AMARILLO, TX – As we have discussed in previous Medtrade Monday articles, health care is evolving from the traditional “fee-for-service” (“FFS”) model to an “integrated care” model. Under the FFS model, health care providers (physicians, hospitals, therapists, pharmacies, DME suppliers, etc.) operate in separate “silos.” Each provider is paid for the services/products it delivers…regardless of whether such services/products result in a positive patient outcome. Plus, in the FFS model, the providers do not coordinate with each other. This approach is expensive and inefficient.
Government health care programs and commercial insurers are pushing providers into the integrated care model. Under this model, providers are expected to coordinate with each other so that they work as a “team” to heal the patient…and then keep the patient healthy. Further, reimbursement is tied to patient outcome.
DME suppliers have a unique role to play in the integrated care model. Unlike most other health care providers, DME suppliers (i) visit their patients’ homes, (ii) communicate regularly with their patients and their caregivers, and (iii) communicate with their patient’s treating physicians. In other words, DME suppliers are in the position to help patients become healthy and, more importantly, to remain healthy.
As DME suppliers engage in the integrated care model, they will desire to (i) work with other providers in which there is some form of sharing compensation and (ii) provide products and services to patients, free of charge, intended to “promote access to care.” In doing so, suppliers need to be aware of the federal anti-kickback statute (“AKS”), the federal Stark physician self-referral statute (“Stark”), and the beneficiary inducement statute. Equally as important, suppliers should be aware of the easing of restrictions against (i) working with other providers (in which there is a sharing of compensation) and (ii) providing free products and services designed to promote access to care. Such easing of restrictions can be found in (i) the Affordable Care Act (“ACA”), (ii) OIG regulations, (iii) two recent OIG Advisory Opinions, (iv) Request for Comments by CMS and the OIG in 2018, and (v) the just published proposed changes to Stark and the AKS.
Affordable Care Act and OIG Regulations
The ACA provides exceptions to what might constitute “remuneration” under the beneficiary inducement statute, including an exception for remuneration that “that poses a low risk of harm and promotes access to care.” In December 2016 the OIG issued final regulations regarding patient incentive arrangements. The OIG defines “care” (in the context of “access to care”) as “access to items and services that are payable by Medicare or a state health care program for the beneficiaries who receive them.” The OIG interprets “promoting access to care” as “improving a particular beneficiary’s, or a defined beneficiary population’s, ability to obtain items and services payable by Medicare or a state health care program.”
Promoting access to care includes the removal of “socioeconomic, educational, geographic, mobility or other barriers that could prevent patients from seeking care (including preventive care) or following through with a treatment plan.” As an example, the OIG makes a distinction between free child care and movie tickets: “[P]roviding free child care during appointments also could promote access to care and help a patient comply with a treatment regimen. In contrast, offering movie tickets to a patient whenever the patient attends an appointment would not fit in the exception; such remuneration would be a reward for receiving care and does not help the patient access care, or remove a barrier that would prevent the patient from accessing care.”
The OIG set out different factors and analysis tests for the “low risk of harm” component. The OIG stated that remuneration would pose a low risk of harm to Medicare and Medicaid beneficiaries and federal health care programs by (i) being unlikely to interfere with, or skew, clinical decision making, (ii) being unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization, and (iii) not raising patient safety or quality of care concerns.
OIG Advisory Opinion 17-01
In conjunction with its regulations, the OIG released Advisory Opinion 17-01 (“AO 17-01”), which expanded on its “low risk of harm” analysis by including additional factors to examine when assessing patient benefits. In addressing “skewing clinical decision making,” health care providers and suppliers should look at whether (i) eligibility to receive the remuneration is conditioned on receipt of a particular service from the supplier and/or (ii) the physician receives remuneration that encourages referring eligible patients to the supplier. In addressing “increased costs to federal health care programs,” the supplier should look at whether the patient incentive arrangement will shift the remuneration cost to federal health care programs. In addressing “overutilization,” the supplier should look at whether (i) it is actively marketing the program to attract patients, (ii) the program is being offered before the patient decides to use the supplier, and (iii) the offered remuneration is encouraging patients to seek out unnecessary or poor quality of care. If the answer is “yes” to one or more of these factors, then it is likely that the patient incentive arrangement does not result in a “low risk of harm.”
