WASHINGTON -- The Department of Health and Human Services (HHS) proposed new rules on Wednesday intended to relax and clarify the "Stark Law" and the federal anti-kickback statute, giving clinicians more opportunities to transition to value-based care.
One draft rule was issued by the Centers for Medicare & Medicaid Services (CMS) and a second came from HHS's Office of the Inspector General.
Reactions from stakeholders were mainly positive. However, the Medical Group Management Association (MGMA) panned the rule suggesting that if HHS cannot provide "meaningful" reform it would look to Congress for its help instead.
Times Change
The 1989 Stark Law, named for former Rep. Fortney H. "Pete" Stark (D-Calif.), "prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies," CMS notes on its website. It was aimed at preventing physicians from enriching themselves at patients' expense -- such as orthopedists, for example, referring patients to get x-rays at clinics the same physicians also own.
But medicine has since evolved to emphasize "value-based care" with bundled services -- e.g., including the imaging that an orthopedic patient may need as part of evaluation and treatment. Clinicians and hospital groups have argued that the Stark Law hampers value-based payment arrangements and makes coordinating patient care more difficult.
When the law was enacted, most of the healthcare system relied on fee-for-service payments, and concerns over physicians getting rich off of their patients through self-referrals was a more relevant concern than it is in many of the value-based arrangements that exist today.
In June 2018, HHS solicited feedback regarding how to amend the rule and the department received approximately 375 letters in response.
With its newly proposed rules, the administration appears to believe that it has effectively resolved physician and hospital groups' key concerns. An HHS press statement explained that the new rules would give providers in value-based arrangements "greater certainty" and "ease the compliance burden for healthcare providers across the industry," while maintaining protections against fraud and abuse.
'Unprecedented opportunity' for high-value care
"Regulatory reform has been a key piece of President Trump's agenda not just for faster innovation and economic growth, but also better, higher-value healthcare. Our proposed rules would be an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve," said HHS Secretary Alex Azar in a press release.
New value-based exceptions to the Stark Law in the proposed rule issued by CMS make clear that incentives in a healthcare system built around value are different from those in one focused on volume (i.e., fee for service).
HHS offered specific examples of the types of care coordination, patient engagement and data sharing practices that would be encouraged under the draft proposals.
For instance, the proposed rule would allow specialty physicians to share data analytics services with a primary care physician's practice; enable hospitals to provide patients with remote monitoring technology to alert physicians and caregivers when he or she needs help; and permit physicians to give patients free "smart pillboxes" which let the physicians and caregivers know when a patient misses a dose.
It would be difficult to fit these activities into the existing protections of the Stark Law, anti-kickback statute, and civil monetary penalties laws, but they would be potentially permissible under the proposed changes "if all applicable conditions are met," noted the press statement.
Increasing Care Coordination, Data Sharing
The proposed rule would also allow a local hospital to enhance its own cybersecurity by providing physician practices that refer patients to that hospital with free cybersecurity software. "The hospital and the physicians often share information about their patients, so it is important that there are no weak links that might compromise everyone else," the HHS statement explained.
The new rule would also, for example, allow a nephrologist or dialysis facility to give patients technology that provides "two-way, real-time interactive communication" with physicians.
Other proposed rule changes related specifically to the anti-kickback statute and the civil monetary penalties law would increase flexibility, innovation and coordinated care through outcome-based payment arrangements, for example.
Finally, CMS is soliciting comments regarding price transparency in relation to the the Stark Law, specifically around "whether to require cost-of-care information at the point of a referral for an item or service," the agency noted in a fact sheet.
The agency stressed that such information could be useful in encouraging patients to talk to their physicians about cost and serve as "an additional safeguard at the point of referral."
Stakeholders Respond
The American Hospital Association celebrated the new rules as long overdue.
"Despite widespread agreement by Congress, and even previous administrations, that these regulations needed to be modernized, today's proposal is the first major step toward achieving that goal," said Rick Pollack, president and CEO of AHA, in a press release.
"The changes proposed should help to supplant numerous waivers of these same regulations needed to experiment with collaborative and innovative programs to provide cost-effective comprehensive care through new value-based models, such as Accountable Care Organizations (ACOs). And, they do so without sacrificing the law's original purpose -- to prevent physicians from referring patients to facilities in which they have a financial stake."
The National Association of ACOs also lauded the draft rules; however, Clif Gaus, ScD, the group's president and CEO, seemed to interpret them differently.
He noted that the administration, in a phone call with stakeholders, clarified that the new rules "do not supersede or override current HHS waivers for ACOs participating in the Medicare Shared Savings Program" and instead "build upon and give additional flexibility for today's ACOs."
The Medical Group Management Association, however, was not impressed: "For those fortunate medical groups that can utilize the new value-based exceptions, this proposal is a step in the right direction. For medical groups that have been waiting years for relief from the complexity of the Stark Law, this isn't it," said Anders Gilberg, senior vice president of government affairs, in a statement.
Current Stark regulations are "fundamentally hyper-technical from beginning to end" and the new proposal "fails to clarify fundamental issues related to group practices and confirms our longstanding position that Congress needs to change the law," Gilberg added.
"If CMS doesn't believe it has the authority to provide meaningful Stark reform, then it should join the provider community in working with Congress to fix these fatally flawed regulations and outdated statute."
The American Medical Association said it is still reviewing the rules, but President Patrice Harris, MD, noted the association is "pleased to see that the administration has acknowledged a need for policy revisions in response to potential barriers that impede the delivery of patient-centric care."
Public comments are due by Dec. 31.
Joyce Frieden, MedPage Today Washington Editor, contributed to this story.