Kicking Off 2020 With Anti-Kickback Statute And Stark Law Reforms: What You Need To Know

By ERICA ERMAN

You’ve probably heard that every provider’s favorite laws, the Anti-Kickback Statute and its related, strict liability counterpart, the Stark Law (formally known as the Physician Self-Referral Law), are getting a makeover from the Department of Health and Human Services (HHS). Here’s what you need to know.

Quick Legal Refresher:
(A) What is the Anti-Kickback Statute?

The Anti-Kickback Statute (AKS) is a broad criminal fraud and abuse statute that prohibits the knowing and willful payment or receipt of “remuneration” (anything of value) with the intent to induce or reward referrals for items or services that are reimbursed by federal health care programs, such as Medicare and Medicaid, unless a recognized Safe Harbor applies. See 42 U.S.C. § 1320a-7b(b).

(B) What is the Stark Law?

The Stark Law is a narrow civil strict liability statute (meaning it is possible to violate the law without having any bad intent) that prohibits a physician from making a referral under Medicare for specific items or services (“designated health services (DHS)”) to an entity with which the physician or a member of the physician’s immediate family has a financial relationship and further prohibits the entity from billing for the services, unless a recognized Exception applies. “Referral,” “DHS,” “entity,” and “financial relationship” all have specific legal definitions. See 42 U.S.C. § 1395nn.

Why is HHS proposing changes to these laws?

To create room for value-based care models. HHS wants to allow providers to be innovative in how to produce better care outcomes for their patients, while still protecting against arrangements that are more likely to result in abuse of federal funds. The proposed new rules recognize that the healthcare landscape that existed when these laws were first passed no longer exists, and to keep the laws relevant, changes are necessary. For reference, the Anti-Kickback Statute was passed in 1972 and the Stark Law was enacted in 1989. Just think how much healthcare has changed since then! As HHS commented in its press release on October 9, 2019, “The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which seeks to promote value-based care by examining federal regulations that impede efforts among providers to better coordinate care for patients.” See “HHS Proposes Stark Law and Anti-Kickback Statute Reforms to Support Value-Based and Coordinated Care,” U.S. Department of Health & Human Services (October 9, 2019), available at: https://www.hhs.gov/about/news/2019/10/09/hhs-proposes-stark-law-anti-kickback-statute-reforms.html. Many of the proposed changes focus on allowing healthcare providers to run their businesses on a value-based care model, rather than the traditional fee-for-service and volume-based models.

When will the proposed rules go into effect?

We don’t yet know when these proposed rules will go into effect. The public comment period closed New Year’s Eve, on December 31, 2019. The rules may be finalized at any time.

What other related laws is HHS in the process of updating to facilitate better care for patients?

In addition to updating the Stark Law and Anti-Kickback Statute, HHS has also focused on updating the Civil Monetary Penalty Law (CMPL) and the Health Insurance Portability and Accountability Act (HIPAA), in order to promote care coordination and the ever important goal of real-time sharing of information between healthcare providers.

What can you do to prepare your practice for the new rules?

(1) Now is the perfect time to brainstorm with your staff, practice group, or hospital as to how you can transition your practice into a value-based care financial model. Work with your legal team to see how you can improve coordination of care between your patients and their other specialists and healthcare providers. One of the goals of the proposed rules is to allow practices to experiment with and innovate value-based arrangements “without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate” the law. See “Modernizing and Clarifying the Physician Self-Referral Regulations Proposed Rule,” Centers for Medicare & Medicaid Services (October 9, 2019), available at: https://www.cms.gov/newsroom/fact-sheets/modernizing-and-clarifying-physician-self-referral-regulations-proposed-rule.

(2) If your practice currently relies upon falling within an Anti-Kickback Statute Safe Harbor or a Stark Law Exception, ensure that your practice model and arrangements continue to fall into those Safe Harbors/Exceptions. When planning how to innovate your practice, talk with your legal team about how to create a business model that will be similarly protected by the new rules. Remember that whether an arrangement falls safely within a Safe Harbor or an Exception is fact-specific, and to qualify for a Safe Harbor or Exception, the arrangement must satisfy every requirement as set out in the regulations.

(3) As we shared with you in our April 2018 article “Costs Down; Quality Up”, one of the key pieces to transforming our healthcare system is price transparency. By helping patients understand competing healthcare costs, and when a difference in price is or is not tied to a difference in quality of treatment, physicians and healthcare providers can empower patients to shape the healthcare landscape in favor of successful and sustainable value-based and outcome-based models. See Erica Morris and Mark Wilson, Legal Leanings: Costs Down; Quality Up, Healthcare Michigan (April 2018), available at: http://healthcaremichigan.com/2018/04/legal-leanings-costs-down-quality-up/.