidance on how to determine if compensation meets this requirement.  The proposed rule also provides clarity and guidance on a wide range of other technical compliance requirements intended to reduce administrative burden that drives up costs. Commenters on the June 2018 RFI also requested new exceptions to provide protection for non-abusive, beneficial arrangements between physicians and other healthcare providers. The proposed exceptions would provide new flexibility for certain arrangements, such as donations of certain cybersecurity technology that safeguard the integrity of the healthcare ecosystem, regardless of whether the parties operate in a fee-for-service or value-based payment system.”

Provider associations applaud announcement

National associations representing provider organizations reacted quickly, and positively. NAACOS, the Washington, D.C.-based National Association of ACOs, released a statement attributed to its president and CEO, Clif Gaus, Sc.D. In it, Dr. Gaus said that “NAACOS applauds and strongly supports the administration’s efforts to enhance value-based care, giving ACOs and other models tools needed to succeed, improving regulatory certainty, and reducing administrative burden. NAACOS previously submitted comments in response to the administration’s request for information on Stark Law and anti-kickback statute waivers. Today’s proposed rules, which represent the first major update to the regulations since the Medicare Shared Savings Program was created, are complex and technical, and we are still reviewing.”

Dr. Gaus added that, “On a call this morning, administration officials confirmed the new proposals do not supersede or override current HHS waivers for ACOs participating in the Medicare Shared Savings Program. NAACOS would encourage HHS to underscore this positive news and clarify that these new proposals build upon and give additional flexibility for today’s ACOs. HHS also extends waivers for other models that ACOs also participate in, which NAACOS asked the administration to do last year. Additional clarity around patient data sharing and how waivers apply to other models is welcomed. We also appreciate HHS’s attention to the Beneficiary Incentive Program, which allows ACOs to provide incentives to ACO patients for certain qualifying visits.”

And the Charlotte-based alliance Premier Inc. released a statement by Blair Childs, the organization’s senior vice president for public affairs, in which Childs said, “Members of the Premier alliance strongly support the administration’s initiative to modernize the physician self-referral law (i.e., Stark Laws) and anti-kickback statute in order to ensure that health systems can continue to create strong, aligned partnerships with physicians and other care providers. These are pivotal changes that need to move forward,” Childs added. “They are essential to building momentum behind value-based care initiatives. Among the most critical changes are thoughtful reforms of the Stark Law to ensure that providers who are engaging in value-based arrangements—from care coordination models to full risk—can coordinate beneficiary care across high-value provider groups and settings. Equally important are the administration’s proposed safe harbors under the Anti-Kickback Statute and Civil Monetary Penalty rules for beneficiary inducements across all CMS models. These are foundational to providers’ work to engage, manage and coordinate patient care so as to achieve optimal outcomes.”

And, Childs stated, “In our comments, Premier will be encouraging CMS to also address the barriers to value-based contracting for drugs and devices. While not a silver bullet to stopping rising prices, value-based contracting can be a critical tool to holding pharmaceutical manufacturers accountable for the value of their products. We believe reform to anti-kickback and Stark should also contemplate how to address the rising cost of drugs and devices.”

This is a developing story. Healthcare Innovation will update it as further developments emerge.

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