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News | Compliance

Battle emerges over value-based safe harbors included in anti-fraud overhaul

News | Compliance

Battle emerges over value-based safe harbors included in anti-fraud overhaul

  • Stark Law rules have limited the extent and number of value-based payment arrangements, providers say.
  • Critics warn creating permanent Stark exceptions will invite fraud.
  • Streamlined compliance requirements beyond the proposed changes would help physician practices by lowering compliance costs, advocates say.

A proposed overhaul of Stark Law rules could give providers a range of new options to improve value-based care and address factors that adversely affect health. But critics want to tighten the requirements for value-based arrangements to receive exceptions from the physician self-referral law.

In October, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to change enforcement of the civil Stark Law, while a separate proposed rule from the Office of the Inspector General of the U.S. Department of Health and Human Services would change enforcement of the criminal anti-kickback statute.

The proposed Stark enforcement changes include permanent exceptions for four types of payment arrangements:

  • Full-risk arrangements
  • Value-based payment (VBP) arrangements with “meaningful” downside risk
  • Any VBP arrangement with specified, written details
  • Any arrangement with specific compensation details

The 100 comments submitted so far on the proposed rule for Stark generally have been supportive of the changes, Kimberly Brandt, principal deputy administrator for operations at CMS, said at a recent briefing in Washington, D.C.

But Debbie Curtis, former chief of staff for then-Rep. Pete Stark (D-Calif.), for whom the law is named, warned that the creation of Stark exceptions for VBP arrangements that lack downside risk will incentivize arrangements primarily designed to skirt the law and not improve value.

“I have a difficult time understanding what needs to be changed in the Stark Law to pursue value-based arrangements,” Curtis said, noting the availability of CMS waivers for participants in its payment models.

Providers urge approval

The safe harbors are needed, argued Jeff Bahr, MD, chief medical group officer for Advocate Aurora Health. The existing Stark rules are opaque and onerous enough to limit the type and number of VBP arrangements established by Advocate Aurora, and a practical impact is that improvements in hypertension care have “plateaued.”

The proposed exceptions will allow for specific steps that are needed to improve care under VBP models, Bahr said, such as by allowing the health system to fund nutritional counseling and remote blood control monitors, which provide ongoing and long-term monitoring for signs of progression of hypertension.

Additionally, the health system expects to change its physician compensation packages to link individual clinician compensation to value-based improvements, as opposed to the primarily production-based packages it currently uses, Bahr said.

Also pushing CMS to retain the proposed broader Stark exceptions was the American Hospital Association (AHA). In a letter this week to CMS, AHA urged CMS not to adopt any of the more specific alternatives that would be needed to earn exceptions, such as requiring 15% or more cost sharing by participants in VBP arrangements.

“The requirement would preclude a host of innovative arrangements and take a disproportionate toll on small and rural physician practices, which are a key component in successfully improving care across patient populations,” AHA wrote.

Is more help need for practices?

Pushback on the Stark proposals also has come from physician advocates, who worry that the rules around Stark remain vague and compliance with them overly burdensome.

Paul Westfall, Washington, D.C., counsel for the American Medical Association (AMA), said AMA supports the proposed rule’s VBP exceptions but is concerned because many requirements have been retained. Especially concerning are requirements linked to clinical outcomes.

“There are a lot of concerns with outcome measures overall,” Westfall said. “A physician can provide all the best care and do the best things … but patients may not follow the care plan.”

Large compliance costs stem from the need to hire consultants and lawyers to ensure Stark compliance, and those costs are expected to continue to lead practices to avoid any arrangements where violating the law is even a possibility.

"To the extent that an arrangement might possibly violate these laws, my clients aren’t going to want to enter into them,” said Taylor Jones, a senior counsel for Akin Group law firm.

CMS and OIG plan to finalize both rules sometime in 2020, Brandt said. The deadline to submit comments is Dec. 31, 2019.


About the Author

Rich Daly, HFMA senior writer and editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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