HHS Proposes New Safe Harbors Under the Anti-Kickback Statute and The Stark Law
Read our newest blogs “Proposed Anti-Kickback Statute "Care Coordination Arrangements" Safe Harbor: Implications for Remote Patient Monitoring and Care Management Services” and “Proposed Anti-Kickback Statute “Patient Engagement and Support” Safe Harbor: Implications for Remote Patient Monitoring and other Care Management Services Vendors”
CMS and OIG double down on supporting care coordination, value based payment arrangements
In a pair of proposed rules released by the Department of Health and Human Services (DHHS), Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS), the DHHS is looking to increase the utilization of value-based arrangements to drive health outcomes and ease the regulatory burdens associated with patient care coordination. The proposed rules seek to change or add certain safe harbors or exceptions to the Anti-Kickback Statute (AKS), Physician Self-Referral prohibition (Stark Law), and the Civil Monetary Penalties (CMP) laws.
This is not the first time that the Trump administration has proposed rules related to the AKS safe harbors. You may recall that in January 2019, the administration sought to remove the safe harbor for prescription drug rebates and add a safe harbor for point-of-sale drug discounts applied to consumer purchases. That proposed rule received mixed support in over 19.000 comments from the pharmaceutical, insurance, and prescription benefit manager industries. However, the proposed rebate and point-of-sale rules were formally withdrawn by the OIG in July of 2019.
This round of proposed AKS and Stark rules reach deeper than the ones proposed in early 2019. As such, they have the potential to impact every stakeholder in the healthcare delivery stream, from pharmaceutical and device manufactures, device and technology manufacturers, physician practices, health systems, payers, and accountable care organizations. While it is still too soon to understand just how much of the proposed changes will be implemented, with just the sheer number of proposed changes included in the proposed rules, it is likely that some of the changes will be implemented in the final rulemaking with potential to greatly change the way that providers and other healthcare stakeholders interact with one another and with patients.
Highlights of the OIG Proposed Rule
The OIG is proposing a total of five new safe harbors to the Anti-Kickback Statute.
AKS Safe Harbors for Value-Based Arrangements and Care Coordination Services
Three new safe harbors under the AKS for value-based arrangements and care coordination services would be created by this proposed rule. These proposals are extensive and create a set of rules that promote the utilization of payment models that compensate stakeholders for health outcomes. While there are many healthcare providers and drug manufacturers that are currently using value-based payment models, the industry as a whole has been reluctant to embrace them due to the lack of a clear path under the AKS regulations. Currently, stakeholders engaged in value-based programs do so by patching together discount, Group Purchasing Organization, and other existing safe harbors. These new safe harbors would clean up the regulatory path for stakeholders to engage in innovative and patient-centered payment methodologies. Some of the key provisions include:
new definitions, like one for “value-based arrangements”;
establishing standards for appropriate, evidence-based outcome measures and metrics;
establishing structures for “value-based enterprises” (VBE) and the governing documents outlining the parties and patient populations involved.
AKS Safe Harbor for Tools and Supports to Improve Quality, Outcomes, and Efficiency
Another new safe harbor would be created for tools and supports furnished under patient engagement and support arrangements to improve quality, health outcomes, and efficiency. Under this proposed safe harbor, “remuneration” under the AKS would not include in-kind patient engagement tools or supports furnished directly by a VBE participant to a patient in a “target patient population” (as defined in the proposed rule) where those tools or supports are directly connected to the coordination and management of care. This safe harbor looks to expand, with certain limitations and caps, similar protections offered by other government sponsored incentive models and allow more stakeholders to offer incentives (such as in-kind items and gift cards) to beneficiaries to promote healthcare outcomes and treatment adherence.
AKS Safe Harbor for CMS Innovation Models
The other new safe harbor that the OIG proposed is for remuneration provided in connection with a CMS-sponsored care and delivery model. This proposal provides flexibility for various stakeholders to engage in population health and care coordination models designed by CMS without having to develop program specific waivers and regulations for those participants.
AKS Safe Harbor for Donation of Cybersecurity Technology and Services
The last new safe harbor proposed by the OIG includes the provision of free cybersecurity technology and services. The proposal outlines various eligible cybersecurity systems and implementation services that can be donated to health care providers for the purpose of mitigating cyber security attacks.
The OIG is also proposing to modify four current safe harbors.
The rule proposes to expand the current safe harbor related to electronic health record services to clarify that developers can include certain cybersecurity functions and promote interoperability of systems.
Changes are also proposed to the current personal services and management safe harbor – which would add protections for outcome-based payment models and part-time services. Specifically, the rule may be changed to (i) substitute, for the requirement that aggregate compensation under these agreements be set in advance, a requirement that the methodology for determining compensation be set in advance; (ii) eliminate the requirement that, if an agreement provides for the services of an agent on a periodic, sporadic or part-time basis, the contract must specify the schedule, length, and the exact charge for such intervals; (iii) protect certain outcomes-based payments. These changes alone could impact many in the healthcare delivery stream as many stakeholders tend to be hamstrung by the current safe harbor which strictly requires aggregation of payments and prescriptive provider schedules.
