The Administration has proposed changes to the regulations governing the Stark Law and the Federal Anti-Kickback Statute, which should make it easier for physicians and other providers to enter into value-based (rather than fee-for-service) payment arrangements and to coordinate patient care. 

The Stark Law generally prohibits physicians from referring patients to medical facilities in which either they or their immediate family members have a financial interest.  The Federal Anti-Kickback Statute generally prohibits payments for recommending products or services to patients covered by the Medicare or Medicaid programs.  Both laws have steep penalties, so providers have frequently shied away from entering into value-based arrangements for fear of violating one or both laws. 

On October 9, 2019, In a coordinated effort, the Centers for Medicare and Medicaid Services (CMS) proposed changes to the regulations governing the Stark Law, and the Department of Health and Human Services Inspector General proposed changes to the regulations governing the Anti-Kickback Statute.  In a press release announcing the regulations, CMS stated that the proposals were designed to “advance the transition to a value-based healthcare delivery system that improves the coordination of care among physicians and other healthcare providers in both the Federal and commercial sectors.”  Echoing these sentiments, HHS’ press release stated:  “Our proposed rules would be an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that their patients deserve.”

The proposed regulations add new safe harbors (exceptions) to the laws. Specifically, the proposed regulations would create three new safe harbors for “value-based arrangements”, which are arrangements providing at least one value-based activity for a target population.  One safe harbor is for value-based arrangements that focus on improving quality, health outcomes and efficiency; one safe harbor is for value-based arrangements that take on substantial down-side risk; and one safe harbor is for value-based arrangements that take on full financial risk for their patients’ healthcare spending.  In order to qualify, providers will need to establish a value-based arrangement, write out the goals of the arrangement, and have a targeted population. 

HHS has listed some of the types of arrangements that could be eligible for the new safe harbors, including arrangements allowing a specialty physician practice to share data analytics with a primary care practice in order to better coordinate care, and arrangements allowing hospitals and physicians to work together in new ways to coordinate care for patients discharged from the hospital in order to ensure patients receive appropriate follow-up care.  

Providers have been generally supportive of the proposed regulations.  The President of the American Medical Association, Patrice Harris, M.D., stated that the AMA was “pleased to see the administration has acknowledged a need for policy revisions in response to potential barriers that impede the delivery of patient-centric care.” Similarly, the President and CEO of the American Hospital Association, Rick Pollack, stated:  “When health care providers are able to work together to coordinate care, it is patients that benefit the most.”

The regulations have been published in the Federal Register.  Comments must be submitted by December 31, 2019.  The attorneys at Whatley Kallas, LLP will continue to follow this issue and will report on the final regulations when they are published.

The CMS regulations are linked here and the HHS regulations are linked here.