Blog Post October 30, 2019 Stark Law and Anti-Kickback Statute Proposed Rules Announced Authors Jason Lee Emma Miller Alex Denning On October 9, 2019, CMS and HHS released proposed rules that aim to update the Stark law and Anti-Kickback Statute. These physician self-referral regulations have not been updated since 2007, and many onlookers across the industry have been calling for revisions to reflect an array of market realities. These updates are part of CMS and HHS’s Regulatory Sprint to Coordinated Care. The proposed rule and safe harbor changes are offered for public comment through the end of 2019, and the final rule is scheduled to be published in the middle of 2020. As part of this announcement, HHS stated the following: 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 changes offer a wealth of advantages for organizations that have embraced alternative payment models and value-based care. In conjunction with HHS, CMS and OIG issued the proposed rules. Taking a Closer Look at Stark LawThe proposed rules under the Stark law are intended to create permanent exceptions for value-based arrangements. The changes stem from industry stakeholder feedback noting that the current law disincentivizes physicians. The fear of violating the Stark law hinders providers from entering into innovative arrangements that can improve quality outcomes, produce health system efficiencies, and lower costs. The new rules and exceptions would apply to arrangements regardless of whether the care model is provided to Medicare or non-Medicare patients. Furthermore, CMS is soliciting comments regarding price transparency in the context of the Stark law. CMS believes that if patients understand the cost of care, then the Stark law can serve as an additional safeguard at the point of referral. Some of the key changes resulting from the proposed rule include the following: Greater flexibility for arrangements that involve the value-based enterpriseRevised definitions of “fair market value” and “general market value” to support value-based arrangementsClarification of the commercially reasonable standard, including two proposed definitions for commentChanges to the definitions of key terms implicated in arrangements between providers and health systems, including “designated health service,” “physician,” and “remuneration”Remuneration exchanged between or among participants (i.e., risk-based contracting)Sharing of tools and supports furnished to patientsDonations for cybersecurity technology and servicesProposed modifications to electronic health record items and updates to provisions regarding interoperabilityAdditional flexibility with respect to outcome-based payments and expansion of local transportation limits for discharged patientsAssessing Changes to the Anti-Kickback StatuteAt the same time, the OIG released proposed changes to the Anti-Kickback Statute, which is a different but related set of laws. The statute sets out safe harbors for financial relationships between providers and health systems. The proposed rules revise and add safe harbors to encourage innovative arrangements designed to support the value-based efforts envisioned by CMS. Several safe harbors are being proposed, including language related to the following: Remuneration exchanged between or among participants (i.e., risk-based contracting)Sharing of tools and supports furnished to patientsDonations for cybersecurity technology and servicesProposed modifications to electronic health record items and updates to provisions regarding interoperabilityAdditional flexibility with respect to outcome-based payments and expansion of local transportation limits for discharged patientsImplications for the FutureThe rules will have an array of intended and unintended consequences for physician arrangements across the industry. The clarifications in the final rules will likely provide (1) greater flexibility for organizations to enter into physician arrangements that offer patients improved value and (2) the opportunity to update existing arrangements. The innovative compensation structures will shift organizations’ focus from individual performance to coordination of care. ECG will continue to follow the updates as the rules are finalized and will provide the industry with guidance on the implications and recommended tactics for adjusting to the new market landscape.