Experts say anti-fraud laws are holding back rural health

Updating two long-standing anti-fraud laws could help rural providers adopt digital health tools and recruit physicians, experts told a Senate HELP subcommittee on Tuesday. (Pixabay)

With a dwindling supply of physicians and more hospitals going out of business, rural areas of the country face considerably more healthcare hurdles.

But experts say two outdated anti-fraud laws—the Anti-Kickback Statute (AKS) and the Stark Law—could go a long way in solving some of the nation's most pressing rural health issues involving physician recruitment and digital health.

While both laws were an important part of preventing fraud in a fee-for-service model, in a value-based world “they are actually becoming an impediment to integration with physicians,” Alan Levine, CEO of Ballad Health, a 15-hospital system with locations throughout East Tennessee and Southwest Virginia, told lawmakers during a Senate Health, Education, Labor and Pensions subcommittee hearing on rural health on Tuesday.


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The laws also make it harder recruit doctors, he said.

“The reality is, in rural communities, we have to pay a lot more and we always bump up against these issues of fair market value,” Levine said. “My biggest fights are sometimes with my legal department when we want to recruit a doctor.”

Levine also advocated for expanding cost-based reimbursement, adding that his system has a negative operating margin of $100 million a year sustaining employed physicians in rural communities. He also urged lawmakers to pass the Fair Medicare Hospital Payments Act, bipartisan legislation that would create a floor for the area wage index used to calculate Medicare reimbursement.

Passing the legislation would be the “single biggest thing you could do near-term to help rural hospitals,” Levine told lawmakers.

RELATED: Groups back Stark Law changes to eliminate barrier to value-based models

The Anti-Kickback Statute and Stark Law are also limiting the expansion of digital health in rural communities where fewer providers over longer distances create a unique opportunity for telehealth and remote monitoring. Under the current laws, providers could face liability risks if they provide tools to patients, like tablets or wearables, according to Morgan Reed, executive director of The Connected Health Initiative and president of ACT | The App Association.

“The barriers AKS and Stark Law present make the seamless integration of digital tools and caregiving difficult and in some cases impossible," he said in written testimony. "Removing or reducing those barriers could dramatically enhance value for caregivers."

RELATED: How telemedicine pulled one rural hospital back from the brink of bankruptcy

But statutory changes may not be necessary, he said. Guidance and exceptions from the Office of the Inspector General could resolve those concerns. Likewise, additional clarification concerning value-based arrangements involving software providers or medical device manufacturers would give rural providers the ability to enter into contracts involving shared risk.

But the Centers for Medicare & Medicaid Services has shown a willingness to overhaul both laws, calling for “bold ideas” that would reduce the regulatory burdens of the Stark Law. Likewise, officials Department of Health and Human Services said the agency is reviewing reforms to the Stark Law and the Anti-Kickback Statute.

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