October 20, 2019

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Government Releases Proposed Changes to Physician Self-Referral Law (Stark Law), Anti-Kickback Statute and CMP Regulations; Significant Changes Intended to Encourage Care Coordination and Value-Based Care

On October 9, 2019, the Department of Health and Human Services (HHS) released its long-awaited proposals (the Proposed Rules) to update regulatory exceptions to the federal Physician Self-Referral Law (the Stark Law), the Anti-Kickback Statute (AKS), and the Civil Monetary Penalties Law (CMP). The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update exceptions to the Physician Self-Referral Law (the PSR Rule), and the HHS Office of Inspector General (OIG) issued a proposed rule to update the AKS safe harbors and expand exceptions to the CMP’s beneficiary inducements prohibition (the AKS Rule). The Proposed Rules are intended to reduce perceived regulatory barriers to beneficial health care arrangements, and to facilitate the implementation of new approaches to health care service delivery and coordination, including value-based care models.

Modernizing and Clarifying the Physician Self-Referral Law Regulations

In its PSR Rule, CMS seeks to address the Physician Self-Referral Law’s “undue regulatory impact and burden” on health care organizations by establishing important new exceptions, and by revising current exceptions to add flexibility for arrangements with referring physicians. Specifically, the PSR Rule sets forth three new exceptions for arrangements that facilitate value-based health care delivery and payment, and may feature full or meaningful downside risk. Interestingly, CMS notes that with the transition to value-based care, where health care reimbursement is “no longer operating in a volume-based system… fewer “traditional” requirements” are needed to ensure that arrangements do not “pose a risk of program or patient abuse.”

The PSR Rule includes a new provision that addresses downstream compensation to a physician from a group practice, where the compensation derives from participation in a value-based arrangement. The PSR Rule also proposes a new exception allowing limited remuneration to a physician – up to $3,500 per calendar year – for items or services provided by the physician at fair market value under a commercially reasonable arrangement that meets certain requirements, even if the arrangement is not memorialized in writing and the amount of remuneration is not set in advance. Additionally, the PSR Rule proposes a new exception allowing for the provision of certain cybersecurity technology and services to a physician in accordance with a written agreement, and also proposes to revise the current exception for donations of electronic health records items and services (EHR Exception) to protect donation of cybersecurity software and services. In connection with this latter change, the PSR Rule proposes to eliminate the current sunset provision for the EHR Exception (currently scheduled for December 31, 2021).

The PSR Rule provides guidance on and proposes changes to provisions within the Physician Self-Referral Law regulations, including the definitions of “fair market value” and “general market value,” special rules for profit sharing within a group practice, the volume or value standard, and other key technical provisions that directly affect Physician Self-Referral Law compliance. Moreover, CMS proposes a new definition for the term “commercially reasonable” – a standard that is essential for compliance with a number of the Physician Self-Referral Law exceptions.

CMS is soliciting feedback and accepting comments on the PSR Rule for a period of 75 days following official publication in the Federal Register (which is expected to occur in the coming days). Comments can be submitted electronically, by regular mail, by express or overnight mail, or by hand or courier, to CMS as directed in the PSR Rule.

Proposed Changes to AKS Safe Harbors and CMP Regulations

In the AKS Rule, OIG seeks to encourage the “transformation of established practices and enhanced collaboration among providers and other individuals and entities” as a means of obtaining better value from the health care system. In furtherance of that goal, OIG proposes a number of new AKS safe harbors, and proposes significant modifications to current safe harbors to expand their potential applicability to arrangements that do not pose a risk of program abuse. Among other changes, OIG proposes new safe harbors that would protect the following:

  • Remuneration between participants in value-based arrangements that promote care coordination;

  • Tools and supports furnished under patient engagement arrangements;

  • Remuneration provided in connection with CMS-sponsored models; and

  • Donations of cybersecurity technology and services.

OIG also proposes to modify current safe harbors for (i) donations of electronic items/services to add protections for donations of cybersecurity technology, (ii) personal services and management contracts to address outcomes-based payment and part-time arrangements, (iii) local transportation arrangements to remove mileage limits for transportation of discharged patients to their homes and expand mileage limits in rural areas, and (iv) warranties to revise the definition of “warranty.” OIG further proposes to codify an exception to the definition of “remuneration” under the AKS for certain accountable care organization (ACO) patient incentive programs. In addition, OIG proposes certain corresponding changes to the definition of “remuneration” under the CMP regulations to enable the provision of telehealth technology to certain in-home dialysis patients.

OIG is soliciting and accepting comments on the AKS Rule for a period of 75 days from its publication in the Federal Register (which is expected to occur in the coming days). Comments can be submitted electronically, by mail, or by hand or courier, to OIG as directed in the AKS Rule.

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About this Author

Conor Duffy Cybersecurity Attorney
Associate

Conor Duffy is a member of the firm's Health Law Group and its Data Privacy + Cybersecurity Team. He advises hospitals, physician groups, community providers, and other health care entities on general corporate matters and health law issues. He also counsels clients on what measures are needed to safeguard data and patient information.

Regulatory

Conor provides legal counsel to health care clients on various regulatory matters, such as Medicare and Medicaid program compliance, federal fraud and abuse laws, and the Emergency Medical Treatment & Labor Act...

860.275.8342
Melissa Lisa Thompson Health Lawyer Robinson Cole Law Firm
Partner

Lisa Thompson advises companies, senior management, and their boards of directors, with a focus on the health care, life sciences and technology industries. She is a member of the firm’s Health Law Group and Data Privacy + Cybersecurity Team.  She is also an arbitrator on the Commercial panel and the Health Care panel of the American Arbitration Association.  

Health Care, Life Science and Technology Industries

Lisa represents domestic and international clients in the health care, life science and technology industries, including pharmaceutical companies, medical device manufacturers, biotechnology companies, hospital systems, academic medical centers, health information exchanges (HIEs) and technology services providers.  In addition, she has represented third party administrators, pharmacy benefit managers, health plans, laboratories, physician practices, pharmacies and retail pharmacy chains, among others in these industries.

Lisa handles a range of matters, including corporate law and contracting, government investigations and audits, clinical research law, and matters involving Institutional Review Boards (IRBs). She has extensive experience representing clients on matters involving privacy and security including HIPAA, reimbursement, Medicare and Medicaid, state and federal surveys and termination actions, managed care disputes, pharmacy and compounding laws, fraud and abuse, Stark Law, anti-kickback, and federal program exclusions.

Lisa’s life sciences experience includes U.S. Food and Drug Administration (FDA) compliance and regulatory matters, product recalls and liability claims, FDA citizen petitions and appeals, labeling review, advertising and marketing compliance, drug and medical device reimbursement, clinical research agreements, Sunshine Act compliance, and commercial contracting. Her technology sector experience includes advising on privacy and security, software licensing, data use agreements, information exchange system agreements, and regulatory requirements.

She formerly served in-house as chief counsel for an international medical device manufacturer, as general counsel for a pharmacy benefit management company, and as corporate, privacy, and research counsel for a major academic medical center. She is a co-editor and contributor for the firm’s blog, Health Law Diagnosis.

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