HHS releases regulations to overhaul the Stark Law to entice value-based payment arrangements

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The Department of Health and Human Services is expected to issue two proposed rules today to overhaul the 1989 Stark Law to encourage value-based care arrangements. (Sarah Stierch/CC BY 4.0)

The Trump administration has proposed new exemptions and safe harbors to the Stark Law and anti-kickback statute to spur more physicians and healthcare facilities into value-based care arrangements.

The reforms, a proposed rule from the Centers for Medicare & Medicaid Services and another proposal from Health and Human Services' Office of Inspector General, aim to update the 1989 Stark Law that bans physicians from referring patients to facilities they have a financial stake in. The proposed regulations would create a permanent exception to the law to shield legitimate value-based deals from penalties.

“Unfortunately the looming threat of liability under the Stark Law has discouraged many providers from entering into value-based arrangements in the first place,” Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma said in a call with reporters Tuesday.

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Verma said that currently, CMS does provide waivers for value-based care arrangements, but they are only for Medicare-based payment models such as accountable care organizations.

“The proposal would allow for these similar types of exceptions for these other models that are Medicare or in the private sector,” she said.

CMS' proposed rule would require healthcare entities to provide a written document to the government that “spells out the arrangements between them and indicate what patient population they are going to target and what outcomes they are going to measure in terms of what value they are going to produce here,” said Deputy HHS Secretary Eric Hargan on a call with reporters.

RELATED: CMS impending overhaul of the Stark Law can only go so far, experts say

Those outcomes will be monitored to ensure the value-based arrangement doesn’t violate the law.

Some examples of value-based care arrangements include if a hospital discharges a patient after a diabetes emergency and assigns a nurse educator and equipment to help the patient keep their diabetes under control.

“All of those things could be viewed as an inducement” under the current law, HHS Secretary Alex Azar said.

The proposed rule would also provide flexibility for sharing information. For example, if a cardiologist has data analytics they currently under Stark can’t give that information to the primary care practice for free, Verma said. The primary care doctor has to pay a price because it refers patients to the cardiologist.

“Our proposed rule would address that problem,” she said.

Another new proposed exception to Stark would protect the donation of cybersecurity software from a hospital to a doctor’s office.

“A hospital that wants to protect electronic health records and other data may be worried about providing cybersecurity software to physicians for free or reduced due to the Stark Law,” Verma said. “Our proposed rule would allow for such a common-sense arrangement while ensuring physicians won’t be obligated to make referrals.”

HHS expects to also propose clarifications to terms in the Stark Law to help hospitals with compliance, but HHS officials did not divulge what terms would be affected.

The agency is also soliciting comments on what role price transparency will play in the regulations. CMS wants to know if it should require cost-of-care information when a physician or hospital issues a referral, a fact sheet on the new regulations said.

The proposed rule would also provide additional guidance on how to determine if compensation from one physician to another runs afoul of Stark.

OIG's proposed rule has changes to safe harbors to ensure that the new exceptions and changes to Stark also don't violate the federal anti-kickback law. 

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