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News | Value-Based Payment

Stark, Anti-Kickback changes draw praise from providers

News | Value-Based Payment

Stark, Anti-Kickback changes draw praise from providers

  • Changes to rules implementing the Stark Law and Anti-Kickback Statute aim to remove barriers that impede provider participation in value-based payment.
  • The Stark rule changes create new, permanent exemptions for value-based payment arrangements.
  • The Anti-Kickback rule changes include a safe harbor for cybersecurity donations.

Recently finalized changes to rules implementing the Stark Law and Anti-Kickback Statute — effective in January — drew support from provider groups.

On Nov. 20, CMS finalized changes to the Physician Self-Referral Law, commonly known as the Stark Law, which generally prohibits physician referrals to services by any entity to which a physician has a financial relationship.

The changes to rules initially designed for a fee-for-service (FFS) system aim to allow broader value-based payment (VBP) arrangements.

Stark Law compliance annually costs millions of dollars and hundreds of hours of time, providers told CMS. The agency said the rules have impeded the move toward VBP in Medicare and across all types of health plans.

“When we kicked off our Patients Over Paperwork initiative in 2017, we heard repeatedly from front-line providers that our outdated Stark regulations saddled them with costly administrative burden and hindered value-based payment arrangements,” CMS Administrator Seema Verma said in a release.

The rule finalizes many of the proposed policies from an October 2019 notice of proposed rulemaking, including:

  • Creating new, permanent exceptions for VBP arrangements
  • Providing additional guidance on key requirements for exceptions to the physician self-referral law
  • Providing protection for non-abusive, beneficial arrangements in both FFS and VBP systems

The changes echoed many that have been long sought by hospital groups.

“Outdated regulations created unnecessary roadblocks to the kind of collaboration and coordination that enables caregivers to meet all of their patients’ health care needs, whether in the hospital, the doctor’s office or their own homes,” Tom Nickels, executive vice president of the American Hospital Association, said in a written statement. “The changes finalized should help to replace numerous waivers of these same regulations needed to experiment with collaborative and innovative care and remove ‘impediments to robust, innovative programs’ noted in a 2016 report from the Department [of Health and Human Services] to Congress.”

The rule goes into effect 60 days from its pending publication in the Federal Register.

Anti-kickback rules changes

Also on Nov. 20, the HHS Office of Inspector General issued a final rule with changes to the enforcement of the Anti-Kickback Statute (AKS), which is a criminal statute that prohibits any form of remuneration, whether monetary or in-kind, in exchange for referrals or other federal healthcare program business by any person or entity.

Changes include:

  • Adding seven new safe harbors
  • Modifying four existing safe harbors
  • Adding a new exception to civil monetary penalties contained in a statute on beneficiary inducements

The final rule also revises the definition of remuneration set forth in the civil monetary penalty law.

The AKS changes “are foundational to providers’ work to engage, manage and coordinate patient care so as to achieve optimal outcomes,” Blair Childs, senior vice president for Premier, said in a statement.

The safe harbors detail voluntary payment and business practices that allow providers to avoid AKS violations even if the underlying transactions or relationships implicate a provider.

Beneficiary inducements are barred by a civil administrative statute that prohibits knowingly offering something of value to program beneficiaries to induce them to select a particular provider, practitioner or supplier.

Driving VBP

OIG said in a fact sheet that the Anti-Kickback changes are designed to eliminate provisions “potentially inhibiting beneficial arrangements that would advance the transition to value-based care and improve the coordination of patient care across care settings in both the Federal health care programs and commercial sector.”

The final rule added some safe-harbor limitations, such as a fixed-dollar cap on protected tools and supports provided to patients and enhanced restrictions on marketing and patient recruitment.

Three of the new safe harbors focused on:

  • Care coordination agreements
  • VBP arrangements with substantial downside financial risk
  • VBP arrangements with full financial risk

OIG defined substantial downside financial risk as one of three scenarios in a VBP arrangement:

  • At least 30% of any loss based on a comparison of current expenditures against bona fide benchmarks to approximate the total cost of care
  • At least 20% of any loss based on a comparison of current expenditures against bona fide benchmarks to approximate the total cost of care for defined clinical episodes agreed upon by the parties
  • A prospective, per-patient payment that is designed to produce material savings and is paid at least annually for a defined set of services or items furnished to the patient population, and that is anticipated to cover the costs of those items and services

The safe harbor protections reflect each party’s degree of participation. While the new protections for care coordination agreements require little or no assumption of financial risk and apply only to remunerative in-kind services, protections for VBP arrangements with substantial or full financial risk  cover both in-kind services and monetary remuneration.

The final rule modifies the safe harbor for personal services agreements and management agreements by adding new protections for outcomes-based payments.

For the Medicare Shared Savings Program and other Center for Medicare and Medicaid Innovation models, the AKS final rule creates a new safe harbor for exchange of anything of value between or among participants, provided that the exchange of value does not induce the parties to participate in the model agreement or other suppliers to furnish medically unnecessary items or services.

Cybersecurity received its own safe harbor under the AKS final rule, which allows donation of cybersecurity technology pursuant to a written agreement that describes the technology and services provided and that does not take into account the value or volume of referrals or condition such  donations on future referrals or an ongoing business relationship.

The AKS regulations are effective Jan. 19, 2021.

Industry watchers said providers will need to analyze both existing and prospective VBP arrangements to understand how they are affected by the new provisions.

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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