When discussing activities that facilitate access to care, the OIG says that “promoting access to care” constitutes “improving a particular beneficiary’s, or a defined beneficiary population’s, ability to obtain items and services….” This includes removing “socioeconomic, educational, geographic, mobility or other barriers that could prevent patients from seeking care…or following through with a treatment plan.” According to the OIG, the following examples promote access to care:
- A physician practice purchases a subscription to an internet based food and activity tracker that offers information on healthy lifestyles for diabetic patients. This helps the patient understand and manage interaction between disease state and lifestyle and creates a record that facilitates interactions with the physician for future care planning.
- A hospital sends patients home with inexpensive devices that record data that is then transmitted to the hospital or the patient’s physician. This increases the patient’s ability to capture information necessary for follow-up care and to comply with the patient’s treatment plan.
- A provider/supplier provides patients with an item that dispenses medications at a certain time with the correct dosage. This pertains to adherence to the treatment plan (i.e., may reduce errors associated with the patient not remembering or misunderstanding the physician’s instructions).
OIG Advisory Opinion 19-03
The latest OIG guidance on providing free products and services designed to promote access to care is set out in OIG Advisory Opinion 19-03 (“AO 19-03”). The scenario described in AO 19-03 is as follows:
- The Requestor is a nonprofit medical center that provides inpatient and outpatient hospital-based services.
- The Clinic is an affiliate of the Requestor that offers primary care and certain specialty services at several facilities located in the geographic region that the Requestor serves.
- The Requestor and Clinic are under the control of an integrated health system operating in three states (“Health System”).
- The Requestor has developed a program to provide free, in-home follow-up care to certain patients who the Requestor certifies are at higher risk of admission or readmission to a hospital.
- Under an existing arrangement (“Current Arrangement”), the Requestor offers in-home care to patients with congestive heart failure (“CHF”) who qualify for participation, and under a proposed arrangement (“Proposed Arrangement”), the Requestor would expand the program to qualifying patients with chronic obstructive pulmonary disease (“COPD”).
- According to the Requestor, the goals of both arrangements are to increase patient compliance with discharge plans, improve patient health, and reduce hospital inpatient admissions and readmissions.
- Clinical nurse leaders screen patients to determine if they meet the following eligibility criteria for the Current Arrangement. First, a patient must have CHF and be (i) currently admitted as an inpatient to the Requestor, or (ii) a patient of the Requestor’s CHF Center who was admitted as an inpatient to the Requestor within the previous 30 days. Second, the clinical nurse leader must identity the patient as high risk for hospital inpatient readmission using a risk assessment tool utilized throughout the industry to predict the risk of unplanned readmission or emergency department visits subsequent to a hospital discharge. Third, the patient must have arranged to receive follow-up care at the CHF Center. If a patient does not plan to seek follow-up care, intends to receive follow-up services elsewhere, or expresses uncertainty about where he or she will receive follow-up care, then the patient is not informed of the Current Arrangement. Fourth, the patient must be willing to enroll in the Current Arrangement after consultation with the clinical nurse leader. Finally, the patient must be discharged to – or reside at – a personal residence or an assisted living facility (“ALF”) in the Health System’s service area.
- The Proposed Arrangement generally would have the same eligibility requirements as the Current Arrangement.
- The Requestor offers the Current Arrangement, and would offer the Proposed Arrangement, to any patient who meets the eligibility criteria, regardless of the patient’s health insurance status or his or her ability to pay for medical services. The Requestor certifies that it does not, and would not, advertise or market the arrangements to the public. Further, the Requestor does not, and would not, publicize the arrangements on its website.
