New Rule Modernizes Stark Law and Anti-Kickback Statute

On January 19, 2021, new rules that modernize and clarify the Stark Law and Anti-Kickback Statute went into effect. In promulgating these new rules, HHS stated that the rules give providers greater flexibility to participate in “value-based arrangements” and provide “coordinated care” to patients, while still maintaining safeguards to protect patients and programs from fraud and abuse.

Stark Law

Notable changes to Stark Law include 3 new exceptions for value-based arrangements: (i) value-based arrangements with full financial risk; (ii) value-based arrangements with meaningful downside financial risk; and (iii) any value-based arrangement provided the enumerated requirements are met. 42 CFR 411.357(aa)(1)-(3). CMS also created an exception for arrangements where a physician receives remuneration limited to no more than $5,000 per calendar year (up from $3,500 as proposed), adjusted annually for inflation, in a fair market value exchange for items or services actually provided by the physician. Finally, CMS created an exception for the donation of nonmonetary technology and related services used predominately to implement, maintain, or re-establish cybersecurity to a referring provider.

CMS also clarified certain key definitions, including:

• “Commercially reasonable,” which means that the particular arrangement furthers a legitimate business purpose of the parties to the arrangement and is sensible, considering the characteristics of the parties, including their size, type, scope, and specialty. The rule also states that an arrangement may be commercially reasonable even if it does not result in profit for one or more of the parties.

• The rule establishes special rules to identify the universe of compensation formulas that are considered to be determined in a manner that takes into account the “volume or value” of a physician’s referrals or the “other business generated” by a physician.

• The rule clarifies when compensation is considered “set in advance.”

• The rule revises the definition of “fair market value” and “general market value” to provide additional specificity based on the type of financial arrangement being valued.
Anti-Kickback Statute

Notable changes to the Anti-Kickback Statute include 3 new safe harbors for value-based arrangements, including:

• Care Coordination Arrangements to Improve Quality, Health Outcomes, and Efficiency at 42 CFR § 1001.952(ee);

• Value-Based Arrangements With Substantial Downside Financial Risk at 42 CFR § 1001.952(ff); and

• Value-Based Arrangements With Full Financial Risk at 42 CFR § 1001.952(gg).

Additionally, the rule created a new safe harbor at 42 CFR § 1001.952(hh) for certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency. The rule created a new safe harbor at 42 CFR § 1001.952(ii) 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. Finally, the rule created a new safe harbor at 42 CFR § 1001.952(jj) for donations of cybersecurity technology and services.

The rules also modified several existing safe harbors. For example, the rule modifies the existing safe harbor for electronic health records items and services at 42 CFR § 1001.952(y) to add protections for certain related cybersecurity technology, to update provisions regarding interoperability, and remove the sunset date. The rule modifies the existing safe harbor for personal services and management contracts at 42 CFR § 1001.952(d) to add flexibility for certain outcomes-based payments and part-time arrangements. The rule modifies the existing safe harbor for warranties at 42 CFR § 1001.952(g) to revise the definition of “warranty” and provide protection for bundled warranties for one or more items and related services. Finally, the rule modifies the existing safe harbor for local transportation at 42 CFR § 1001.952(bb) 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.

As examples of how these new safe harbors could help improve care coordination, OIG provided the following examples:

(1) Hospitals can improve patient transitions from one care delivery point to the next by providing physician offices with care coordinators that furnish individually tailored case management services for patients requiring post-acute care.

(2) Hospitals may wish to provide support and reward institutional post-acute providers for achieving outcome measures that effectively coordinate care across settings and reduce hospital readmissions. Such measures would be aligned with a patient’s successful recovery and return to living in the community.

(3) A primary care physician may wish to furnish a tablet capable of two-way, real-time communication between the patient and physician, which could facilitate communication through telehealth and the provision of in-home services.

(4) A health system could furnish cybersecurity technology to physician practices to reduce harm from cyber threats to all their systems.

DBL Law’s healthcare team is available to assist you with all your Stark and Anti-Kickback Statute compliance and other healthcare issues.