CMS Releases Long Awaited Changes to Stark/Antikickback Proposed Rule

Goal of incentivizing more value-based payments

October 15, 2019

On Oct. 9, the federal Centers for Medicare & Medicaid Services (CMS) released two long-awaited proposed rules that would update the Stark Law and Antikickback Statute (AKS). Both laws were intended to ensure physicians refer patients for services and tests based on necessity rather than on financial incentives for referrals. However, critics have widely noted that the burdensome, decades-old rules implementing the laws have not kept up with a changing Medicare environment. With many hospitals and health systems looking to participate in more value-based payment arrangements, the complexity of these federal rules has greatly inhibited hospitals from entering such contracts. As the Stark Law is a strict liability statute, even unintentional violations can lead to millions of dollars in retroactive repayments.

The proposed rule appears to respond to many of the concerns WHA highlighted in its comment letter to CMS in August 2018. In that letter, WHA recommended CMS focus on four main areas to alleviate the growing burdens with Stark Law compliance:
1. Clarifying confusing definitions.
2. Providing clearer exceptions from the law.
3. Prioritizing intentional, rather than unintentional violations.
​4. Harmonizing the Stark Law with the Antikickback Statute.

The proposed rule on Stark Law creates three new exceptions for value-based payment arrangements that either require participants to take on a degree of financial risk or advance “value-based” purposes. CMS also proposes amending the definitions of “fair market value” to mean the generally-accepted meaning of arms-length transactions between two parties, and redefining “commercial reasonableness” to include arrangements that further a legitimate business purpose, even if it does not result in profit for either of the parties. The rule also excludes services that do not affect a hospital’s Medicare inpatient prospective payment system payments from being considered “designated health services.”

CMS is also making attempts to harmonize the Stark Law and AKS in these proposed rules. In the AKS rule, CMS proposes to add safe harbor exceptions for value-based arrangements in which participants take on financial risk or offer only in-kind benefits to participants. It would also create a new safe harbor in the AKS for value-based arrangements which offer in-kind patient engagement tools directly to a target patient population, of up to $500 per patient per year. Both rules also would allow exceptions for cybersecurity technology and services, so long as they are not conditioned on future referrals or business.

WHA intends to offer comments on these rules before the Dec. 31 comment deadline and encourages members to contact Jon Hoelter, WHA director of federal and state relations, or Matthew Stanford, WHA general counsel, with any questions or suggested comments for CMS.

This story originally appeared in the October 15, 2019 edition of WHA Newsletter