Physician Advisory / 10.18.2019

Changes Proposed for Some of Healthcare Industry’s Most Important Fraud & Abuse Laws

By Andrew Wilber

physician advisoryEarlier this month, the Center for Medicare and Medicaid Services (“CMS”) and the HHS Office of Inspector General (“OIG”) announced a pair of proposed rules that would modify three of the most important fraud and abuse laws governing the healthcare industry—the Physician Self-Referral Law (the “Stark Law”), the Federal Anti-Kickback Statute and the Civil Monetary Penalties Law (the “CMPL”).

The highly anticipated proposed rules support CMS’s Patient over Paperwork Initiative and HHS’s Regulatory Sprint to Coordinate Care, and align with the Trump administration’s directive to evaluate and reduce burdensome regulations. In a press release, HHS stated that the proposed rules would “provide greater certainty for healthcare providers participating in value-based arrangements and providing coordinated care for patients.” HHS anticipates that the proposed rules will “ease the compliance burden for healthcare providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse.”

Proposed Changes to the Stark Law

The Stark Law generally prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician (or an immediate family member) has a financial relationship. The CMS proposed rule attempts to modernize the Stark Law, which has not been significantly updated since it was enacted in 1989, when healthcare was primarily paid for on a fee-for-service basis. The proposed rule would support the evolving healthcare environment by creating new, permanent exceptions to the Stark Law for (i) certain value-based compensation arrangements between or among physicians, providers and suppliers, (ii) certain arrangements under which a physician receives limited remuneration (not exceeding an aggregate of $3,500 per calendar year) for items or services actually provided by the physician, and (iii) donations of cybersecurity technology and related services. Further, the proposed rule would amend the existing exception for electronic health records items and services to protect the donation of cybersecurity software and services and either eliminate the sunset provision or extend the sunset date past December 31, 2021. Finally, the proposed rule would clarify key concepts in the Stark Law, including “commercial reasonableness,” “the volume or value of referrals or other business,” and “fair market value,” in an effort to reduce administrative burden.

Proposed Changes to the Federal Anti-Kickback Statute and the CMPL

OIG’s proposed rule would modify the Federal Anti-Kickback Statute and the CMPL. The Federal Anti-Kickback Statute prohibits offering, paying, soliciting or receiving anything of value to induce or reward referrals or generate health care program business. The CMPL provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or state healthcare program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a state healthcare program. The proposed rule would create new safe harbors for certain (i) value-based arrangements, (ii) tools and supports furnished to patients to improve quality, health outcomes and efficiency, (iii) remuneration provided in connection with a CMS-sponsored model, (iv) donations of cybersecurity technology and services, and (v) remuneration relating to Accountable Care Organization Beneficiary Incentive Programs for the Medicare Shared Savings Program. Moreover, the proposed rule would modify the following existing safe harbors:

  • The safe harbor for electronic health records items and services ( 1001.952(y)) to add protections for certain related cybersecurity technology, to update provisions regarding interoperability and to remove the sunset date;
  • The safe harbor for personal services and management contracts (§ 1001.952(d)) to add flexibility with respect to outcomes-based payments and part-time arrangements;
  • The safe harbor for warranties (§ 1001.952(g) to revise the definition of “warranty” and provide protection for bundled warranties for one or more items and related services; and
  • The safe harbor for local transportation (§ 1001.952.(bb)) to expand and modify mileage limits for rural areas and for transportation for patients discharged from inpatient facilities.

Further, with respect to the CMPL, the proposed rule would amend the definition of “remuneration” at 42 C.F.R. § 1003.110 to include an exception to the prohibition on beneficiary inducements for “telehealth technologies” furnished to certain in-home dialysis patients.

Stakeholders wishing to submit comments to the proposed rules must do so within 75 days of the proposed rules’ publication in the Federal Register.

If you have any questions regarding the proposed rules and how they might impact your practice, please reach out to Andrew Wilber at ajw@kjk.com or 216.736.7298, or contact any of our Physician Advisory professionals.

 

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