Under both arrangements, patients who meet all eligibility criteria, and who choose to participate, receive two visits from a community paramedic each week for approximately 30 days following enrollment. Each visit takes place in the patient’s home or Assisted Living Facility and lasts approximately 60 minutes, during with time the community paramedic may perform some or all of the following activities (collectively, the “Services”):
- review the patient’s medication;
- assess the patient’s need for follow-up appointments;
- monitor the patient’s compliance with the discharge plan of care or the patient’s disease management;
- perform a home safety inspection; and
- perform a physical assessment, which may include checking the patient’s pulse and blood pressure, listening to the patient’s lungs and heart, checking any wounds, running an electrocardiograph, drawing blood and running blood tests using a portable blood analyzer, or administering medication.
The community paramedic uses a clinical protocol to deliver interventions and to assess whether a referral for follow-up care is necessary. The community paramedic documents all activities and interventions he or she performs during the course of the visit in the patient’s electronic medical record. If a patient requires care that falls outside the community paramedic’s scope of practice, the community paramedic directs the patient to follow up with his or her established provider. For urgent but non-life threatening medical needs, the community paramedic calls the patient’s established provider, and such provider follows up with the patient as he or she deems appropriate.
In many cases, the Requestor or the Clinic is the patient’s established provider. If a patient requires care unrelated to his or her CHF or COPD for which he or she has no established provider, the community paramedic contacts the Requestor or the Clinic, as applicable, to determine if the Requestor or the Clinic can address any immediate needs, but the patient may obtain care from the provider of his or her choice, and the community paramedic informs the patient of this fact. According to the Requestor, this approach fosters integrated care delivery for patients and improves patients’ adherence to their treatment plans, which is particularly important for patients with chronic diseases.
The Requestor and the Clinic bill, and would bill, for any follow-up services they provide outside the scope of the arrangements at the same rate that they would bill for such services if the patient was not participating in the arrangements. The Requestor employs, on either a full-time or part-time basis, the community paramedics who provide the Services. Neither the Requestor nor the Clinic compensates, or would compensate, any employee or contractor based on the number of patients who enroll in the arrangements. All costs associated with the community paramedic visits provided under the arrangements are, and would be, allocated to the Requestor.
With one exception, the Services are not covered or reimbursed by federal health care programs when performed by a community paramedic. One Medicaid program reimburses for community paramedic services that Requestor represents are similar to the Services, but the Requestor represents that it does not, and would not, bill this Medicaid program for the Services. Neither patients nor any payors are, or would be, billed for the Services, and the Requestor does not, and would not, shift any costs related to the arrangements to Medicare, Medicaid, other payors, or individuals.
In reviewing the Current Arrangement and the Proposed Arrangement, the OIG observed that the arrangements could potentially violate the AKS and the beneficiary inducement statute. Nevertheless, the OIG concluded that it would not bring an enforcement action against the arrangements under these statutes. This conclusion is based on the following:
- According to the OIG, the Services provide a significant benefit to patients in the form of free health care services and care management furnished in their homes. As such, the Services constitute remuneration from the Requestor to patients participating in the arrangements. The OIG further states that the remuneration could influence a patient to select Requestor or the Clinic for federally reimbursable items and services. And, according to the OIG, the “Promotes Access to Care” exception under the beneficiary inducement statute does not protect the arrangements.
- Although the remuneration implicates the beneficiary inducement statute, the OIG believes that the arrangements’ benefits outweigh any risk of inappropriate patient steering that the beneficiary inducement statute was designed to prevent. For example, before learning about the arrangements, patients already must have selected the Requestor or the Clinic for follow-up services related to their CHF or COPD. With respect to future services unrelated to their CHF or COPD, the community paramedics direct patients to follow up with their established provider. Patients are informed that they have the right to choose their provider. Of particular importance is that the arrangements foster integrated care delivery, which is particularly important for individuals with chronic diseases because it improves their adherence to their treatment plans.
