Changes to Stark Law, Anti-Kickback Statute Rules Put Focus on Value-Based Care; Will They Help Your Practice?

Doctor Reviewing Information on a Laptop Computer

CMS and HHS-OIG Usher in a New Era for Value-Based and Coordinated Care. Your Practice Could Benefit from the Revisions, Exceptions, and Safe Harbors That Come with It.

As more healthcare providers are moving toward value-based and coordinated care arrangements, and away from fee-for-service, the federal government is also modernizing to accommodate these newer ways of doing business.

In November 2020, the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services Office of Inspector General (“HHS-OIG”) announced two long-awaited final rules to Stark Law and Anti-Kickback Statute (“AKS”) regulations. Each offer greater clarity and flexibility for providers who may have been hesitant to engage in value-based and coordinated care. In addition, there are safe harbors and exceptions that could benefit your healthcare practice.

The HHS-OIG’s final rule is “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements,” while CMS’s is “Modernizing and Clarifying the Physician Self-Referral Regulations.” They are a springboard from the HHS’s 2018 “Regulatory Sprint to Coordinated Care” project, set up as a means of surveying ways to incentivizing coordinated care across the federal and commercial sectors, while also reducing the regulatory burden that would come from it.

What Are the Stark Law and Anti-Kickback Statute Exceptions for Value-Based Arrangements?

In its final rule, CMS proclaims that its revisions will:

“[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 apply regardless of whether the arrangement relates to care furnished to people with Medicare or to other patients.

The HHS-OIG’s final rule has a similar goal:

“[T]o remove potential barriers to more effective coordination and management of patient care and delivery of value-based care.”

To that end, each final rule sets out exceptions and safe harbors for:

    • value-based arrangements that involve the parties’ full assumption of financial risk;
    • value-based arrangements that involve the parties’ assumption of meaningful financial risk; and
    • care coordination arrangements that do not carry financial risk but will improve quality health outcomes and efficiency.

What Do the Stark Law Value-Based Terms Mean?

There are several new Stark Law value-based definitions at play here:

    • Value-Based Activity: For any of the following activities, provided that the activity is reasonably designed to achieve at least one value-based purpose of the value-based enterprise: (1) the provision of an item or service; (2) the taking of an action; or (3) the refraining from taking an action.
    • Value-Based Arrangement: This is an arrangement for the provision of at least one value-based activity for a target patient population to which the only parties are: (1) the value-based enterprise (“VBE”) and one or more of its VBE participants; or (2) VBE participants in the same value-based enterprise.
    • Value-Based Enterprise: Two or more VBE participants: (1) that collaborate to achieve at least one value-based purpose; (2) each of which is a party to a value-based arrangement with the other or at least one other VBE participants in the value-based enterprise; (3) that have an accountable body or person responsible for the financial and operational oversight of the value-based enterprise; and (4) that have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s).
    • Value-Based Enterprise Participant: A person or entity engaging in at least one value-based activity as part of a VBE.
    • Target Patient Population: An identified patient population as selected by a VBE or its VBE participants, based on legitimate and verifiable criteria that: “1) are set out in writing in advance of the commencement of the value-based arrangement; and 2) further the value-based enterprise’s value-based purpose(s).”
    • Value-Based Purpose: This applied to any of the following: (1) coordinating and managing the care of a target patient population; (2) improving the quality of care for a target patient population; (3) appropriately reducing the costs to, or growth in expenditures of payors without reducing the quality of care for a target patient population; or (4) transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.
    • Full Financial Risk: This means the value‐based enterprise is financially responsible on a prospective basis for the cost of all patient care items and services covered by the applicable payor for each patient in the target patient population for a specified period.
    • “Meaningful downside financial risk”: The physician is responsible to repay or forgo no less than 10% of the total value of the remuneration the physician receives under the value-based arrangement.

What Are Further Stark Law Exceptions, Modifications, and Definitions?