The final two modifications would change the safe harbors for warranties and expand mileage limits allowed for the provision of local transportation following a patient discharge. Regarding the local transportation safe harbor, the OIG is considering adding “non-medical” services to the safe harbor so long as the services (like trips to the grocery store, gyms or social services facilities) would promote overall health and health outcomes. The transportation rule also considers whether a change is necessary to include the provision of ride sharing programs and even self-driving (or autonomous) vehicles.
Finally, the OIG has proposed to codify the exception in the 1128(b)(3)(K) of the Social Security Act related to “remuneration” to beneficiaries participating in an ACO. One of the key drivers of the Medicare ACO models is to encourage beneficiaries to seek and adhere to care. As a result, the Medicare Shared Savings Program (initially established in 2014), allowed ACO sponsors to offer certain incentives directly to patients without incurring AKS liability related to patient inducement. This proposed rule would finally add that exception to the implementing regulations under the AKS.
Eligibility for new AKS Safe Harbors
Pharmaceutical manufacturers (and several other entities listed in the proposed rule) are NOT eligible for protection under the proposed safe harbors for value-based arrangements, patient engagement and support, and revisions related to outcomes-based payments included in the personal services and management contracts safe harbor. Other elements of the proposed rule would be available to pharmaceutical manufacturers, including certain modifications to the personal services and management contracts safe harbor such as greater flexibility for part-time arrangements and arrangements in which the aggregate compensation is not known in advance. The OIG does indicate in the proposed rule that it is developing value based and outcome based safe harbors specifically for the pharmaceutical industry.
New protections would be available to all entities under the proposed safe harbors for cybersecurity items and services and for CMS-sponsored models, as well as for the proposed modifications to the warranties safe harbor.
Highlights of the CMS Proposed Rule
CMS has also issued a proposed rule that would change the exceptions allowed to the Stark law. The proposed changes recognize that when the Stark law was passed, most Medicare spending was based on the fee-for-service model. With the advent of other payment models such as ACOs and prospective payment systems, CMS recognizes that the delivery of healthcare has changed and the payment structures at the heart of the Stark law have adapted. The provisions included in the proposed rule are aimed at supporting a full transition to value-based care delivery.
The proposed rule touches almost every aspect of the regulations related to the Stark law, including compensation, group practice profit allocation and distribution, ownership and investment interests and service valuation. The proposed rule also adds several definitions and protections related to value-based arrangements and cybersecurity technology exceptions that largely mirror those found in the OIG’s proposed rules related to the AKS.
Changes to Stark Law Definitions
The proposed rule also seeks to change some of the foundational regulatory language related to the Stark law as they would apply to members of a value based enterprise, including compensation definition changes to “commercially reasonable”, “fair market value”, and the “volume or value of referrals” standard. Other similar definition changes would change the way compensation arrangements are reviewed for physicians who are members of physician group practices, including the profit sharing and productivity bonuses, and distribution of “overall profits” for all designated health services provided by the practice.
In a major shift in thinking, CMS is proposed to “decouple” the Stark law from the AKS by removing statements in the Stark regulations pertaining to compliance with the AKS and Federal and State laws or regulations governing billing or claims submission as requirements of the exceptions to the Stark law. CMS recognizes that Congress did not require compliance with the AKS or any other law in existence at the time of enactment of the statute or its subsequent revision in order to avoid the law’s referral and billing prohibitions. It is important to remember that the Stark law is a “strict liability” law, and the AKS is an “intent-based” law. Over the years, many stakeholders have struggled to reconcile the different standards and achieve comfort in their ability to structure arrangements that balance the two standards.
Another proposal would clarify that that the definition of “designated health services” would not include any items that are provided to a hospital inpatient that do not increase reimbursement paid for that patient under the Inpatient Prospective Payment System. This is important as many hospital discharges are based on set groupers and prospectively set fees. Often times, hospital may provide the minimum necessary to a patient and avoid recommending additional affiliated services to avoid implications under the Stark law. This shift would allow hospitals to furnish different or better items or services from affiliated healthcare provders which may have a better impact on patient care, as long as the services are medically necessary and do not alter the reimbursement to the hospital.
Who will be affected by the proposed changes?
The Stark Law applies to financial arrangements with physicians, but the proposed rule open the door to include other stakeholders in the relationships covered by the Stark law and its regulations. Unlike the OIG’s proposed rules for the AKS, under the proposed Stark rule related to value-based arrangements, CMS is only considering excluding pharmaceutical manufacturers; manufacturers and distributors of DMEPOS; pharmacy benefit managers (PBMs); wholesalers; and distributors from the value based rules to align with the same exclusions under the OIG’s AKS proposed rule.
What’s Next?
While we continue to unpack all of the sweeping changes that this pair of proposed rules would have to the healthcare delivery system, we can agree that some, if not most, of these changes have the potential to dramatically change contracting arrangements among healthcare entities managing populations health. Health and Human Services Secretary Alex Azar said the goal is to make the health care system more efficient, not to open the door to new types of fraud. "We propose these changes with great appreciation for the intent of these statutes, which is preventing patients from being taken advantage of and taxpayer dollars from being misspent," Azar said.
Providers and technology companies have the opportunity to voice concerns and support for these proposed rules when the comment period opens. Please contact us if you would like additional information about how these proposed rules may impact your business operations or if you would like assistance drafting comments to the proposed rules.
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