Anti-kickback changes especially are needed to allow better functioning of ACOs, according to providers.

Jan. 30—Reducing regulatory burdens is a common recommendation from healthcare providers and their advocates to the Trump administration and the new Congress. And one of the biggest regulatory headaches remains the Stark Law, which targets actions seen as anticompetitive.

The appeal to reduce regulations is expected to fall on willing ears, given that many Republicans have urged the repeal and replacement of the Affordable Care Act (ACA) in part to reduce what they perceive as the overregulation of health care.

Thirty-nine hospitals and health systems joined other healthcare entities to highlight regulatory barriers and lay out principles the Trump administration should adhere to in seeking to bolster the shift to value-based payment.

“Over the years, the regulations governing this system have grown extraordinarily complex,” the organizations wrote in a Jan. 25 letter. “This complexity hampers efforts of clinicians and other healthcare providers who have been diligently working to measurably improve quality, reduce costs and take accountability for populations of patients.”

Similarly, the American Hospital Association (AHA) and about 70 other hospital groups wrote Congress a letter on Jan. 27 that outlined priorities in any ACA replacement, noting that “significant regulatory reform to address the burden faced by hospitals and health systems needs to be implemented by both the legislative and executive branches.”

Where to Begin

The range of potential regulatory targets in health care is significant and has been greatly increased by implementation of the 2,000-page ACA. In just the first 10 months of 2016, the U.S. Department of Health and Human Services (HHS) and its agencies issued 43 proposed and final rules with 21,000 pages of text affecting hospitals and health systems, according to AHA.

“In addition to the sheer volume, the scope of changes required by the new regulations is beginning to outstrip the field’s ability to absorb them,” Rick Pollack, president and CEO of AHA, wrote in a Dec. 2 letter to Trump.

It remains unclear what the effects will be of early Trump initiatives to roll back regulations, such as a first-day executive order instructing federal agencies to relieve ACA “burdens” and a Jan. 30 order for all federal agencies to reverse two rules for every new one issued. But hospitals have many regulatory targets in mind.

Pollack called the order a “good first step” and said the association will work with the administration on reducing regulations.

“We are encouraged by the executive order signed by President Trump today that will help reduce red tape,” he said in a written statement.

Among 33 areas of regulation where hospitals urged Trump to provide relief was enforcement of the Anti-Kickback Statute and the Stark Law, which is a conflict-of-interest statute that restricts physicians from making referrals based on financial considerations. The laws were impeding hospitals from coordinating care and participating in new payment models, according to AHA.

“A new exception should be created that protects any arrangement that meets the terms of the newly created anti-kickback safe harbor for clinical integration arrangements,” Pollack wrote.

That call increasingly is being echoed on Capitol Hill.

Nick Turkal, MD, president and CEO of Aurora Health Care, noted at a Jan. 25 congressional briefing that the Stark Law was created to guard against conflicts in fee-for-service (FFS) payment arrangements.

“As we move away from that, let’s fix the things that don’t work,” Turkal said. “And to put handcuffs on us won’t allow us to do the things we need to do to be a good partner. We don’t want bad actors in healthcare, either. But we do want solutions where we can work across lines much more effectively.”

Specific Changes On Tap

The Stark Law may be moving closer to an overhaul than at any point since its earliest provisions were enacted in 1990. The provider calls for changes followed a July 2016 Senate Finance Committee report that suggested a range of updates to modernize the law to better fit a changing healthcare landscape. Seeking to encourage innovative payment models, the report examined potential changes such as expanded waivers, reduced penalties for technical violations, and simplified definitions and exceptions.

Among Stark changes sought by Premier are new protections for accountable care organizations (ACOs). The waivers offered to providers under the Medicare Shared Savings Program do not extend to downstream providers or suppliers, a Premier analysis noted. ACOs thus are barred from arrangements with pharmaceutical companies that allow for rebates on drugs or devices when the long-term outcome does not meet certain expectations, which is referred to as value-based contracting.

The law also prevents ACOs from paying skilled nursing facilities more than the Medicare rate to cover the costs of treating medically complex patients. Such a restriction hampers the ability of ACOs to ensure such patients are accepted and receive needed care.

Other specific changes sought by Premier included:

  • Permitting ACO participants to provide detailed information on provider quality, such as star ratings, to aligned or potentially aligned beneficiaries
  • Permanently codifying existing exceptions to the Anti-Kickback Statute and the Stark Law for donation and financial support of electronic health record software, technology, and training
  • Allowing beneficiary engagement tools such as copay waivers, transportation fees, and information about the value of post-acute care settings within alternative payment models

Among the hospital advisory group’s suggested legislative changes: requiring HHS to review and assess the Anti-Kickback Statute and the Stark Law in the context of transforming the healthcare system and protecting against fraud and abuse amid new payment models aimed at improving care and lowering costs.

Michael Leavitt, a former HHS secretary, noted at the Jan. 25 congressional briefing that Stark rules have prevented anticompetitive relationships and incentives for unacceptable behavior.

“On the other hand, people have to work together in a collaborative way to make this happen,” Leavitt said, referring to healthcare transformation. “There’s a give-and-take that goes into that.”

The possibility of changes to Stark comes amid an aggressive antifraud enforcement push. The Justice Department (DOJ) obtained more than $4.7 billion in settlements and judgements from civil cases involving allegations of fraud and false claims in FY16, which was the third-highest annual recovery in False Claims Act (FCA) history, according to an announcement. The DOJ has used the FCA to enforce the Stark Law and target arrangements that compromise physician independence, according to legal observers.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


Publication Date: Tuesday, January 31, 2017