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HHS Makes Stark Law and Anti-Kickback Statute Reforms to Support Coordinated, Value-Based Care

Today, the Department of Health and Human Services (HHS) published two final rules that aim to reduce regulatory barriers to care coordination and accelerate the transformation of the healthcare system into one that pays for value and promotes the delivery of coordinated care.

The rules provide greater flexibility for healthcare providers to participate in value-based arrangements and to provide coordinated care for patients. The final rules also ease unnecessary compliance burden for healthcare providers and other stakeholders across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse.

The HHS Office of Inspector General (OIG) issued the final rule “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements,” and the Centers for Medicare and Medicaid Services (CMS) issued the final rule “Modernizing and Clarifying the Physician Self-Referral Regulations.” These rules are part of HHS’s Regulatory Sprint to Coordinated Care, which has examined federal regulations that potentially impede healthcare providers’ efforts that otherwise would advance the transition to value-based care and improve the coordination of patient care across care settings in Federal healthcare programs and the commercial sector. In addition to advancing value-based care, the CMS final rule clarifies and modifies existing policies to ease unnecessary regulatory burden on physicians and other healthcare providers while reinforcing the physician self-referral law’s (often called the “Stark Law”) goal of protecting patients from unnecessary services and being steered to less convenient, lower quality, or more expensive services because of a physician’s financial self-interest.

“When I launched the Trump Administration’s agenda for value-based transformation of healthcare in 2018, I identified regulatory reform to support coordinated care as one of the four key strategies for delivering a system that pays for outcomes rather than procedures,” said HHS Secretary Alex Azar. “Today, we’ve completed historic reforms to regulations that have stood in the way of creativity and innovation by American healthcare providers for far too long. These new regulatory reforms will mean better care, including innovative arrangements with digital technology that may help patients receive care during the COVID-19 pandemic.”

“These reforms under the Stark Law and Anti-Kickback Statutes are historic reforms and come as part of the regulatory sprint to coordinated care that I led over the past few years,” said HHS Deputy Secretary Eric Hargan. “Too often, ‘sorry, Stark’ or ‘can’t do it, AKS’ have been watchwords in American healthcare. Under President Trump, we’re finally breaking down barriers to patient-centered, value-based healthcare innovation. As Chief Regulatory Officer of HHS, it has been an honor for me to work with the talented staff at OIG and CMS to create platforms to allow innovative uses of a whole array of new ideas, such as value-based enterprises and patient engagement tools.”

“This rule is emblematic of the Trump Administration’s commitment to addressing longstanding problems and developing innovative solutions to outdated regulations that add administrative costs and rob health care providers of time from patients.” said CMS Administrator Seema Verma “When CMS launched our nationwide tour to kick off our Patients Over Paperwork initiative in 2017, one of the top things we heard from front-line providers was how the outdated Stark regulations impeded them from moving toward a more value-driven reimbursement model. Our team listened and took action, and today’s final rule is the historic result.”

“OIG’s new safe harbor regulations are designed to facilitate better coordinated care for patients, value-based care, and improved cybersecurity, while also protecting against fraudulent or abusive conduct,” said Christi A. Grimm, Principal Deputy Inspector General. “Providers and the health care system are still on the front lines against COVID-19, and this rule establishes flexibilities for remote patient monitoring or other arrangements to assist in the ongoing response and recovery efforts.”

The new and amended regulations related to the federal Anti-Kickback statute and the civil monetary penalties law issued by OIG address stakeholder concerns that these laws unnecessarily limit the ways in which healthcare providers can coordinate care with and for federal healthcare program beneficiaries. OIG’s final rule modifies and clarifies the agency’s proposed rule in response to comments, as explained in the preamble to the final rule.

For example, OIG’s final rule clarifies how medical device manufacturers and durable medical equipment companies may participate in protected care coordination arrangements that involve digital health technology, and the final rule lowers the level of “downside” financial risk parties must assume to qualify under the new safe harbor for value-based arrangements that involve substantial downside financial risk. In recognition of the urgent problem of cyber threats to the healthcare industry, the rule also broadens the new safe harbor for cybersecurity technology and services to protect cybersecurity-related hardware.

OIG’s final rule, and the CMS final rule to the extent the Stark Law is applicable, would facilitate a range of arrangements to improve the coordination and management of patient care and the engagement of patients in their treatment if all applicable regulatory conditions are met, including the following examples:

  • To improve patient transitions from one care delivery point to the next, a hospital may wish to provide physician offices with care coordinators that furnish individually tailored case management services for patients requiring post-acute care.

  • A hospital may wish to provide support and to reward institutional post-acute providers for achieving outcome measures that effectively and efficiently coordinate care across care settings and reduce hospital readmissions. Such measures would be aligned with a patient’s successful recovery and return to living in the community.

  • A primary care physician or other provider may wish to furnish a smart tablet that is capable of two-way, real-time interactive communication between the patient and his or her physician. The patient’s access to a smart tablet could facilitate communication through telehealth and the provision of in-home services.

  • A health system furnishes cybersecurity technology to physician practices to reduce harm from cyber threats to all their systems.

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