Blog Post

The Stark Contrast Between Value and Volume: The Stark Law and Anti-Kickback Statute in a Shifting Healthcare Landscape

The Stark Contrast Between Value And Volume Mar 2019 Web

As healthcare continues to shift from a volume to value orientation, observers across the country are increasingly raising concerns over how the Stark law and Anti-Kickback Statute (AKS) limit the ability of providers to participate in and be appropriately compensated for care coordination. According to many stakeholders, these laws were developed for a fee-for-service delivery system and may restrict providers’ ability to effectively incentivize physicians under Alternative Payment Models (APMs) such as accountable care organizations. Recent statements from the Trump administration indicate that modifying the Stark law and AKS is a priority. Congress may also seek out separate opportunities to promote coordinated care, but passing legislation remains challenging. Further, the administration has signaled that it intends to make regulatory changes, even without new legislation. Providers, particularly those participating in value-based arrangements, will need to remain apprised of the potential changes.

Recent Developments

The Trump administration has introduced an initiative called the “Regulatory Sprint to Coordinated Care,” which aims to reduce regulatory burdensand promote care coordination, potentially through modifications to the Stark law and AKS. In a recent speech, Health & Human Services (HHS) deputy secretary Eric Hargan indicated that HHS intends to release proposed rulemaking on the Stark law and AKS later this year. After the results of last year’s midterm elections, it is unclear if a divided Congress will also support these activities through legislation. Removing roadblocks to more coordinated and value-based care would likely have bipartisan consensus, but it remains to be seen whether and how that consensus can be translated to actual legislation.

Regulatory and Legislative Processes

Potential mechanisms for changes include the following:

Regulatory Process

The Office of Inspector General (OIG) and Centers for Medicare & Medicaid Services (CMS) have substantial leeway in defining safe harbors and exemptions. Specific regulatory options the administration could pursue include1:

  • Expanding exemptions to providers participating in all types of APMs, not just CMS-specific models such as the Medicare Shared Savings Program.
  • Relaxing the restrictions on paying for the volume or value of referrals to potentially allow payments that are tied to outcomes or quality.
  • Clarifying how providers can utilize improvements in quality or outcomes in setting fair market value compensation rates for physicians
  • Removing the “one-purpose test,” which can be used to demonstrate a violation of the AKS if any part of a payment rewards patient referrals, even if that is not the main purpose or intent of the payment.

Legislative Process

A divided Congress and competing health policy aims (e.g., drug price regulation, coverage expansion) limit the likelihood of significant legislative reform of the Stark law and AKS. The previous House leadership expressed interest in revisiting some of these laws, but to date, the newly elected House leadership has not identified this as a priority. If Congress does decide to act, some options it could pursue include:

  • Passing legislation that revises or replaces the Stark law and AKS.
  • Expanding OIG’s and/or CMS’s rulemaking authority and allowing these entities to expand safe harbors and exceptions.
  • Establishing additional safe harbors and exceptions directly through legislation.

Implications for Providers

Given the current divided Congress, it is unlikely that large-scale legislative changes will be made to either the Stark law or AKS. While providers should continue to track activities on Capitol Hill, the broad structures of these laws probably will not change in the near future. However, it is likely that the Trump administration will continue to push for regulatory changes and may pursue significant exemptions for providers participating in APMs. Hospitals, health systems, and physicians currently participating in APMs or considering doing so should keep a close eye on CMS’s actions in the coming months.

Footnotes

  • 1.

    “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (Stark) Law to Foster Integrated Care Delivery and Payment Models” (Healthcare Leadership Council).