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New Stark Law rules create safe harbors to promote value-based care, telehealth

A pair of Final Rules issued recently by CMS and the OIG establishes new safe harbors aimed to promote value-based care, while also modifying some of the existing safe harbors.

CMS said the intent behind the new rules, which were first proposed in 2019, is to allow healthcare providers and technology vendors to work together on establishing online health services and share tech without worrying about violating self-referral laws or Anti-Kickback Statute.

Under existing Stark Law, physicians are prohibited from referring to another provider if that physician or their family has a financial relationship with the provider. Anti-Kickback Statute prohibits offering anything of value for referrals that may be reimbursed by a federal healthcare program.

The final rule from CMS created new exceptions for value-based providers under the Stark Law. Meanwhile, OIG’s final rule modified four existing Anti-Kickback Statute safe harbors and codifies a new exception under the Beneficiary Inducements Civil Monetary Penalty law provision.

These laws have been considered burdensome for the expansion of telehealth in particular, as they have hamstrung health systems and medical companies from partnering with other local providers to create larger care networks. HHS hopes the new exceptions will lead to more “value-based enterprises” (VBE), which it defines as two or more “VBE participants” working together to coordinate care, improve outcomes and reduce costs for a target population while transitioning to value-based care.

Initially, CMS had debated excluding laboratories and DMEPOS suppliers from these new exceptions due to concerns that compensation arrangements involving these entities could influence referrals without contributing to better patient care coordination. However, the final rules did not include this exclusion.

“The definition of “VBE participant” finalized here does not exclude any specific persons, entities, or organizations from qualifying as a VBE participant,” CMS states in its final rule.

The new exceptions serve primarily to allow companies working in healthcare technology, such as telehealth and analytics companies, to have the opportunity to provide in-kind and monetary remuneration to providers through free or reduced items and services or shared savings arrangements. The new safe harbors do not include the longstanding requirement of fair market value for goods/services or bar those in the arrangement from considering volume or value of referrals.

Despite the creation of these new safe harbors, the College of American Pathologists (CAP), expressed disappointment that the rule changes don’t go far enough. Specifically, CAP had asked CMS to close the in-office ancillary services (IOAS) exception for anatomic pathology (AP) services. However, the CMS determined that removing any IOAS exemptions were outside the scope of the regulation.

“Even as the CMS has taken steps to close ambiguities to deter pod laboratories, and other abusive referral practices, physician groups are creating new arrangements to take advantage of the IOAS exception and profit from pathology services,” CAP stated in a letter to CMS last year when the rules were proposed. “Our members report specialty groups building large ‘physician office’ AP laboratories serving broad geographic areas using contracted or part-time pathologists in a central location who are reimbursed at a fraction of the billed professional amount.”

The new Anti-Kickback safe harbors are:

  • Care Coordination: One of three new value-based safe harbors, this carries no assumed financial risk. It permits in-kind remuneration among participants for care coordination and management, including digital health technology provided by vendors.
  • Safe Harbor for Value-Based Arrangements with Substantial Financial Risk: Another value-based safe harbor, this protects both in-kind and monetary remuneration for items and services among participants who are sharing substantial financial risk.
  • Safe Harbor for Value-Based Arrangements with Full Financial Risk: The third value-based safe harbor, this model gives participants more flexibility for in-kind and monetary remuneration, since they’re assuming full financial risk. This safe harbor does require a quality assurance program to make sure the items and services are used properly.
  • Patient Engagement and Support: this focuses on patient engagement and support tools provided by a participant to patients in a target population.
  • CMS-Sponsored Models: Applies to payment and delivery models and incentives sponsored by CMS that would otherwise require separate fraud and abuse waivers.
  • Cybersecurity Technology and Services: Safe harbor for the remuneration of cybersecurity technology and services, designed to improve security in programs that might be exposing sensitive information.

Additionally, the new rule adds an exception to the Beneficiary Inducement Civil Monetary Penalty, allowing for programs that use telehealth in home-based dialysis treatment.

Finally, the Final Rule amends five existing safe harbors:

  • Electronic Health Records: The OIG is altering this model to improve interoperability, clarify cybersecurity protections in an EHR arrangement, and remove the sunset provision and prohibition of donated equivalent technology.
  • Personal Services and Management Contracts: This change allows more flexibility in how personal and/or management services are defined, offering opportunities for part-time or occasional arrangements and those for which compensation is determined later.
  • Warranties: This amendment redefines “warranty” and includes protection for warranties for one or more items and services.
  • Local Transportation for Beneficiaries: This change allows beneficiary transport in rural areas up to 75 miles, while removing limits to the distance a beneficiary can be transported from the hospital back to the home. It also allows for ride-sharing.
  • ACO Beneficiary Incentives Program: this change creates a statutory exception to the definition of remuneration under the Medicare Shared Savings Program.

If you have questions about these new safe harbors, you may contact us directly for a free consultation.


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