- If the arrangements work as intended, they are unlikely to lead to increased costs to federal health care programs or patients through overutilization or inappropriate utilization. To the extent that the arrangements increase utilization of health care services, such an increase likely would reflect appropriate utilization from patients receiving medical necessary care as a result of the arrangements. Further, the arrangements would result in overall savings to federal health care programs if they successfully achieve the goals of improving patient health and reducing hospital inpatient admissions and readmissions.
- The risk that the arrangements will interfere with or skew clinical decision making is low.
- The arrangements would not be marketed or publicized.
- The scope and duration of the Services appear reasonably tailored to accomplish the goals of increasing patient compliance with discharge plans, improving patient health, and reducing hospital admissions and readmissions.
Request for Comments by the OIG
In October 2018, the OIG requested comments on relaxing the AKS and beneficiary inducement statute in order to promote care coordination. AAHomecare responded by submitting an 11 page letter to the OIG that discussed (i) the importance of modifying the AKS and beneficiary inducement statute in order to facilitate the coordination of care and (ii) the equal importance of maintaining laws on the books, and implementation of those laws, designed to prevent fraud. In its letter, AAHomecare suggested (i) a new safe harbor for collection of copayments; (ii) modification to the Personal Services and Management Contracts (“PSMC”) safe harbor; (iii) a new safe harbor for non-monetary compensation; (iv) modification to the safe harbor for small investment interests; (v) a new safe harbor for preferred provider arrangements; (vi) modification to the Electronic Health Records (“EHR”) safe harbor; (vii) a new exception to the beneficiary inducement statute; and (viii) that the inconsistencies between Stark and the AKS be addressed.
Request for Comments by CMS
In August 2018, CMS requested comments on relaxing Stark in order to promote care coordination. AAHomecare responded by submitting a five page letter to CMS that discussed the impact of Stark on care coordination.
Precursor to Proposed Changes to Stark and the AKS
Everything we have discussed, above, serves as a precursor to (i) the OIG’s October 9, 2019 proposed changes to the AKS and (ii) CMS’s October 9, 2019 proposed changes to Stark.
Proposed Changes to the AKS
The October 2019 OIG Notice of Proposed Rulemaking states:
The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) is publishing a Notice of Proposed Rulemaking, “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements.” This proposed rule is part of HHS’s Regulatory Sprint to Coordinated Care (Regulatory Sprint), which aims to reduce regulatory barriers and accelerate the transformation of the healthcare system into one that better pays for value and promotes care coordination.
HHS has identified the broad reach of the Federal anti-kickback statute, 42 U.S.C. § 1320a-7b(b), and the civil monetary penalty (CMP) for beneficiary inducements, 42 U.S.C. § 1320-a-7a(a)(5), as potentially inhibiting beneficial arrangements that would advance the transition to value-based care and improve the coordination of patient care among providers and across care settings in both the Federal health care programs and commercial sector.
The Federal anti-kickback statute provides for criminal penalties for whoever knowingly and willfully offers, pays, solicits, or receives remuneration to induce or reward the referral of business reimbursable under any of the Federal health care programs, including Medicare and Medicaid. Healthcare providers and others may voluntarily seek to comply with statutory and regulatory safe harbors so that they have the assurance that their business practices will not be subject to any anti-kickback statute enforcement action (see 42 CFR § 1001.952). Parties may use any applicable safe harbor into which they can squarely fit. However, failure to fit in a safe harbor does not mean that an arrangement violates the anti-kickback statute. Arrangements that do not fit in a safe harbor are analyzed on a case-by-case basis, including whether the parties had the requisite criminal intent. Congress intended the safe harbor regulations to be updated periodically to reflect changing business practices and technologies in the healthcare industry.
