Feds Revise Stark Law and Anti-kickback Statute

Feds Revise Stark Law and Anti-kickback Statute

Two final rules make value-based programs less of a liability for physicians.

The Centers for Medicare & Medicaid Services (CMS) and Office of Inspector General (OIG) announced, Nov. 20, coordinated efforts to revise the physician self-referral law, or Stark law, and anti-kickback statute through rulemaking to make value-based programs less risky for healthcare providers to adopt.

Changes to the Physician Self-Referral Law Allow Care Coordination

CMS’ “Modernizing and Clarifying the Physician Self-Referral Regulations” final rule addresses undue regulatory impact and burden of the physician self-referral law that may deter physicians and other healthcare providers and suppliers from entering into value-based agreements.

CMS says in a Fact Sheet, “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).”

To remedy some of the said deterrents and facilitate the transition to value-based care and care coordination, CMS is finalizing a set of definitions and exceptions to the physician self-referral law, effective Jan. 19, 2021.

Provisions in the final rule:

  • Establish exceptions to the physician self-referral law for certain value-based compensation arrangements between or among physicians, providers, and suppliers;
  • Establish a new exception for certain arrangements under which a physician receives limited remuneration for items or services provided by the physician;
  • Establish a new exception for donations of cybersecurity technology and related services; and
  • Amend the existing exception for electronic health record (EHR) items and services.

The final rule starts off by defining the following terms:

  • Value-based activity is the provision of an item or service; the taking of an action; or the refraining from taking an action to achieve at least one value-based purpose of the value-based enterprise (VBE).
  • Value-based arrangement is an arrangement for the provision of at least one value-based activity for a target patient population between or among: the VBE and one more of its VBE participants, or VBE participants in the same VBE.
  • Value-based enterprise (VBE) is two or more VBE participants collaborating to achieve at least one value-based purpose, each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the VBE. The VBE must have an accountable body or person responsible for financial and operational oversight there must be a governing document that describes the VBE and how its participants intend to achieve its value-based purpose(s).
  • Value-based purpose means coordinating and managing the care of a target population; improving the quality of care for a target population; appropriately reducing the costs to, or growth in expenditures of, payers without reducing the quality of care for a target patient population; or transitioning from healthcare 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.
  • VBE participant is a person or entity that engages in at least one value-based activity as part of a VBE.
  • Target patient population is an identified patient population predetermined by a VBE or its participants based on legitimate and verifiable criteria.

CMS did not finalize its proposal to state in the definition of “value-based activity” that the making of a referral is not a value-based activity, but instead revised the definition of “referral” to clarify that a referral is not an item or service. Thus, CMS states in the final rule, “Care planning activities that meet the definition of ‘referral’ at §422.351 will qualify as ‘the taking of an action’ for purposes of applying the definition of ‘value-based activity.’”

In defining the above terms, CMS set out to finalize three exceptions:

  • A value-based arrangement where a VBE has, during the entire duration of the arrangement, assumed full financial risk from a payer for patient care services for a target patient population. (§411.357(aa)(1))
    • CMS finalized this exception with one modification to the period of time during which the exception will be available prior to the VBE’s financial responsibility for the cost of all patient care items and services covered by the applicable payer (12 months, instead of 6 months).
  • A value-based arrangement under which the physician is at meaningful downside financial risk for failure to achieve the value-based purposes of the VBE during the entire duration of the arrangement. (§411.357(aa)(2))
  • Applies to any value-based arrangement, provided that the arrangement satisfies specified requirements. This exception would permit both monetary and nonmonetary remuneration between parties. (§411.357(aa)(3))
    • CMS finalized the proposed safeguards that are also in included in the meaningful downside financial risk exception, but the agency did not finalize the alternative proposal regarding the condition of remuneration.
    • CMS did finalize a requirement regarding patient choice, which is included in the regulations for all three exceptions.

CMS also finalized a provision at §411.352(i)(3) related to the distribution of profits from designated health services that are directly attributable to a physician’s participation in a VBE, but this provision does not go into effect until Jan. 1, 2022.

