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Digital Health Opportunities Under Federal Fraud and Abuse Regulatory Reform


The US Department of Health and Humans Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) have launched the Regulatory Sprint to Coordinated Care, a reform effort that will address several key health care regulations, including the federal physician self-referral law (Stark Law) and the Anti-Kickback Statute (AKS). Digital health technology companies have an opportunity to integrate their tools into these fraud and abuse reform initiatives.

In Depth

Highly publicized comments made by leadership of the US Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) this summer have signaled a focus on regulatory reform that aims to accelerate transformation to a value-based health system emphasizing care coordination. As part of this reform effort, which HHS has dubbed the Regulatory Sprint to Coordinated Care, developers and users of health IT and other digital health solutions could expect to see revisions to regulatory restrictions that may have impeded innovative, technology-based collaborations among various stakeholders, including hospitals, physicians and other health care providers, pharmaceutical companies, medical device manufacturers and technology vendors. In addition, the desired effect of the regulatory reform—transformation to a value-based health system and increased care coordination—will necessarily rely on the development of digital health technologies.


According to HHS, the Regulatory Sprint to Coordinated Care will address four key health care regulatory regimes: the federal physician self-referral law (Stark Law), the Anti-Kickback Statute (AKS), the Health Insurance Portability and Accountability Act (HIPAA), and rules under 42 CFR Part 2 related to opioid and substance abuse disorder treatment. In this article, we primarily focus on fraud and abuse reform. 

On June 25, 2018, CMS published a request for information (RFI) seeking input from the public on how to address any undue regulatory impact and burden under the Stark Law on value-based and other coordinated care arrangements designed to improve quality and lower costs. On July 17, 2018, HHS Deputy Secretary Eric Hargan testified to the US House Ways and Means Committee’s Subcommittee on Health about HHS’s efforts to review and address obstacles posed by longstanding fraud and abuse laws to shifting the Medicare payment system to a value-based, coordinated payment system, including an indication that HHS would soon issue an RFI on AKS reforms. McDermott covered CMS’s RFIand Deputy Secretary Hargan’s testimony in previous posts. On July 26, 2018, in remarks to the Heritage Foundation, HHS Secretary Alex M. Azar II announced upcoming RFIs regarding HIPAA and 42 CFR Part 2, which, according to Azar, not only impede value-based arrangements in health care, but can also hamper communities and families working together to combat the United States’ opioid addiction crisis. 

Digital health tools and data informatics are widely viewed as critical to the success of any kind of alternative payment model. Reform of federal fraud and abuse regulations, with complementary reforms in the area of health information confidentiality, could spur the advancement of digital health technology in the areas of health IT, data analytics and telemedicine, and could pave the way to increased integration of patient engagement and consumer wellness tools. Digital health tools are currently used to facilitate innovative payment arrangements (e.g., tracking provider performance and patient adherence), and any loosening of restrictions on collaborations between health care providers and other entities should open opportunities to health IT developers. 

Integrating Digital Health into Fraud and Abuse Reform

Value-based payment models and the digital health tools on which they rely often implicate the Stark Law and the AKS because by design they are focused on managing the volume and value of services provided to patients. The Stark Law prohibits a physician from making a referral for “designated health services” to an entity with which the physician has a financial relationship, unless an exception applies. Designated health services include, for example, hospital services and certain imaging, laboratory and other services. The AKS is a criminal statute that prohibits paying or offering anything of value to induce, or reward for, items or services payable by a federal health care program. The Stark Law RFI and the anticipated AKS RFI are thus critical opportunities to address the need for clear pathways for leveraging digital health technologies to facilitate the development and implementation of alternative payment models and promotion of care coordination.

The Stark Law RFI contains prompts that could elicit public comments related to the deployment of digital health technology. For example, the Stark Law RFI requests comments regarding existing or potential arrangements that involve entities that furnish designated health services (DHS Entities) and referring physicians that participate in alternative payment models or other novel financial arrangements, and requests information regarding the items and services that are or could be provided under the arrangement, specifically including “infrastructure,” such as electronic health records technology. This solicitation opens the door to suggestions for additional types of technology (e.g., data analytics, decision support tools or other innovative technologies) and services that could be part of a relationship between a physician and a DHS Entity. These exceptions would be in addition to, or an expansion of, the current Stark Law exceptions that permit donations of certified electronic health record or electronic prescribing items and services. 

In fact, comments submitted to regulations.gov in response to the Stark Law RFI to date have already recommended exceptions for expenditures related to cybersecurity or digital privacy technologies and services made by DHS Entities on behalf of physicians or physician groups. In addition, comments suggest exceptions for investment in infrastructure, which could include technology infrastructure, and redesigned care processes for high-quality and efficient care as part of an innovative payment exception. 

Similar concepts may be addressed in the forthcoming AKS RFI. Related comments could address an expanded assortment of arrangements proposed for safe harbor protection, to include those that involve the deployment of digital health technologies and partnerships between health care providers, technology developers, pharmaceutical or device manufacturers, including innovative technology ventures that may currently invite particular scrutiny. 

One area notably absent from discussions about fraud and abuse reform to date is the development of additional exceptions to the beneficiary inducement prohibition under the Civil Monetary Penalties Act, which prohibits the provision of free items or services of value to federal health care program beneficiaries that may influence their selection of a particular provider. The beneficiary inducement prohibition has been seen as a barrier to the implementation of certain technology-based programs in the Medicare and Medicaid participant population.

Comments to the Stark Law RFI are due no later than 5:00 pm EDT on August 24, 2018. HHS has not announced the publication date of the AKS RFI.

© 2023 McDermott Will & EmeryNational Law Review, Volume VIII, Number 220

About this Author

Amanda Enyeart Healthcare and Life Sciences Attorney Mcdermott WIll Emery Law Firm

Amanda Enyeart is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  Amanda focuses her practice on general regulatory health law matters. 

Previously, Amanda was an associate at a national law firm in its Chicago office where she provided guidance on regulatory issues, such as practitioner licensure; telehealth; Medicare and Medicaid reimbursement; and compliance with Stark Law and the Anti-Kickback Statute and state fraud and abuse laws.

Additionally, Amanda has...

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