CMS Proposes Changes to Stark and Anti-Kickback Regulations to Promote Value Based Care

The Trump administration released a pair of long-awaited rules aimed at modernizing and clarifying the Stark Law and Anti-Kickback Statute (AKS). The Department of Health and Human Services (HHS) said that the notice of proposed rulemaking addressing the Stark Law from the Centers for Medicare & Medicaid Services (CMS) and the AKS from the Office of the Inspector General (OIG) would provide greater certainty for health care providers participating in value-based arrangements and providing coordinated care for patients. You can read the CMS proposed rule on the Stark Law here and the OIG proposed rule on the AKS here.

The Proposed Rules

The proposed rule on the Stark Law opens additional avenues for physicians and other healthcare providers to coordinate the care of the patients they serve, and will allow providers across different healthcare settings to work together to promote quality care. According to CMS, the Stark Law’s new value-based exceptions acknowledge that incentives are different in a healthcare system that pays for value, rather than the volume, of services provided. The health agency also ensured that the proposed new pathways include proper safeguards to ensure meaningful protection against overutilization and other harms.

The proposal on the AKS and civil monetary penalties (CMP) regarding beneficiary inducements would create a number of safe harbor protections similar to CMS’s rule on the Stark Law. The new safe harbors would create a range of flexibilities for providers engaged in value-based arrangements, ranging from flexibility on in-kind remuneration for coordinated care to permitting monetary remuneration for providers with full financial risk in a value-based care arrangement. It would also create an exception to CMP for inducing the use of telehealth technologies for patients undergoing in-home dialysis.

Pharmaceutical manufacturers were notably excluded from the bulk of the new and modified safe harbors. OIG says in the notice of proposed rulemaking that its decision to propose not including pharmaceutical manufacturers stems from concerns that value-based arrangements involving them could result in structures that encourage the use of a certain product. Manufacturers would still be eligible for limited safe harbors, such as those concerning cybersecurity and CMS-sponsored models.

Stark Law

Under the proposed rule, new exceptions would be made for value-based arrangements, and it would allow physicians and other health care 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 proposed rule would provide additional guidance on several key requirements that must often be met in order for physicians and healthcare providers to comply with the Stark Law. Additionally, the proposed rule provides clarity and guidance on a wide range of other technical compliance requirements intended to reduce administrative burden that drives up costs.

In response to stakeholder requests for exceptions to the Stark Law for non-abusive, beneficial arrangements between physicians and other health care providers, the proposed rule includes exceptions that would provide new flexibility for certain arrangements — such as donations of certain cybersecurity technology that safeguard the integrity of the healthcare ecosystem — regardless of whether the parties operate in a fee-for-service or value-based payment system.

The proposed rule also addresses the price transparency directives in the June 24, 2019 Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First. CMS is considering whether to include a requirement related to price transparency in every proposed exception for value-based arrangements. The agency states that because of limits on currently available pricing data, such a requirement could help break down barriers to cost-of-care discussions. CMS also writes that it plans to add additional program integrity requirements.

Anti-Kickback Statute

In the proposed rule, OIG creates a number of new safe harbors in the AKS protecting value-based arrangements. These arrangements would generally be targeted at a specific patient population under a framework designed to encourage high-value care for that population. Value-based arrangements would be protected under three safe harbors. Care coordination arrangements would include in-kind remuneration for services or infrastructure. It would protect sharing employees for various tasks related to care coordination. Medically-unnecessary items would not be protected. Value-based arrangements are two safe harbors that would protect value-based arrangements with either substantial downside risk or full financial risk.

Furthermore, the rule would create a new safe harbor for patient engagement, allowing providers participating in a value-based arrangement to offer in-kind patient engagement tools and supports to patients. Monetary inducements for patients would not be permitted. Additionally, the cybersecurity donations safe harbor would protect the transfer of cybersecurity technology and services between entities to implement and maintain cybersecurity.

Similar to a requirement in the rule published simultaneously by CMS, OIG’s rule would modify the current safe harbor for the donations of EHRs and associated services by requiring donated items and services to be interoperable. It would also update the safe harbor to use more up-to-date definitions of information blocking and would clarify that cybersecurity software and services have always been covered under the existing safe harbor for EHRs. The rule also includes proposed safe harbors relating to local transportation, personal services, management contracts.

Device Industry Support

After the release of the rule, the Advanced Medical Technology Association (AdvaMed) released a positive statement through its president and CEO, Scott Whitaker.

“The administration’s proposed updates to the AKS safe harbor and Stark Law regulations are crucial steps toward a more patient-centered, value-based health care system that will help achieve better clinical outcomes, lower costs, and an improved patient experience. We thank White House Domestic Policy Council Director Grogan, Secretary Azar, Deputy Secretary Hargan, Administrator Verma and their staff for their hard work on behalf of America’s patients.

“Today’s medical technology companies don’t just produce devices and diagnostics that save and improve lives, they provide solutions that comprise a range of products and services to improve patient outcomes. They are true partners working to diagnose, treat and manage disease, as well as share accountability for achieving better outcomes and managing costs. HHS’s proposed AKS changes in particular will help make that happen.

“We look forward to reviewing the proposed rules in more detail, and working closely with HHS and CMS on both implementation and finding additional ways to strengthen value-based care across the health care system.”

Pharmaceuticals

According to HHS the proposed anti kickback rule specifically includes a variety of “protections for pharmaceutical and medical device manufacturer arrangements, including broad protections for drug and medical device manufacturer participation in value-based contracts, pricing arrangements, warranty arrangements, and APMs, as well as protection for coupons and other means of direct co-payment assistance to Medicare Part D beneficiaries in certain situations.”

Despite giving this and other references that there are  certain protections in the proposed rule.  Pharmaceutical manufacturers are excluded from many of the new and modified safe harbors. The OIG decision to exclude pharmaceutical manufacturers results from apprehension that these value-based arrangements could encourage the use of a certain product.     Manufacturers will still be eligible for partial safe harbors, for example concerning cybersecurity and CMS-sponsored models.