November 15, 2019

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HHS Proposes Sweeping Changes to Anti-Kickback Statute and Stark Law

On October 9, 2019, the Department of Health & Human Services (HHS) announced significant changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (known as the Stark Law) through proposed rules issued by the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS).  The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which aims to promote value-based care and ease regulatory burden on health care providers, particularly with respect to the AKS and the Stark Law.

Below is a high-level overview of key provisions in the proposed rules. We will provide in-depth summaries and analysis of the proposed rules in our upcoming blog series.

OIG’s Proposed Revisions to the AKS and the Civil Monetary Penalty Law

New Safe Harbors for Value-Based Arrangements

Noting that the broad reach of the AKS potentially inhibits beneficial value-based care arrangements, the OIG's proposed rule includes three new safe harbors for remuneration exchanged between participants in value-based arrangements.  The safe harbors separately address (i) care coordination arrangements; (ii) value-based arrangements where the value-based enterprise assumes substantial downside financial risk; and (iii) value based-arrangements where the value-based enterprise assumes full financial risk.  Notably, the new safe harbors do not protect arrangements with pharmaceutical manufacturers, manufacturers, distributors, DMEPOS suppliers, and laboratories.  OIG notes that it seeks comments on these exclusions and is considering separate rulemaking to address value-based arrangements with pharmaceutical manufacturers.

New Safe Harbors for Patient Support Tools and Cybersecurity Donations

The OIG also proposes new safe harbors for:

  • certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency;

  • certain remuneration provided in connection with a CMS-sponsored model, which should reduce the need for the OIG to issue separate and distinct fraud and abuse waivers for new CMS-sponsored models; and

  • donations of cybersecurity technology and services.

Modifications to Existing Safe Harbors – EHR, Personal Services, Warranty, and Transportation

Additionally, in an effort to reduce the regulatory burden associated with the AKS, the OIG has proposed modifications to existing safe harbors, including:

  • creating protections for certain cybersecurity technology and removing the sunset date to the safe harbor for electronic health records items and services;

  • amending the personal services and management contracts safe harbor to add flexibility with respect to outcomes-based payments and part-time arrangements;

  • revising the definition of “warranty” and providing protection for warranties for one or more items and related services under the warranty safe harbor; and

  • expanding the mileage limits for rural areas and for transportation for discharged patients under the local transportation safe harbor.

Beneficiary Inducement Protection for Telehealth Technologies Furnished to Home Dialysis Patients

The OIG’s proposed rule also includes a proposed amendment to the definition of remuneration in the Civil Monetary Penalty rules on beneficiary inducement for telehealth technologies furnished to certain in-home dialysis patients.

CMS’s Proposed Changes to the Stark Law

Exceptions for Value-Based Arrangements

Similar to the proposed AKS safe harbors on value-based arrangements, CMS's proposed rule includes four new Stark Law exceptions for:

  1. value-based arrangements where a value-based enterprise has assumed full financial risk for patient care services for a target patient population;

  2. value-based arrangements under which a physician is at meaningful downside financial risk for failure to achieve the value-based purpose of the arrangement;

  3. other value-based arrangements that satisfy certain criteria; and

  4. indirect compensation arrangements that include a value-based arrangement.

Clarification of Fundamental Stark Law Terminology and Requirements

CMS’s proposed rule also includes critical guidance and clarification on fundamental Stark Law terminology and requirements, including proposed definitions on key concepts such as commercially reasonable, the volume or value standard, the other business generated standard, and fair market value.

The OIG and CMS are seeking comments to these proposed rules, which are due about six weeks after the rules’ publication dates.  These proposed changes, if adopted, will have a far-reaching impact on the health care industry.  Stay tuned for more insights from the Mintz team on the proposed rules!

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About this Author

Rachel Yount Healthcare Attorney Mintz Levin
Associate

Rachel focuses her practice on health care industry transactions.  

Prior to joining Mintz, Rachel was a health care associate in the Washington, DC office of an Am Law 200 law firm, where she represented long-term care clients in complex multistate transactions; helped health systems structure financial arrangements with referral sources; advised pharmaceutical manufacturers and pharmacy benefit managers on state laws affecting drug pricing transparency; and counseled clients on compliance with the Anti-Kickback Statute, Stark Law, False Claims Act, Medicare billing and...

202.434.7427
Theresa Carnagie, Health Law Attorney, MIntz Levin Law Firm
Member

Theresa counsels health care clients on a variety of transactional, regulatory, and fraud and abuse matters.

Theresa focuses much of her practice on counseling health plans, pharmacy benefit managers, pharmacies, device manufacturers, and distributors on regulatory and compliance matters. Her practice extends to counseling on drug pricing and reimbursement issues, Medicare Advantage and Medicare Part D compliance, and the regulatory requirements under the Affordable Care Act and state health insurance exchanges. Theresa has extensive experience drafting, negotiating, and structuring PBM agreements, retail, mail and specialty pharmacy agreements, GPO agreements, and pharmaceutical purchase, distribution, and rebate agreements. She also regularly counsels these clients on compliance with federal and state fraud and abuse laws, the PhRMA and AdvaMed Codes, state disclosure and gift ban laws, and state licensure laws.

Theresa also specializes in representing clients in connection with mergers and acquisitions, joint ventures, strategic affiliations, complex service agreements, provider contracts, network development programs, and general contracting. Theresa advises clients on the structuring and legal, practical, and fraud and abuse implications of these business arrangements and transactions. She has served as health regulatory counsel on managed care, PBM, pharmacy, laboratory, behavioral health, anesthesiology, DME, and practice management company transactions. Theresa also has deep experience assisting private equity firms in connection with their investment in the health care industry and the day-to-day regulatory compliance of their portfolio companies.

Other aspects of Theresa’s practice include day-to-day counseling on matters related to the anti-kickback statute, the Stark law, and state statutes prohibiting kickbacks and self-referrals. Theresa regularly advises client on the structuring of business arrangements to comply with state regulatory restrictions such as corporate practice of medicine and fee-splitting prohibitions. Theresa is also an Editor of and a frequent contributor to Mintz's Health Law blog, Health Law & Policy Matters.

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Karen Lovitch Mintz DC Health Care Compliance, Fraud & Abuse, and Regulatory Counseling Medicare, Medicaid & Commercial Coverage & Reimbursement Health Care Transactions Health Care Transactional Due Diligence Health Care Enforcement & Investigations
Member

Karen focuses her practice on representing health care companies in regulatory, transactional, and operational matters. She has a substantial health care regulatory background and advises clients on matters pertaining to the federal anti-kickback statute, the Stark law, state statutes prohibiting kickbacks and self-referrals, the Clinical Laboratory Improvement Amendments of 1988, and the federal Physician Payments Sunshine Act. Karen often applies her strategic insight on these matters to counsel companies on regulatory issues arising in connection with mergers and acquisitions and other...

202-434-7324