Potential Stark Law and Anti-Kickback Statute Reforms to Support Coordinated Care

During a hearing on July 17, 2018, Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan announced that HHS is interested in reforming the Stark law and the Anti-Kickback Statute (AKS). As value-based care is becoming more prominent in the healthcare system, coordinated care between providers is a necessity; but the Stark law and AKS are considered an impediment to coordinated care. Hargan contends that since the Stark law was created in a fee-for-service context, it “may unduly limit ways that physicians and healthcare providers can coordinate patient care [in a value-based system].”

HHS’s push for reform comes out of the “Regulatory Sprint to Coordinated Care,” which is an initiative launched by CMS that seeks to remove barriers to coordinated care while still upholding laws and rules that keep patients safe. According to Hargan, HHS is working on creating administrative rules to address these barriers.

Aside from the regulatory hurdles that the Stark law imposes on coordinated care, HHS is also concerned about the strict liability aspect of the Stark law. Strict liability imposes civil liability with monetary penalties onto the provider, regardless of the intent underlying the Stark law violation arises from an accident. HHS believes that strict liability turns providers away from entering into coordinated care arrangements, because the complexity of the Stark law may cause providers to violate it unintentionally and become liable. A suggested change from HHS is to define “noncompliance” in a clearer manner, which would allow providers to feel more at ease with participating in coordinated care.

While there is bipartisan support for reform of the fraud and abuse laws, Representative Sander Levin (D-MI) still cautions that these laws are “important tools protecting Medicare beneficiaries from inappropriate referrals and overutilization of care,” and that Congress should be wary about weakening them.

To aid in its reform efforts, HHS recently released a Request for Information (“RFI”) to seek input from the public on how to address the burdens that the Stark law imposes on coordinated care. Inquiries from HHS include:

• What are some existing or potential arrangements that involve DHS entities and referring physicians that participate in alternative payment models or other novel financial arrangements?
• What exceptions to the Stark Law are necessary to protect financial arrangements between DHS entities and referring physicians who participate in the same alternative payment model?
• How can the definition of “fair market value” be changed?
• What provisions, definitions, and/or exceptions in the regulations would be useful to have more clarification on?

The RFI regarding the Stark law will close for comments on August 24, 2018.

Hargan also stated that “HHS is looking at the Anti-Kickback statute and its intersection with the Stark law to see if either law or the interactions between the two is stifling innovative arrangements that could result in better outcomes for patients.”  Hargan signaled that HHS will release a RFI seeking public comment on Anti-Kickback statute reforms.

Wachler & Associates will continue to stay up to date with the potential reform of the fraud and abuse laws.  If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.