Sweeping Stark Law and Anti-Kickback Statute Final Rules Published

As part of its Regulatory Sprint to Coordinated Care, on November 20, 2020, the Department of Health and Human Services (HHS) published two final rules which make significant and sweeping changes to regulations relating to the Physician Self-Referral Law (Stark Law) and the Anti-Kickback Statute. Links to the final rules are available online through HHS and will be published in the Federal Register on December 2. The preambles and final rules together amount to 1,676 pages.

The results of the presidential election undoubtedly played a role in the timing of the final rules. The proposed rules were published October 17, 2019. Earlier this Spring, HHS announced its final rules would be published in August of 2020, but in August announced that it was “still working through the complexity of the issues raised by comments received” and extended its deadline for publication of the final rule to August 31, 2021. Given the anticipated change of administrations in January, HHS went final with its rules now. The effective date of most of the changes is January 19, 2021, the day before the scheduled inauguration.

New Rules for Value-Based Arrangements

The main purpose of the rulemaking initiative was to identify and reduce regulatory barriers that interfere with the transition to value-based care. Or, as Secretary Azar put it, to revise regulations “that have stood in the way of creativity and innovation by American health care providers for far too long.”

To that end, the cornerstone of the final rules is the creation of new regulations to address value-based arrangements which may involve the assumption of financial risk by providers. The new regulatory safe harbors to the Anti-Kickback Statute address value-based care arrangements in which providers assume no risk (42 C.F.R. §1001.952(ee)), substantial downside financial risk (42 C.F.R. §1001.952(ff)), and full financial risk (42 C.F.R. §1001.952(gg)). The new regulatory exceptions to the Stark Law similarly involve arrangements in which providers assume no financial risk (42 C.F.R. §411.357(aa)(3)), meaningful downside financial risk (42 C.F.R. §411.357(aa)(2)), and full financial risk (42 C.F.R. §411.357(aa)(1)).

New or Revised Rules to Facilitate Coordinated Care

There are several other new or revised rules that facilitate coordinated and value-based care arrangements, including: a new safe harbor addressing arrangements for patient engagement and support to improve quality, health outcomes and efficiency (42 C.F.R. §1001.952(hh)); a new safe harbor and Stark exception addressing the donation of cybersecurity technology and services (42 C.F.R. §1001.952(jj); 42 C.F.R. §411.357(bb)); and revisions to the current safe harbor and Stark exception allowing for the donation of electronic health record (EHR) items and services (42 C.F.R. §1001.952(y); 42 C.F.R. §411.357(w)). Significantly, the sunset provision of the EHR safe harbor has been removed. The warranty safe harbor (42 C.F.R §1001.952(g)) and the safe harbor for local transportation (42 C.F.R. §1001.952(bb)) have also been revised to facilitate coordinated care.

Clarifications and New Stark Law Exceptions

In addition to the regulatory changes facilitating coordinated and value-based care, the final regulations provide additional guidance and clarification on key Stark concepts and definitions. The revisions define for the first time the key requirement of “commercially reasonable,” and further refine the definitions of “volume or value,” “group practices,” “fair market value” and several other terms.

In a welcome departure from the rule’s prior, seemingly draconian punishment of even the smallest unexcepted arrangements, the rule finalizes a new, essentially de minimis exception to the Stark law. The new regulation (42 C.F.R. §411.357(z)) allows for limited remuneration to a physician, up to $5,000 per calendar year, for items or services provided by the physician to the entity, provided certain conditions are satisfied.

Finally, the rule also finalizes numerous clarifications to some commonly used Stark exceptions. These include changes to the rental of office space and rental of equipment exceptions (42 C.F.R. §§411.357(a) and (b)), the physician recruitment exception (42 C.F.R. §411.357(e)), the exception for remuneration unrelated to the provision of designated health services (42 C.F.R. §411.357(g)), and the exception for payments by a physician (42 C.F.R. §411.357(i)). Significantly, the Centers for Medicare and Medicaid Services (CMS) now notes the fair market value exception may be used for office and equipment leases — a reversal of its position in its prior so-called Phase III regulations.

Telehealth Technologies for In-Home Dialysis

The final rule includes new protections designed to facilitate telehealth services provided to in-home dialysis patients (42 C.F.R. §1003.110). The rule removes from the definition of “remuneration” telehealth technologies given by a provider to an individual with end-stage renal disease who is receiving home dialysis. The Office of Inspector General notes this rule would allow a primary care physician, dialysis facility or other provider to give a patient a smart tablet capable of two-way, real-time interactive communication between the patient and his or her physician to facilitate the provision of in-home dialysis services.

Additional In-Depth Analysis

Over the course of the next two weeks Faegre Drinker will review, analyze and publish more in-depth analysis of the final rules on the following subject matter areas:

• Value-Based Care. This update will address the new rules providing for value-based arrangements, as well as the new safe harbors on CMS-Sponsored Models (42 C.F.R. §1001.952(ii)), and Accountable Care Organization Beneficiary Incentive Programs (42 C.F.R. §1001.952(kk)).
• EHR and Cybersecurity. This update will discuss the revisions to the Electronic Health Records donation exception and safe harbor, as well as the new rules relating to cybersecurity technology and services.
• Changes to Existing Stark Exceptions. This update will address the changes to some of the fundamental Stark terms and definitions, the new Stark exception for limited remuneration to a physician and changes to commonly used Stark exceptions such as the rental of office space and equipment and the physician recruitment exception.
• Patient Engagement. This update will focus on the new Anti-Kickback Statute safe harbor involving arrangements for patient engagement and support to improve quality, health outcomes and efficiency.
• Local Transportation. This update will focus on changes to the Anti-Kickback Statute safe harbor for local transportation.
• Warranties. This update will focus on changes to the Anti-Kickback Statute safe harbor for warranties.
• Personal Services and Management Contracts. This update will focus on changes to the Anti-Kickback Statute safe harbor for personal service and management contracts.
• Telehealth Technologies for In-Home Dialysis. This update will focus on the regulatory changes enabling the provision of free or discounted items or services to beneficiaries to facilitate the provision of in-home dialysis services.