3 areas of the Stark overhaul likely to give providers compliance headaches

Doctor and patient talking and discussing health treatment while sitting at the desk. Physician pointing into tablet pc.
The new overhaul to the Stark Law proposed by the Trump administration could create some major headaches for providers. (andrei_r/GettyImages)

Last week, the Trump administration released two proposed rules to ensure value-based care deals don’t run afoul of the Stark Law and the antikickback statute.

But while provider groups were largely optimistic about the direction of the new rules, there are still some areas that could cause compliance headaches.

Here's a look at a few such concerns:

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Documenting value-based care

A major requirement in both rules is creating a document outlining any value-based arrangement in order to get the safe harbor and exception.

The document must include the targeted patient population, value-based outcome and duration of the deal. Any compensation delivered from, say, a hospital to a doctor’s office as part of a value-based outcome cannot exceed fair market value. But some experts say that the documentation requirements are going to be a lot for providers. 

"There are so many documentation requirements that I do think it will be at least a lot of bother if not impossible to keep up with," said Judy Waltz, healthcare partner with law firm Foley & Lardner.

Providers must also maintain a meticulous compliance program to identify any errors.

The Centers for Medicare & Medicaid Services (CMS) offers an example of a written agreement that calls for a hospital to pay a physician $150 an hour as part of a value-based deal, but the physician gets paid $140 an hour due to a clerical or operational error.

If a physician or hospital finds the discrepancy before the value-based arrangement ends, it can be corrected. However, if the discrepancy is found after the arrangement ends, the providers can’t “’unring the bell’ by correcting it at some date after the termination, the CMS rule said.

RELATED: CMS' impending Stark overhaul can only go so far, experts say

CMS and the Officer of Inspector General (OIG) are going to increase focus on documentation because the agencies “realize they are giving people a little more leeway,” said Venson Wallin, managing director of the consulting firm BDO’s Healthcare Advisory practice.

Watch out for small differences

It has always been difficult to meet regulations for both Stark and the antikickback statute, and it looks like the new value-based care rules won’t be any different, some experts say. The CMS rule focuses on how the new exceptions to Stark will work, and the OIG rule outlines the new safe harbors to the antikickback statute.

“There are some circumstances where OIG says we are not aligned with CMS and were more restrictive in some of these arrangements because they are still worried about fraud and abuse,” said Kathleen McDermott, an attorney with Morgan Lewis. “It remains to be seen if these changes are a disincentive.”

For example, both rules offer protection for a "care coordination" value-based deal where a hospital and physician exchange items or services. The OIG proposed rule requires the physician to pay the hospital 15% of the cost for any items and services provided under the deal, but the CMS rule does not contain such a requirement. 

OIG does say it will take into account any comments that CMS gets for its rule, because the agency wants to closely align its own rule with CMS. The comment period runs for 75 days after the rules are published in the federal register Oct. 17.

However, these differences between the rules may be a feature, not a bug. 

A Stark Law exception only applies to the providers that can include a hospital and a physician, while a safe harbor can apply to anyone, said Albert Shay, a partner with Morgan Lewis.

"When you put the exceptions and the safe harbors side by side there are a lot more requirements to meet under safe harbor than the exceptions," he said.

However, the Stark Law is much more strict if a provider doesn't meet all of the requirements. 

"You are either in bounds or out of bounds, even if (you are) a little out of bounds," Shay said. That is why the Stark Law has been so challenging for so many providers. It is that strict liability nature.

How much risk can you take?

The rules offer three new safe harbors and exceptions for value-based care that differ based on the level of financial risk.

One of the deals focuses on “care coordination” arrangements between providers that could let them share any information or services. Neither provider has to take on any financial risk. Another exception and safe harbor enables providers to take on some “downside” risk.

RELATED: HHS' massive Stark overhaul prompts optimism for value-based care models

For example, a value-based enterprise could be at substantial downside risk through “an agreement with a payor to assume a percentage of shared losses for items and services provided in connection with hip replacements to the target patient population,” the OIG rule said.

Another exception and safe harbor are for “full financial risk,” where the physician is financially responsible for the cost of all items and services for each patient during the deal.

CMS and the Department of Health and Human Services believe downside or full financial risk will be a motivator for providers to police themselves, said Shay.

However, the push for downside or full financial risk does create new questions of whether providers are fully ready to take on risk.

“It creates a barrier to entry for small and medium-size players because if you go fully at risk you have to invest in processes and personnel,” said Jesse Neil, healthcare attorney at law firm Waller.

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