New rules mean that doctors and hospitals who coordinate patients’ care with other providers no longer face fines or prison
In 1972, the federal anti-kickback statute prohibited paying for or receiving any remuneration in return for Medicare- or Medicaid-funded business. Seventeen years later, in 1989, doctors were prohibited – by the Stark Law – from making referrals for healthcare services to entities in which they had a financial relationship. The two statutes were intended to reduce fraud and waste, but over the years, the industry questioned whether they were counterproductive to efforts that encouraged value-based arrangements instead of the traditional fee-for-service.
“Industry stakeholders informed us that, because the consequences of noncompliance with the physician self-referral law (and the anti-kickback statute) are so dire, providers, suppliers, and physicians 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),” wrote the Centers for Medicare & Medicaid Services in the Federal Register on Dec. 2, 2020.
Effective Jan. 19, 2021, new rules to modernize the AKS and Stark Law became effective, as part of the federal government’s “Regulatory Sprint to Coordinated Care” program. The program is designed to encourage:
- A patient’s ability to understand treatment plans and make empowered decisions.
- Providers’ alignment on an end-to-end treatment approach (that is, coordination among providers along the patient’s full care journey).
- Incentives for providers to coordinate, collaborate, and provide patients with tools to be more involved.
- Information-sharing among providers, facilities, and other stakeholders in a manner that facilitates efficient care while preserving and protecting patient access to data.
Repertoire asked Mollie Gelburd, associate director of government affairs for the Medical Group Management Association, to spell out how the new rules might affect providers’ actions, as well as suppliers’ role in coordinated-care.
Repertoire: Up until January 2021, how have the Stark Law and anti-kickback statute interfered with providers’ coordination-of-care arrangements?
Mollie Gelburd: Any type of shared incentive payments involved in care coordination arrangements, such as an accountable care organization, is suspect under Stark if they include Medicare payments. The potential for liability under the Stark Law is much broader than the AKS, as it is a strict liability law. Any Stark violation is subject to the same penalty, whether the nature of the infraction is innocuous or not.
Here’s an example: Several medical group practices are interested in forming a care coordination model for diabetes patients to improve clinical outcomes, promote efficient use of resources, and improve communication among providers involved in the patient’s care. A primary care provider coordinates care with a dietician, nurse educator, endocrinologist, and other specialists as needed across multiple sites of service, with the goal of reducing A1C levels and mitigating comorbidities. Participating providers receive a share of any resulting savings.
Under the Stark Law, there was no express protection for cost-saving programs, so practices would have been prohibited from entering into a care coordination plan with a shared savings component, opening themselves up to possible liability.
The AKS is a criminal law, but there’s an “intent” element that’s missing from Stark. Anyone who knowingly and willfully receives or pays anything of value (remuneration) as an incentive to influence the referral of federal health program business can be held accountable. Therefore, any support provided by an entity, such as a hospital providing support to an entity with which it is coordinating care, such as a group practice, is remuneration under the AKS and therefore subject to scrutiny.
Repertoire: What types of “legitimate activities” to coordinate and improve care are now OK in the eyes of CMS, which were not OK prior to Jan. 19?
Gelburd: The types of payment arrangements used in value-based models are unlikely to fit within any of the Stark Law exceptions that existed prior to the final rule. That would include a gainsharing arrangement where a hospital and physician practices agree to share in any financial savings for cost-efficient care, or pay back losses for care that exceeds a predetermined benchmark, such as in the example above. Most Stark exceptions prohibit compensation that varies with the volume or value of referrals, so a key problem with an arrangement like gainsharing is, it inevitably links physician payments to the volume or value of referrals. It’s possible that this type of arrangement could be structured to fit within one of the three new Stark exceptions … but a group practice would likely have to consult counsel or a compliance expert to ensure they are not running afoul of the requirements.
Repertoire: The rule regarding the anti-kickback statute says that some entities are NOT eligible for value-based safe harbors, including medical device distributors and manufacturers of devices or medical supplies. What does that mean?
Gelburd: The Office of the Inspector General originally stated in the proposed rule that entities ineligible to use new value-based safe harbors are pharmaceutical manufacturers, distributors, and wholesalers; pharmacy benefit managers; laboratory companies; pharmacies that primarily compound drugs or primarily dispense compounded drugs; manufacturers of devices or medical supplies; entities or individuals that sell or rent durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) (other than a pharmacy or a physician, provider, or other entity that primarily furnishes services); and medical device distributors and wholesalers. However, in the final rule, the OIG created a pathway for “limited technology participants” to receive safe harbor protection in some instances. “Limited technology participants” include manufacturers of a device or medical supply or a DMEPOS company that is a value-based-enterprise (VBE) participant that exchange digital health technology with another VBE participant or a VBE. That said, they are restricted from conditioning the exchange of remuneration on any recipient’s exclusive use, or minimum purchase, of any item or service manufactured, distributed, or sold by those entities.
Repertoire: In your opinion, are further changes or revisions needed to the Stark Law and AKS?
Gelburd: MGMA supports and appreciates the Stark Law value-based arrangement exception finalized by CMS, as it may create opportunities for more group practices to participate in care coordination arrangements to improve patient care. However, MGMA believes that rewording and tinkering with terminology does not resolve the fundamental complexity and overall problems with the law. Moreover, changes to highly technical terms do not nullify the need for group practices to consult with attorneys, compliance experts, and/or valuation professionals when evaluating Stark Law compliance. This adds unnecessary expenses that would be better spent on investments that drive improvements in patient care.
In our opinion, here are some potential solutions:
- Repeal the compensation arrangement provision in Stark, leaving intact the restriction on self-referrals for physicians with an ownership or investment interest. Doing this would still leave abusive referral relationships involving compensation arrangements subject to the AKS in combination with the False Claims Act.
- “Inverse” the law, to permit all relationships, except if specifically identified as a prohibited relationship. This would remedy the current patchwork of exceptions approach.
- Simplify the definition of what it means to be a “group practice,” which currently entails seven technical requirements.
- Completely revise the penalty provisions in Stark, so as to limit fines to situations where the prohibited referrals result in some demonstrable harm to the government or the patients served.
Sidebar:
Safety-net hospitals favor new rules
America’s Essential Hospitals is a national trade association of more than 300 public and other nonprofit hospitals with a safety-net role. Maryellen Guinan, principal policy analyst, responded to Repertoire’s request for the association’s viewpoint on the new rules regarding Stark Law and the anti-kickback statute.
“We appreciate and support HHS’ work to prioritize care coordination, improve delivery across the care continuum, and reduce regulatory impediments to our hospitals’ fully engaging in value-based care and alternative payment models. The final rules from OIG and CMS are welcome steps toward aligning fraud and abuse laws with the value-driven health care system of today – and, just as important,
of tomorrow.
“The new exceptions to the Stark Law and safe harbors under the anti-kickback statute vary based on the level of financial risk assumed by the parties involved in the value-based arrangement. Greater protection is provided for those who have assumed full or substantial financial risk, compared with those in upside-only arrangements.
“What these exceptions and safe harbors lack is an acknowledgment that necessary upfront and ongoing investments constitute a downside risk – for example, investments in proactive data management, technology upgrades, and redesign processes. We believe investments in infrastructure and care redesign, as well as clinical risk essential hospitals assume in treating complex patients, should be considered a form of downside risk. We encourage further work by OIG and CMS in this area.”