Together, these exceptions and definitions are intended to create a set of requirements for protection from the physician self-referral law’s referral and billing prohibitions. Practice managers and compliance professionals will need to read this final rule very carefully to comprehend the full scope of the new exceptions and applicable criteria.

Changes to Anti-Kickback Statute Reduce Physician Liability

OIG’s hand in fostering care coordination and value-based care involves amending existing safe harbors and adding new safe harbors to the anti-kickback statute. The OIG’s final rule also amends the beneficiary inducements civil monetary penalty (CMP) for telehealth technologies for in-home dialysis patients and defines several value-based terms.

Although the value-based terminology finalized by CMS is very similar to the OIG’s, compliance officers will need to pay close attention to the slight variations. OIG’s final definition of “value-based activity,” for example, specifies that referrals are not value-based activities, which is contrary to CMS’ definition. The OIG defines additional terms, as well, such as “care coordination and management.”

New and Modified Safe Harbors Protect Physicians

The OIG is finalizing, without modifications from the proposed rule, three new safe harbors for remuneration exchanged between or among participants in a value-based arrangement:

  1. Care coordination arrangements to improve quality, health outcomes, and efficiency without requiring the parties to assume risk;
  2. Valued-based arrangements with substantial downside financial risk; and
  3. Value-based arrangements with full financial risk.

Note, however, that there are modifications to some of the value-based terminology, which may affect the application of these safe harbors compared to what the OIG proposed.

Patient Engagement and Support Safe Harbor. This is a new safe harbor for patient engagement tools and supports furnished by a participant in a VBE to a patient in a target patient population.

CMS-Sponsored Models Safe Harbor. This is a new safe harbor for CMS-sponsored model arrangements and CMS-sponsored model patient incentives that would require OIG fraud and abuse waivers.

Cybersecurity Technology and Services Safe Harbor. This is a new safe harbor for remuneration in the form of cybersecurity technology and services.

Electronics Health Records Safe Harbor. OIG is modifying this existing safe harbor to update and remove provisions regarding interoperability, remove the sunset provision and prohibition on donation of equivalent technology, and clarify protections for cybersecurity technology and services included in an EHR arrangement.

Personal Services and Management Contracts and Outcomes-Based Payments. OIG is modifying this existing safe harbor to increase flexibility for part-time or sporadic arrangements and arrangements for which aggregate compensation is not known in advance. OIG is also finalizing new protection for outcomes-based payments. This new safe harbor protects payments tied to achieving measurable outcomes.

Warranties. OIG is modifying this existing safe harbor for warranties to modify the definition of “warranty” and to provide protection for warranties for one or more items and related services.

Local Transportation. OIG is modifying this existing safe harbor for local transportation furnished to beneficiaries to expand mileage limits for rural areas (up to 75 miles) and eliminate mileage limits for transportation to convey patients discharged from the hospital to their place of residence, and includes rideshare arrangements.

Accountable Care Organizations (ACOs) Beneficiary Incentives. OIG is codifying, without modification from the proposed rule, the statutory exception to the definition of “remuneration” related to ACO beneficiary incentive programs for the Medicare Shared Savings Program.

Mark Your Calendar for These Changes

Although CMS and OIG coordinated their efforts in developing these final rules, the final definitions and exceptions in the physician self-referral law may differ from the definitions and safe harbors in the anti-kickback statute. Another consideration, CMS warns, is that “compensation arrangements may implicate both statutes and, therefore, should be analyzed for compliance with each statute.” Both final rules go into effect Jan. 19, 2021, except for amendment 3 in CMS’ final rule, which goes into effect Jan. 1, 2022. The final rules are scheduled to publish in the Dec. 2 Federal Register.

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Renee Dustman, BS, AAPC MACRA Proficient, is managing editor - content & editorial at AAPC. She holds a Bachelor of Science degree in Media Communications - Journalism. Renee has more than 30 years' experience in journalistic reporting, print production, graphic design, and content management. Follow her on Twitter @dustman_aapc.

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