Medicare Proposes Overhaul to 'Kickback' Laws   

Kerry Dooley Young

October 09, 2019

Federal officials on Wednesday unveiled plans to remove what they describe as unintended hurdles to coordination of patient care due to outdated rules about clinicians' financial relationships.

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would create new exceptions to the so-called Stark law, which dates to 1989. The Stark law was intended to stop physicians from profiting at the expense of patients at a time when there was little challenge to Medicare's fee-for-service model.

But the law — or the fear of it — now can stand in the way of what CMS describes as value-based arrangements at a time of increasing emphasis on pegged Medicare payment to judgements about the quality of care delivered.

"We serve patients poorly when government regulations gather dust in the attic: they become ever more stale and liable to wreak havoc throughout the healthcare system," said CMS Administrator Seema Verma in a statement about the proposed changes.

CMS' 333-page proposed rule would, for example, make it easier for firms to donate software that protects electronic health records (EHRs) from hacking. This builds on a current exception to the Stark law regarding EHR software and training services, CMS said in the rule.

On Wednesday, the Office of the Inspector General (OIG) for the US Department of Health and Human Services (HHS) issued a companion proposed rule that examines federal antikickback laws, which date to 1972. In its 386-page proposed rule, OIG also emphasizes the need for special carve-out for cybersecurity.

"The digitization of the healthcare delivery system and related rules designed to increase interoperability and data sharing in the delivery of healthcare create numerous targets for cyberattacks," OIG said in its proposed rule. "The healthcare industry and the technology used to deliver healthcare have been described as an interconnected 'ecosystem' where the 'weakest link' in the system can compromise the entire system."

Value-Based Goals

Both CMS and OIG also emphasized a need to create exceptions from these federal rules for "value-based" arrangements, ones where physicians or medical organizations collaborate for the benefit of patients, and not their own finances.

In its draft rule, OIG said its proposals for "value-based arrangements are different or more restrictive than CMS's comparable proposals, in recognition of the differences in statutory structures and penalties."

"For some arrangements, we believe it is appropriate for the anti-kickback statute, which is a criminal, intent-based statute, to serve as 'backstop' protection for arrangements that might be protected by a less restrictive exception to the civil, strict liability physician self-referral law," OIG said.

"Siloed System"

The American Medical Association (AMA) has asked HHS to overhaul Stark and antikickback rules to allow new collaborations in medicine. In August 2019, the AMA specifically suggested that CMS create new exceptions to the Stark and antikickback rules for cybersecurity. 

In a Wednesday statement, Patrice A. Harris, MD, MA, AMA's president, said her organization is reviewing the CMS and OIG proposals. Still, she said the AMA "greatly appreciates" HHS' interest in revising the Stark and antikickback rules.

"In certain circumstances, physicians are prohibited from employing care coordination strategies on behalf of our patients," Harris said. "Instead, patients, in addition to dealing with the physical and emotional aspects of a disease or condition, often find themselves having to coordinate their own care in a fragmented and siloed system."

But the Medical Group Management Association (MGMA) expressed immediate disappointment with CMS' Stark proposal.

"This rule adds layers upon layers to a regulatory scheme that was originally intended to provide bright-line guidance for medical practices, but never has." said Anders Gilberg, MGMA's senior vice president for government affairs, in a statement. "The new proposal fails to clarify fundamental issues related to group practices and confirms our longstanding position that Congress needs to change the law."

Lawmakers have taken some interest in the Stark rules in recent years, but it appears that, at least for now, HHS may be leading the charge on any changes.

The Senate Finance Committee and House Ways and Means Committee held a round table on the Stark law in December 2015 and then requested feedback from industry experts. Senate Finance said it received close to 50 responses. In contrast, CMS received more than 390 comments to its 2018 request for feedback on the Stark law.

A "Maze" of a Law

In its August 24, 2018, comment to CMS, Alyssa Keefe, vice president of federal regulatory affairs for the California Hospital Association, noted that many people have called for a repeal of the Stark law.

Keefe described the Stark law as a "maze that can trap not only the unwary but also the reasonably wary and well intentioned, as even those knowledgeable about the law cannot always agree on whether a particular scenario violates it."

"While combatting true fraud and abuse is undeniably necessary, we believe this would be best effectuated by wiping the slate clean and developing a new statutory and regulatory framework that creates fewer barriers to the delivery and payment models that facilitate care coordination," Keefe wrote.

But Keefe conceded that amending the Stark law, rather than repealing it, is seen as the expedient option. CMS should address how the Stark law impedes or bars care coordination activities, including making phone calls to patients and providing patients transportation to physicians' offices for care, she wrote.

The Missouri Hospital Association also told CMS that the Stark law and antikickback statute impede efforts to address transportation needs of the homeless and trauma care for people who have suffered physical and sexual abuse.

"All providers along the care continuum must be free to coordinate care and care planning without the threat of financial reprisal," wrote Herb B. Kuhn, president and chief executive of the Missouri Hospital Association. "The Stark Law and Anti-Kickback Statute have the opposite effect in creating silos that drive providers apart."

Many other physicians and healthcare executives also see these rules as an impediment to addressing what are often called social determinants of health, according to Kimberly Brandt, a senior CMS official.

She spoke at a January 2019 event on the Stark law at the Brookings Institution. Brandt has been working on this issue for many years, having earlier served as a staffer on the Senate Finance Committee.

"The reality is, as they say, it's not your father's Oldsmobile anymore, but we're kind of moving into a new payment model, in a new world, and we really understood that we needed to think about how we can use our regulatory authority to make those changes," Brandt said, according to a transcript of the meeting.

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