The CMP prohibiting beneficiary inducements provides for the imposition of CMPs against any person who offers or transfers remuneration to a Medicare or State healthcare program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a State healthcare program.
In response to an August 2018 Request for Information, OIG received 359 responses from a range of stakeholders. OIG also coordinated with the Centers for Medicare & Medicaid Services (CMS), which is issuing a proposed rule in connection with the Regulatory Sprint.
The proposed rules are designed to promote coordinated patient care and foster improved quality, better health outcomes, and improved efficiency. The proposed safe harbors also include multiple proposed safeguards to protect against fraud and abuse. Readers are directed to the proposed rule for a complete description of the proposals.
Subject to definitions and conditions in the proposed regulations, the proposed changes include:
- Value-Based Arrangements. Three proposed 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 ( 1001.952(ee));
- Value-Based Arrangements With Substantial Downside Financial Risk ( 1001.952(ff)); and
- Value-Based Arrangements With Full Financial Risk ( 1001.952(gg)).
These proposed safe harbors vary by the types of remuneration protected, level of financial risk assumed by the parties and types of safeguards included as safe harbor conditions.
- Patient Engagement. A proposed new safe harbor ( 1001.952(hh)) for certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency.
- CMS-Sponsored Models. A proposed new safe harbor ( 1001.952(ii)) for certain remuneration provided in connection with a CMS-sponsored model (as defined in the proposed rule), which should reduce the need for separate and distinct fraud and abuse waivers for new CMS-sponsored models.
- Cybersecurity Technology and Services. A proposed new safe harbor ( 1001.952(jj)) for donations of cybersecurity technology and services.
- Electronic Health Records Items and Services. Proposed modifications to the existing safe harbor for electronic health records items and services ( 1001.952(y)) 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. Proposed modifications to the existing safe harbor for personal services and management contracts ( 1001.952(d)) to add flexibility with respect to outcomes-based payments and part-time arrangements.
- Warranties. Proposed modifications to the existing safe harbor for warranties ( 1001.952(g)) to revise the definition of “warranty” and provide protection for bundled warranties for one or more items and related services.
- Local Transportation. Proposed modifications to the existing safe harbor for local transportation ( 1001.952(bb)) to expand and modify mileage limits for rural areas and for transportation for patients discharged from inpatient facilities.
- Accountable Care Organization (ACO) Beneficiary Incentive Programs. Codification of the statutory exception to the definition of “remuneration” related to ACO Beneficiary Incentive Programs for the Medicare Shared Savings Program ( 1001.952(kk)).
- Telehealth for In-Home Dialysis. A proposed amendment to the definition of “remuneration” in the CMP rules at 42 C.F.R. 1003.110 interpreting and incorporating a new statutory exception to the prohibition on beneficiary inducements for “telehealth technologies” furnished to certain in-home dialysis patients.
Let us focus on the 6th bullet: “Outcomes-Based Payments and Part-Time Arrangements.” What the OIG is proposing is significant. The Federal Register sets out the exact language:
Elimination of Requirement to Set Aggregate Compensation in Advance
The existing safe harbor for personal services and management contracts requires that such agreements be for a term of at least 1 year, and that the aggregate compensation be set in advance. In addition, the compensation must be consistent with fair market value in arm’s-length transactions. Consistent with our existing safe harbor, compensation under personal services and management contracts may not be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs. Also, the aggregate services performed under the agreement must not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services. The purpose of these requirements is to limit the opportunity to provide financial incentives in exchange for referrals.
To provide the healthcare industry enhanced flexibility to undertake innovative arrangements, we are proposing to revise the safe harbor to remove the requirement at 42 CFR 1001.952 (d) (5) that the “aggregate” amount of compensation paid over the term of the agreement must be set forth in advance. To mitigate the risk of parties to the agreement periodically adjusting the compensation to reward referrals or unnecessary utilization, the proposed modification to the safe harbor would require the parties to an arrangement to determine the arrangement’s compensation methodology in advance of the initial payment under the arrangement. In addition, under (d) (1) of our proposal, the safe harbor would continue to require that the compensation reflect fair market value, be commercially reasonable, and not take into account the volume or value of referrals or business otherwise generated between the parties.
