Big Changes for Health Care Fraud and Abuse: HHS Gifts Providers Updates to the Stark Law and the AKS, Just in Time for the Holidays

Sheppard Mullin Richter & Hampton LLP

On November 20, 2020, the Centers for Medicare and Medicaid Services (“CMS”) and the Office of Inspector General (“OIG”) promulgated much-anticipated and significant final rules intended to “modernize” and “clarify” regulations regarding the Physician Self-Referral Law (“Stark Law Final Rule”) and the Anti-Kickback Statute (“AKS Final Rule”). In the immediate future, Sheppard Mullin will post on this Healthcare Law Blog a comprehensive critical analysis of both the Stark Law Final Rule and the AKS Final Rule and their practical impacts.

The Stark Law Final Rule

The Stark Law Final Rule aims to advance the transition to a value-based healthcare delivery and payment system that improves the coordination of care among physicians and other healthcare providers, across different healthcare settings, in both the federal and commercial sectors.

The Stark Law Final Rule finalizes many of the provisions proposed in the October 17, 2019 proposed rule (“Stark Law Proposed Rule”), as analyzed in Sheppard Mullin’s previous critical analysis. Key changes to the Stark Law include the following:

  • New guidance on key Stark Law technical compliance requirements, such as the definition of “fair market value”, “commercially reasonable” arrangements, and the volume or value standard;
  • Additional new or revised definitions for key Stark Law terms, such as designated health services, physician, referral, remuneration, and transaction, some importantly narrowing the Stark Law’s scope;
  • New exceptions for value-based arrangements, designed to permit “physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law,” and have the potential to protect a wide range of arrangements in the health care industry;
  • New exceptions for cybersecurity, both expanding the existing exception for donations of electronic health record systems to expressly include the donation of cybersecurity software and services, when related to electronic health records, and a new exception for arrangements involving the donation of cybersecurity technology and related services; and
  • Updates to existing Stark Law exceptions to provide clarification and adjust scope in line with the shift toward value-based care and CMS’ experience in enforcing the Stark Law.

CMS anticipates that this rule will facilitate better access and outcomes for patients by creating clearer paths for the providers that serve them to enter into and maintain enhanced coordinated care arrangements.

The AKS Final Rule

The AKS Final Rule, released concurrently with the Stark Law Final Rule, similarly aims to remove barriers to coordinated and value-based care while facilitating appropriate safeguards to protect Federal health care programs and patients.

The AKS Final Rule implements seven new safe harbors, modifies four existing safe harbors, and codifies one new exception under the Beneficiary Inducements Civil Monetary Penalties Law (“CMPL”), as follows:

  • Three new safe harbors for remuneration exchanged as part of Value-Based Arrangements that foster better coordinated and managed patient care;
  • New safe harbors for Patient Engagement and Support, remuneration provided in connection with CMS-Sponsored Models, donations of Cybersecurity Technology and Services, and for Accountable Care Organization (“ACO”) Beneficiary Incentive Programs for the Medicare Shared Savings Program; and
  • Modifications to existing safe harbors for the donation of Electronic Health Records Items and Services (to allow donations of related cybersecurity technology and to update provisions regarding interoperability), for Personal Services and Management Contracts, for Warranties, and for Local Transportation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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