New Amendments to Federal Fraud and Abuse Regulations May Ease Compliance Burdens
By Sarah Charles Wright
In October 2019 the Department of Health and Human Services issued proposed amendments to the regulations under the federal Stark Physician Referral law (“Stark”), the Anti-kickback statute (“AKS”), and the Civil Monetary Penalties (“CMP”) law. The amendments are intended to resolve conflicts between these laws and value-based payment models (e.g., accountable care organizations) promoted by the Affordable Care Act and CMS with the goal of transitioning providers from the current fee-for-service to a value-based reimbursement system. They are also intended to reduce compliance burdens for physician and other providers. Regardless, the criteria that must be satisfied for an arrangement to fit within one of the new or revised safe harbors are complex.
Bottom Line:
“The proposed amendments are directed at encouraging physician participation in value-based arrangements that the Stark law would otherwise prohibit, and at clarifying and expanding the safe harbors for physician compensation arrangements. The amendments include very detailed definitions for the terms Value-Based Arrangement, Value-Based Enterprise, Value-Based Enterprise Participant, Care Coordination Arrangement, and Target Population. Fitting within any of the new and revised safe harbors under the AKS requires satisfying not just the criteria under the safe harbor but also under one or more of these new definitions.
The proposed amendments are not final and may be further revised. They should not be relied upon by providers to structure any arrangement at this time.”
The phrase “value-based” is integral to many of the amendments and signals value produced through improved care coordination and health outcomes, lower costs, reduction in the growth of health care costs, and improved efficiencies in the delivery of care. The proposed amendments are not final and may be further revised. They should not be relied upon by providers to structure any arrangement at this time.
STARK SAFE HARBOR AMENDMENTS
The Stark Law prohibits physician self-referral of patients for Designated Health Services (“DHS”) to any entity the physician has a financial relationship with and that files claims with Medicare for the referred DHS. The proposed amendments are directed at encouraging physician participation in value-based arrangements that the Stark law would otherwise prohibit, and at clarifying and expanding the safe harbors for physician compensation arrangements.
Physician Group Practice Profit-Sharing Distributions and Productivity Bonuses. The amendments relax the conditions under which doctors in group practices that provides DHS can participate in profit sharing arrangements. Similarly, the proposed amendments specify three alternative conditions under which a group practice providing DHS can pay its physicians Productivity Bonuses without violating Stark. As with the current regulations, productivity bonuses may be calculated based on the physician’s patient encounters or personally performed RVUs. Productivity bonuses may also be based on revenue from DHS as long as the group derives less than 5% of its revenues from DHS and DHS revenues paid to physicians in the group in the form of bonuses make-up less than 5% of their compensation.
Bona fide Employment Arrangements. The proposed amendments now identify specific conditions that if met, will permit a provider entity to condition a physician’s compensation under a bona fide physician employment arrangement, personal services, or managed care contract, on the physician's referrals to a particular provider, practitioner, or supplier.
Further Guidance on Fair Market Value in Physician Compensation Arrangements. The amendments offer long-needed guidance on what Fair Market Value means related to the Stark safe harbors for Physician Compensation Arrangements, and for Office Space and Equipment Leases.
Physician Compensation Arrangements that Facilitate Value-Based Healthcare Delivery and Payment. The amendments create new safe harbors for physician compensation arrangements that qualify as Value-Based Arrangements. The exceptions are intended to apply regardless of whether the arrangement relates to Medicare patients, non-Medicare patients, or both. For this safe harbor, CMS has proposed detailed, interconnected definitions of the terms Value-Based Arrangement, Value-Based Enterprise, Value-based Enterprise Participant, Care Coordination Arrangement and Target Population. These definitions align with definitions of the same or similar terms under the proposed AKS and CMP regulations discussed below. CMS is still considering whether to exclude laboratories, suppliers of durable medical equipment, prosthetics, orthotics and supplies, pharmaceutical manufacturers, and/or pharmacy benefit managers, wholesalers; and distributors from application of the safe harbor.