We anticipate this proposal would more closely align this safe harbor with the personal service arrangements exception to the physician self-referral law, 42 CFR 411.357 (d).
Elimination of Requirement to Specify Schedule of Part-Time Arrangements
We propose to eliminate the requirements set forth at 42 CFR 1001.952 (d) (3) relating to agreements for services provided on a periodic, sporadic, or part-time basis. This paragraph of the safe harbor requires contracts that provide for services on such a basis to specify “exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.” Removing this requirement would afford parties additional flexibility in designing bona fide business arrangements, including care coordination and quality-based arrangements, where parties provide legitimate services as needed.
The existing safe harbor requires part-time contractual arrangements between healthcare providers to specify their timing or duration because of our concern that such arrangements are especially vulnerable to abuse. Specifically, part-time arrangements could be readily modified based on changing referral patterns between the parties. However, we believe that existing safeguards under (d) (1) of our proposal would provide sufficient safeguards against the manipulation of these arrangements to reward referrals, namely: the term of the arrangement must not be less than 1 year; the compensation terms must reflect fair market value, be commercially reasonable, and not take into account the volume or value of any referrals or business otherwise generated between the parties, and the methodology for determining compensation must be set in advance.
As with our first proposal, we anticipate this proposal would more closely align this safe harbor with the personal service arrangements exception to the physician self-referral law, 42 CFR 411.357 (d).
Proposed Changes to Stark
The October 9, 2019 CMS Fact Sheet (entitled “Modernizing and Clarifying the Physician Self-Referral Regulations Proposed Rule”) states:
On October 9. 2019, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to modernize and clarify the regulations that interpret the Medicare physician self-referral law (often called the “Stark Law”), which has not been significantly updated since it was enacted in 1989. The proposed rule supports the CMS “Patients over Paperwork” initiative by reducing unnecessary regulatory burden on physicians and other healthcare providers while reinforcing the Stark Law’s goal of protecting patients from unnecessary services and being steered to less convenient, lower quality, or more expense services because of a physician’s financial self-interest. Through the Patients over Paperwork initiative, the proposed rule opens additional avenues for physicians and other healthcare providers to coordinate the care of the patients they serve – allowing providers across different healthcare settings to work together to ensure patients receive the highest quality of care. In addition, as part of the Regulatory Sprint to Coordinated Care, CMS worked closely with the Department of Health and Human Services Office of Inspector General in developing proposals to advance the transition to a value-based healthcare delivery and payment system that improves the coordination of care among physicians and other healthcare providers in both the Federal and commercial sectors.
When the Stark Law was enacted in 1989, healthcare was paid for primarily on a fee-for-service basis. The law rightly recognized that a profit motive could influence some physicians to order services based on their financial self-interest rather than the good of the patient. For this reason, the Stark Law prohibits a physician from making referrals for certain healthcare services payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity performing the service. There are statutory and regulatory exceptions, but in short, a physician cannot refer a patient to any entity with which he or she has a financial relationship. The Stark Law also prohibits the entity from filing claims with Medicare for services resulting from a prohibited referral, and Medicare cannot pay if the claims are submitted.
Since then, Medicare and the private market have implemented many value-based healthcare delivery and payment systems to address unsustainable cost growth in the current volume-based system. A value-based system pays based on the quality of patient care rather than the volume of services provided. The Stark Law has not evolved to keep pace with this transition. In its current form, the Stark Law may prohibit some arrangements that are designed to enhance care coordination, improve quality, and reduce waste. Although the regulations that interpret the Stark Law have been updated several times, all previous changes left in place a framework that is tailored to a fee-for-service environment.
