Healthcare Blog Series: CMS and HHS-OIG Issue Final Rules Updating the Anti-Kickback Statute and Stark Law

***This is an update to the second installment of the blog series, which detailed
proposed revisions to the Anti-Kickback Statute and the Stark Law.***

 
On November 20, 2020, over one year after releasing proposed changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark Law), the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) and the Centers for Medicare and Medicaid Services (CMS) issued two final rules, revising the AKS and Stark Law safe harbor regulations. The new regulations, with one exception, took effect on January 19, 2021. As was discussed in the second installment of this blog series, the key to the AKS’s and Stark Law’s proposed changes is the government’s focus on promoting coordination of care among providers and value-based care models to align federal healthcare program reimbursements with quality, cost-effective patient care. Satisfying the requirements of the new safe harbor regulations, like the previous versions, is situation-specific and can be complex.

To address concerns on whether a particular payment or business arrangement is subject to an applicable safe harbor, government contractors and commercial businesses should seek legal advice to minimize the risk of potential government investigations, costly litigation, criminal liability, or exclusion from participation in federal healthcare programs.

AKS Final Rule

The HHS-OIG final rule implements seven new AKS safe harbors, modifies four existing safe harbors, and revises the definition of “remuneration” in the Civil Monetary Penalty statute (CMP) to include a new exception for the provision of certain telehealth technologies related to Accountable Care Organization (ACO) Beneficiary Incentive Programs.

HHS-OIG finalized three new safe harbors for value-based arrangements involving value-based enterprises (VBE) (i.e., a network of individuals and / or entities who participate as parties to a value-based arrangement), which involve remuneration exchanged between VBE participants to achieve (1) coordination and management of care of target patient populations to improve outcomes; (2) containment of substantial downside financial risk that is meaningfully shared by the transaction’s participants; and (3) assumption of full financial risk from a payor for each patient in the target population.

In addition to the safe harbors for value-based arrangements, HHS-OIG issued four new safe harbors: (1) Patient Engagement and Support; (2) Cybersecurity; (3) CMS-Sponsored Models; and (4) a modified ACO Beneficiary Incentive CMP. The AKS final rule modifies the ACO Beneficiary Incentive CMP to codify the statutory exception to the definition of “remuneration” for certain benefits offered to patients, including telehealth technologies.

Lastly, along with the seven new safe harbors, HHS-OIG finalized the modification of four existing safe harbors: Electronic Health Records, Warranties, Personal Service and Management Contracts, and Local Transportation.

Stark Law Final Rule

In furtherance of HHS-OIG’s goal to advance value-based, coordinated care, CMS’ final rule brings the first significant updates to the Stark Law since 1989, the year of its enactment, with a focus on modernizing the statute to address “undue regulatory impact and burden” on physicians and healthcare providers. CMS’ final rule issued three new safe harbors for value-based compensation arrangements and a new safe harbor for the donation of cybersecurity technology. It also amended several existing definitions and provisions of the Stark Law.

CMS’ new safe harbors for value-based compensation arrangements allow physicians and healthcare providers to design and enter into value-based arrangements that emphasize coordinating and improving the quality of care for patients at lower costs, without violating the Stark Law. This supports CMS’ goal of promoting coordinated care and novel payment models to improve quality and patient outcomes for beneficiaries in the federal healthcare programs and the privately insured. CMS’ final rule permits in-kind and monetary remuneration paid under (1) a value-based arrangement; (2) a value-based arrangement in which the physician is at meaningful downside financial risk for failing to achieve the value-based purpose(s) of the VBE; and (3) a value-based arrangement in which a VBE has assumed full financial responsibility from a payor for the cost of all patient care items and services.

CMS also amended several existing definitions and provisions of the Stark Law. These amendments include revisions to the definitions for “commercial reasonableness,” “designated health services,” “fair market value” and “general market value,” and “indirect compensation” when compensation takes into account the volume or value of referrals or other business generated. CMS also clarified that the signature requirement “may be satisfied by an electronic or other signature that is valid under applicable Federal or State law.”

Lastly, CMS’ final rule “de-coupled” the Stark Law from AKS compliance. Eligibility for many of the Stark Law’s previous safe harbor protections required compliance with the AKS. The final rule removed references to compliance with the AKS from all safe harbors except for the fair market value compensation exception. This was done to avoid conflating the AKS’ intent-based requirements and the Stark Law’s strict liability provisions.

If you have questions about whether a particular payment or business arrangement is subject to an applicable safe harbor, please contact Matt Kreiser, the author of this blog, or a member of PilieroMazza’s Litigation & Dispute Resolution Group or Healthcare Industry Team.

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