Takeaways From AHLA Webinar, "CMS, OIG Insights into Stark and AKS Final Rules Part I: Supporting Value-Based Care"

On Thursday, December 17, 2020, senior representatives of the US Department of Health and Human Services’ Office of Inspector General (“OIG”) and the Centers for Medicare & Medicaid Services (“CMS”) delivered a virtual presentation to American Health Law Association members and other health industry stakeholders to explain and elaborate on significant new regulations that become final on January 19, 2021. OIG Senior Counselor for Policy, Vicki Robinson, OIG Industry Guidance Branch Chief, Susan Edwards, and OIG Senior Counsel, Samantha Flanzer, discussed OIG’s recently issued final rules amending current and adding new safe harbors to the Anti-Kickback Statute (“AKS”). CMS Senior Technical Advisors, Lisa Wilson and Catherine Martin, discussed CMS’s recently issued final rules amending current and adding new exceptions to the Physician Self-Referral Law (“Stark Law”).

The AKS and Stark Law govern certain financial relationships among health care providers and entities. The Stark Law generally prohibits physicians from referring patients to receive "designated health services" payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. See 42 U.S.C. § 1395. The AKS generally prohibits the knowing and willful payment of "remuneration" to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). See 42 U.S.C. § 1320a-7b(b). The new AKS safe harbors and Stark Law exceptions are a result of the Regulatory Sprint to Coordinated Care initiated by the Department of Health and Human Services. The rules center around the concepts of Value-Based Enterprises (“VBE”) and Value-Based Arrangements (“VBAs”) and are intended to allow the exchange of remuneration among VBE participants while promoting quality in patient care.

OIG Senior Counselor for Policy, Vicki Robinson, stated that both OIG and CMS worked together in drafting the new rules and that the new rules are intended to remove barriers and accelerate the transformation of the health care system into one that better pays for value and promotes patient care coordination. The new rules are intended to operate together to create pathways for parties entering into VBAs that avoid strict liability for technical noncompliance while ensuring the government can pursue those parties engaging in intentional kickback schemes through the AKS. As an example of how the rules work together, CMS and OIG have the same definition of Value-Based Enterprise.

However, despite that the rules are intended to operate together, Ms. Robinson also stated that the laws continue to have fundamental differences. In particular, whereas the AKS is a criminal statute requiring criminal intent, and its safe harbors are voluntary, the Stark Law is a civil statute with strict liability, and its exceptions are mandatory.

Ms. Edwards emphasized that the mere presence of an ineligible entity within a VBE does not bar the other VBE participants from invoking safe harbor provisions. She also stated that, although the OIG excludes certain entities, which play a less central role in care coordination, from certain safe harbor provisions, such entities may obtain safe harbor under the cybersecurity safe harbor and the warranty safe harbor. Ms. Edwards further stated that certain VBE participants may be able to provide patients with digital health technology under the patient engagement and support safe harbor provision.

CMS Senior Technical Advisor, Lisa Wilson, emphasized that CMS was not necessarily attempting to draw more entities or individuals into the ambit of the Stark Law in proposing the new exceptions. Further, she emphasized that a VBE is not necessarily a separate legal entity and/or registered with a government, and a VBE may consist solely of a single physician and a single entity. Ms. Wilson and Ms. Robinson both emphasized that the agencies worked together in creating the new rules, but both emphasized that significant differences still exist.

In discussing the Stark Law full financial risk exception, CMS Senior Technical Advisor, Catherine Martin, stated that the risk for fraud and abuse is diminished where full financial risk for patient services is assumed. She also emphasized that the exception’s focus is on the VBE’s assumption of the risk, rather than any particular VBE’s participant’s assumption of the risk.

As January 19, 2021 approaches, health care industry stakeholders should ensure that their referral arrangements comport with these new complex regulations while keeping in mind the policy goals of OIG and CMS, as emphasized by their senior representatives above.