CMS published a Request for Information (RFI) on June 25, 2018 seeking input from stakeholders about how to address regulatory barriers to a value-based healthcare payment and delivery system under the Stark Law. Commenters told us that the regulations have not kept up with the evolution of a healthcare landscape that is focused more on value than volume. They also asked for additional guidance on fundamental requirements and other changes to help ease burden and make compliance more straightforward.
The proposed rule includes a comprehensive package of proposed reforms to modernize the regulations that interpret the Stark Law while continuing to protect the Medicare program and patients from bad actors. Under this proposed rule, for the first time, the regulations would support the necessary evolution of the American healthcare delivery and payment system.
Exceptions for Value-based Arrangements
The proposed rule would create new, permanent exceptions to the Stark Law for value-based arrangements. Industry stakeholders have informed us that, because the consequences of noncompliance with the Stark Law are so dire, physicians and other healthcare providers may be discouraged from entering into innovative arrangements that would improve quality outcomes, produce health system efficiencies, and lower costs (or slow their rate of growth). The proposed rule would unleash innovation by permitting physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law. The exceptions would apply regardless of whether the arrangement relates to care furnished to people with Medicare or other patients.
The new value-based exceptions include a carefully woven fabric of safeguards to ensure that the Stark Law continues to provide meaningful protection against overutilization and other harms. These proposals recognize that incentives are different in a healthcare system that pays for the value, rather than the volume, of services provided.
In addition, we are soliciting comments about the role of price transparency in the context of the Stark Law and whether to require cost-of-care information at the point of a referral for an item or service. As an agency priority, price transparency is important to transforming America’s healthcare system to pay for value as it empowers healthcare customers by providing them with the best information available to make informed decisions about their care and lowers the rate of growth in healthcare costs. We believe that such information could empower patients to have conversations about costs with their physicians at the point of care and serve as an additional safeguard at the point of referral.
New Guidance and Clarifications
Commenters on the June 2018 RFI told us that they currently invest sizeable resources to understand and comply with the Stark Law, and requested additional guidance in this regard. The proposed rule would provide additional guidance on several key requirements that must often be met in order for physicians and healthcare providers to comply with the Stark Law. For example, compensation provided to a physician by another healthcare provider generally must be at fair market value. The proposed rule would provide guidance on how to determine if compensation meets this requirement. The proposed rule also provides clarity and guidance on a wide range of other technical compliance requirements intended to reduce administrative burden that drives up costs.
Other New Exceptions
Commenters on the June 2018 RFI also requested new exceptions to provide protection for non-abusive, beneficial arrangements between physicians and other healthcare providers. The proposed exceptions would provide new flexibility for certain arrangements, such as donations of certain cybersecurity technology that safeguard the integrity of the healthcare ecosystem, regardless of whether the parties operate in a fee-for-service or value-based payment system.
Applicability to DME Suppliers
As exemplified by the ACA, OIG regulations, OIG Advisory Opinions, OIG and CMS Request for Comments, and the proposed modifications to Stark and the AKS, the government recognizes the importance of backing off some of the strictures of the AKS and Stark. This is good for all health care providers, including DME suppliers. The AKS, which is intent-based, is broad. Many arrangements fall into the proverbial gray area as to whether or not there is a violation of the AKS. This can be unsettling for DME suppliers. On the other hand, Stark is not intent-based. It is a “strict liability” statute. Black or white…you either violate Stark or you don’t. This can also be unsettling to DME suppliers.
And so if Stark and the AKS are relaxed, then DME suppliers can operate in less dangerous waters. Having said this, suppliers need to understand that the purpose behind relaxing the AKS and Stark is to promote coordination of care. The purpose is not to give suppliers a technical loophole to enter into an arrangement designed to make money. If Stark and the AKS are modified as proposed, then the aim of DME suppliers should be to enter into arrangements, acceptable under Stark and the AKS, that are designed to meet the government’s goal of facilitating care coordination.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or firstname.lastname@example.org.