While the Stark Law Final Rule contains hundreds of pages of commentary and rules, this overview highlights some of the more important ones with which practitioners should be aware:

    • New Cybersecurity Exception and Modification to the Existing Electronic Health Records (“EHR”) Exception: This exception protects the donation of nonmonetary remuneration of cybersecurity technology. As well, the existing exception related to donations of EHR systems was expanded, and it does not require recipients to contribute to the cost of the donated cybersecurity technology or services.
    • New Exception for Limited Remuneration to a Physician: This exception was designed to allow arrangements where a physician receives remuneration of no more than $5,000 per calendar year (though it is adjusted annually for inflation) as a fair market value exchange for items or services provided by the physician.
    • Clarification on Group Practices and Designated Health Services (“DHS)” Profit Sharing: Group practices can no longer distribute overall profits from DHS on a “split-pool” basis (different pools of DHS are shared differently among physicians). To qualify as a group practice now, the group must combine, prior to distribution, the overall profits derived from all DHS of the entire group (or overall profits from all DHS of any subgroup that has five or more physicians). Note: This clarification does not take effect until January 1, 2022.
    • New or Revised Definitions and Other Clarifications: The Stark Law Final Rule creates a new definition for the term “commercially reasonable” and “general market value” and further revises key definitions such as “volume or value” and “fair market value,” among others. CMS’s stated intention in making these changes is to modernize and clarify the Stark Law to reduce unnecessary burdens while still protecting the Medicare program from fraud and abuse.
    • “Commercially Reasonable”: This definition is to mean that “the particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty.” Also, CMS clarified that an arrangement may be “commercially reasonable” even if it does not result in a profit for one or more of the parties.
    • Compensation: New rules define when compensation will be determined to consider “volume or value” of referrals or “other business generated” between the parties. CMS also clarified the circumstances under which compensation will be considered to be “set in advance.”
    • “Fair Market Value”: This definition is modified into a general definition for equipment rental and office space rental. In addition, “general market value” gets segmented into definitions that specifically apply to each of the purchase of assets, compensation, and the rental of equipment or office space.

What Are Further Safe Harbors and Modifications for the Anti-Kickback Statute?

The AKS final rule has additional new safe harbors as well as modifications to existing safe harbors that allow for greater flexibility:

    • Patient Support and Engagement:A new safe harbor, this protects the use of goods, items, and services that are furnished by a value-based enterprise participant to a patient who is part of a target patient population.
    • CMS-Sponsored Models: This protects CMS-sponsored model arrangements and model patient incentives that would normally require OIG fraud-and-abuse waivers. Under this safe harbor, the need for separate OIG fraud-and-abuse waivers for new CMS-sponsored models is reduced.
    • Cybersecurity Technology and Services: This is similar to the Stark Law Cybersecurity Exception.
    • Electronic Health Records Exception: Here, the EHR is modified to eliminate provisions over interoperability and to take out the prohibition on equivalent technology donation. In addition, it clarifies those protections for cybersecurity technology and services are included in an electronic health records arrangement. The sunset provision also is removed, so this exception is now permanent.
    • Personal Services and Management Contracts and Outcomes-Based Payments: Certain payment structures that incorporate value-based care models are now provided protection but still require compliance with all.
    • Warranties Safe Harbor:This now expands its protection to warranties for one or more items and related services (i.e., bundled warranties).
    • Local Transportation Safe Harbor:This modification expands mileage limits for rural areas (previously up to 50 miles, now to up to 75 miles); eliminates mileage limits for transporting discharged patients from the hospital to their place of residence; and clarifies that transportation through ride-sharing services is protected.

How Can the Health Care Compliance Attorneys at Chapman Law Group Help My Medical Practice with These New Rules and Exceptions?

As with every new rule released by CMS and HHS-OIG, there are voluminous rules, stipulations, and notes. This can make things daunting for healthcare providers who want to incorporate any modifications into their practice. But as value-based business practices become mainstream, it’s important for healthcare practices to understand the exceptions, safe harbors, definitions, and prohibited acts, in order to stay compliant with government health care program payors.

The healthcare compliance lawyers at Chapman Law Group are here to keep you apprised on what the additional flexibility in the Stark Law and the AKS does and does not offer. Because each health care provider is different, we want to be sure you’re following the correct methods in order to prevent healthcare audits and investigations from happening.

Our national compliance practice offices are based in:

Contact us today to learn more about our health care compliance services.

Need an Attorney? Contact us now!

.

  • This field is for validation purposes and should be left unchanged.

Related Attorneys

Wedad Suleiman, LL.M.

Attorney

Healthcare Compliance, Civil Litigation

Michigan Office
1441 W. Long Lake Road, Suite 310
Troy, MI 48098
Phone: (248) 644-6326

Recent Posts

Related Posts

Blog Categories

Blog Archives

FREE Health Care Newsletter

Stay up to date on the latest news in health care law!

FREE eBook!

Click the link below to download our compliance eBook now!

Got A Question?

Call now to schedule a consultation.
Chapman Law Group Favicon

This website uses cookies to ensure you get the best experience on our website.

Send this to a friend