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Much Anticipated Changes to the Stark Law and Anti-Kickback Statute Announced

In October 2019, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the Physician Self-Referral Law, also known as the "Stark Law." The Stark Law generally prohibits a physician from making referrals to an entity for certain healthcare services, if the physician has a financial relationship with the entity.

November 20, 2020, CMS finalized the proposed changes to the Stark Law.

According to CMS Administrator Seema Verma, "When we kicked off our Patients Over Paperwork initiative in 2017, we heard repeatedly from front-line providers that our outdated Stark regulations saddled them with costly administrative burden and hindered value-based payment arrangements." She goes on to say, "That sound you hear is the mingled cheers and exclamations of relief from doctors and other health care professionals across the county as we lift the weight of our punishing bureaucracy from their backs."

TheCMS announcement provided the following summary of changes to the Stark Law:

  • Finalizing new, permanent exceptions for value-based arrangements that will permit physicians and other healthcare providers to design and enter into value-based arrangements.
  • Finalizing additional guidance on key requirements of Stark Law exceptions to make it easier for physicians and other healthcare providers to make sure they comply with the law.
  • Finalizing protection for non-abusive, beneficial arrangements that apply regardless of whether the parties operate in a fee-for-service or value-based payment system - such as donations of cybersecurity technology that safeguard the integrity of the healthcare ecosystem.
  • Reducing administrative burdens that drive up costsby taking money previously spent on administrative compliance and redirecting it to patient care.

The changes finalized in the rule will become effective on January 19, 2021, except for one amendment, which will be effective January 1, 2022.

Summary of Changes to the Anti-Kickback Statute and Civil Monetary Rules

On November 20, 2020, the U.S. Department of Health and Human Services (HHS) also announced a final rule, "Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements."

According to the HHS Factsheet, the Final Rule implements seven new safe harbors, modifies four existing safe harbors, and codifies one new exception under the Beneficiary Inducements Civil Monetary Penalty (CMP) law. HHS also states mentions the Final Rule clarifies how medical device manufacturers and durable medical equipment companies may participate in protected care coordination arrangements that involve digital health technology; lowers the level of "downside" financial risk parties must assume to qualify under the new safe harbor for value-based arrangements with substantial downside financial risk; and, in recognition of the urgent problem of cyber threats to the healthcare industry, broadens the new safe harbor for cybersecurity technology and services to cover remuneration in the form of cybersecurity-related hardware.

The HHS Factsheet summarizes the final safe harbor regulations protections:

Value-Based Arrangements - Three new safe harbors for certain remuneration exchanged between or among eligible participants in a value-based arrangement that fosters better coordinated and managed patient care:

  • Care Coordination Arrangements to Improve Quality, Health Outcomes, and Efficiency
  • Value-Based Arrangements With Substantial Downside Financial Risk
  • Value-Based Arrangements With Full Financial Risk

Patient Engagement and Support - A new safe harbor for certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency.

CMS-Sponsored Models - A new safe harbor for certain remuneration provided in connection with a CMS-sponsored model, which should reduce the need for separate and distinct fraud and abuse waivers for new CMS-sponsored models.

Cybersecurity Technology and Services - new safe harbor (§1001.952(jj)) for donations of cybersecurity technology and services.

Electronic Health Records Items and Services - Modifications to the existing safe harbor for electronic health records items and services to add protections for certain related cybersecurity technology, to update provisions regarding interoperability, and to remove the sunset date.

Outcomes-Based Payments and Part-Time Arrangements - Modifications to the existing safe harbor for personal services and management contracts to add flexibility for certain outcomes-based payments and part-time arrangements.

Warranties - Modifications to the existing safe harbor for warranties to revise the definition of "warranty" and provide protection for bundled warranties for one or more items and related services.

Local Transportation - Modifications to the existing safe harbor for local transportation to expand and modify mileage limits for rural areas and for transportation for patients discharged from an inpatient facility or released from a hospital after being placed in observation status for at least 24 hours.

Accountable Care Organization (ACO) - Beneficiary Incentive Programs - Codification of the statutory exception to the definition of "remuneration" under the anti-kickback statute related to ACO Beneficiary Incentive Programs for the Medicare Shared Savings Program

The final exception regulations under the Beneficiary Inducements CMP protect:

Telehealth for In-Home Dialysis - An amendment to the definition of "remuneration" in the CMP rules interpreting and incorporating a new statutory exception to the prohibition on beneficiary inducements for "telehealth technologies" furnished to certain in-home dialysis patients.

Healthcare Compliance Pros will be reviewing the Final Rule in depth. We also expect additional guidance to come out in 2021. We will be sure to provide a follow-up with anything your organization needs to know regarding the changes to the Stark Law and Anti-Kickback Statute.

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