AMENDMENTS TO ANTI-KICKBACK AND CIVIL MONETARY PENALTY REGULATIONS
The AKS imposes severe criminal fines penalties on anyone who knowingly and willfully offers, pays, solicits, or receives remuneration to induce or reward the referral of business reimbursable by a federal health care program. Violation of the AKS can also result in large civil monetary penalties, provider “exclusion” from federal programs, and criminal liability under the False Claims Act.
Achieving value-based care through patient care coordination among providers is a pillar of the Affordable Care Act and CMS’s implementation of the accountable care organization models and Medicare Shared Savings Program. Care coordination naturally requires treating providers to refer patients to each other and to exchange in-kind “remuneration” which in turn implicates the AKS. Providing patients with incentives to engage and support them in improving their health may also implicate the AKS and the CMP law. The proposed amendments to the AKS and CMP regulations provide new and revised safe harbors from the definition of “remuneration” to alleviate provider compliance concerns with participating in Value Based Arrangements. The safe harbor amendments focus on remuneration in the form of: (i) payments from third-party payors that drive value (e.g., capitated payments, bundled payments); and (ii) the sharing among clinicians, providers and suppliers of staff (e.g., care coordinators); of data analytics tools to achieve performance goals, and gainsharing or shared savings arrangements.
The amendments include new safe harbors for:
Care Coordination Arrangements to Improve Quality, Health Outcomes and Efficienc – allows in-kind remuneration between providers in the form of shared services or IT.
Value-Based Arrangements with Substantial Downside Financial Risk or Full Financial Risk for the Provider – applies to certain in-kind and monetary arrangements where a Value Based Enterprise enters an arrangement with a payor: (i) for shared savings/losses and risks repaying a substantial portion of the money received from the payor if the Enterprise it fails to meet performance goals; or (ii) to receive a prospective payment from the payor in return for assuming full financial responsibility to care for a target population for a year or more.
Cybersecurity Technology Services – allows one provider to donate certain cyber technology and services to another provider to enhance patient care coordination.
Patient Engagement Tools and Supports – permits providers participating in a Value Based Enterprise to furnish certain engagement tools and supports to patients within the Enterprise’s target population to improve health outcomes and efficiency of care.
CMS-Sponsored Reimbursement Models and Model Patient Incentives – covers reimbursement models authorized by the CMS Innovation Center (e.g., ACOs) as being within the safe harbor.
Importantly, the AKS regulatory amendments also modify the safe harbors for:
Personal Services and Management Contracts to add flexibility for compensating providers based on health outcomes, or for performing part-time services;
Local Transportation Services to expand mileage limits for rural areas and for transporting patients discharged from inpatient facilities;
Telehealth for In-Home Dialysis to cover a new exception under the CMP law to the prohibition against beneficiary inducements to allow providers to furnish telehealth technologies to certain in-home dialysis patients. Related to this is a new exception under the CMP law prohibition against giving Medicare/Medicaid beneficiaries inducements for Telehealth Technologies in-home dialysis patients.
The amendments include very detailed definitions for the terms Value-Based Arrangement, Value-Based Enterprise, Value-Based Enterprise Participant, Care Coordination Arrangement, and Target Population. Fitting within any of the new and revised safe harbors under the AKS requires satisfying not just the criteria under the safe harbor but also under one or more of these new definitions.
The comment period for the proposed changes has now closed, and it is not yet clear which amendments will be included in the final rules. What is clear is that changes are on the horizon, and it is important for providers to ensure their arrangements follow the amended rules.
Questions about your compliance with federal or state healthcare business laws? Healthcare attorney Sarah Charles Wright has extensive experience in this area, and is happy to help. Contact her at 859.255.8581, or swright@sturgillturner.com!
This article is intended as a summary of state and/or federal law and does not constitute legal advice.