In Win for Hospital Value-Based-Payments, HHS Finalizes Reforms to Stark Law and Anti-Kickback Statute

November 25, 2020

On Nov. 20, the U.S. Department of Health and Human Services (HHS) released two long-awaited final rules governing the physician self-referral or Stark Law and Anti-Kickback Statute. Reform of the Stark Law has been a significant priority for WHA for a while, including in comments on a federal Request for Information (RFI) in 2018 and on the proposed rule in early 2020. Wisconsin’s Congressional Delegation has also supported efforts by WHA and others to push for Stark Law reforms and to encourage HHS to finalize the proposed rule earlier this year.
Named after its lead author, former California Congressman Pete Stark, the Stark Law was intended to guard against financial incentives physicians might receive for ordering unnecessary tests or procedures under Medicare. Unfortunately, more than 25 years after its passage, the law has been beset by a complex maze of rules and regulations that also intersect the Anti-Kickback Statute and make it difficult for hospitals to comply, creating a chilling effect on participation in value-based payment reforms that are intended to incentivize higher quality and higher value health care.

The new rule aims to draw more providers into value-based payment arrangements by creating specific exceptions from the Stark Law and safe harbors from the Anti-Kickback Statute to existing regulations. Specifically, it creates safe harbors or exceptions in three types of arrangements:
  • Care coordination agreements or value-based arrangements that require no financial risk but are entered into for the sake of improving quality, health outcomes and efficiency.
  • Value-based arrangements with substantial shared financial risk or meaningful downside financial risk to the physician (of at least 10% of a physician’s remuneration under the Stark Law).
  • Value-based arrangements with full financial risk, typically paid via a capitated or per-member-per-month rate.
In addition to these three main criteria, the rules also contain additional flexibilities for patient engagement tools furnished to patients which may improve outcomes as well as electronic health record and cybersecurity technology upgrades. It also attempts to clarify the confusing definitions surrounding
  • Commercially reasonable agreements;
  • Fair market value;
  • Patient choice and directed referrals; and
  • An objective standard for compensation that “takes into account the volume or value of referrals.”
WHA is exploring additional educational opportunities for members on these proposed reforms and will be in touch as opportunities arise. For more information, contact WHA Vice President of Federal and State Relations Jon Hoelter or Vice President of Education and Marketing Leigh Ann Larson.

This story originally appeared in the November 25, 2020 edition of WHA Newsletter