Final Updates to Stark Law Will Ease Transition to Value-Based Care

New rules will ease administrative burden, speed up reimbursement and remove fears of accidental violations.

By Nan Sloan, Vice President of Compliance, Medecision

Last November, the federal government issued two final rules aimed at removing unintentional barriers to value-based care.

The Department of Health and Human Services (HHS) Office of the Inspector General (OIG) issued the final rule “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements.” Meanwhile, the Centers for Medicare & Medicaid Services (CMS) issued the final rule “Modernizing and Clarifying the Physician Self-Referral Regulations.”

These two updated rules were delivered as part of HHS’s Regulatory Spring to Coordinated Care, an initiative that has closely examined federal regulations that impede the transition to value-based care. These final rules also clarify and change policies related to what’s commonly known as the Stark Law—which prohibits physicians from referring Medicare patients to entities with whom they or their family members have a financial relationship. When the Stark Law was enacted in 1989, it made sense. Medicare reimbursed physicians based on a fee-for-service payment system, and preventing physicians from profiting from referrals or coordinated care was important. Under value-based care, however, physicians are reimbursed on the value, rather than the volume, of their services. Although the Stark Law did include some exceptions for value-based arrangements, they were poorly worded. The Stark Law was also a strict liability statute, meaning the government didn’t have to prove that the involved parties intended to violate the law. Not wanting to face strict penalties, many providers were discouraged from participating in any type of coordinated care—like occupational and physical therapy, radiology, or clinical lab services—with other healthcare providers.

A Win for Everyone

With the CMS’s updated rule, there are not only more clearly defined value-based exceptions to the Stark Law, but also new exceptions for arrangements in which a physician receives limited compensation for items or services actually provided by the physician; a new exception for donations of cybersecurity technology and related services; and an amendment to the existing exception for electronic health records (EHR) items and services. The rule from the OIG also includes more concrete examples of care coordination, patient engagement and data sharing practices that would be encouraged.

In short, these final rules are beneficial for both healthcare providers and patients—as well as the healthcare industry as a whole as it moves toward a value-based care payment model. In a press release issued by CMS in November, CMS Administrator Seema Verma said, “When CMS launched our nationwide tour to kick off our Patients over Paperwork initiative in 2017, one of the top things we heard from frontline providers was how the outdated Stark regulations impeded them from moving toward a value-driven reimbursement model.”

When the new rules go into effect on January 19*, physicians will be able to provide more coordinated care without fear of unintentionally violating the law or facing penalties. This opens even more doors for healthcare services like behavioral and mental health. For example, consider a primary care physician who is married to a psychiatrist. When a patient presents symptoms of depression or anxiety—two mental health conditions that have seen a dramatic increase because of COVID-19—the physician can refer the patient to his spouse’s psychiatry practice without facing penalty. Imagine the benefits of coordinated care in that situation!

The old Stark Law also stood in the way of innovations such as telehealth. The Stark Law and the Anti-Kickback Statute have hindered large health systems and healthcare organizations from working with smaller hospitals or physician practices with telemedicine services. For instance, in 2019, Douglas Grimm, a health law partner at Arent Fox, told Healthcare IT News that “an arrangement where a hospital engages a physician to provide on-call telestroke services, where the hospital provides the equipment to the physician and pays the physician an hourly rate for his or her services,” could potentially be a situation that would violate both the Stark Law and the Anti-Kickback Statute. Now, however, the exceptions in the final rules allow for two or more “value-based enterprises” to work together to improve outcomes, coordinate care and reduce costs.

The exceptions included in the CMS final rule also aim to relieve the administrative burden on smaller physician practices. For example, if you are a physician and you own your practice, you’re responsible for essentially everything. You have a lot more on your plate than just seeing patients and providing care. Oftentimes, doctors in small practices can’t afford EHR systems—or they have EHRs with limited functionality—because hospitals won’t give access to their systems out of fear of it being deemed as paying to give referrals. That means physicians are often stuck doing things manually. Now, however, larger health systems and hospitals in the community can grant smaller practices access to their EHR systems without fear of punishment or penalty.

As I wrote last June, the Affordable Care Act and other healthcare reforms and legislation have made it clear that value-based care is the way of the future. Now that the CMS and the OIG have issued updates, the healthcare industry can speed up the reimbursement process so that providers and payers can move forward with improvements to fill gaps in care.

*Note: The final rules will become effective on January 19, 2021, except for physician practices that meet the definition of a “group practice.” The law is effective January 1, 2022, for group practices.

 

Hear more from Nan Sloan with her insightful and informed thoughts on Improving Compliance for Medicaid Populations.