Earlier this month, both the Department of Health and Human Services’ Office of Inspector General (OIG), and the Centers for Medicare & Medicaid Services (CMS) issued proposed rules that contain major and significant changes to the Anti-Kickback statute (AKS), the beneficiary inducement statute, and the Stark Law. The proposed rules must go through the notice-and-comment process that enables the public to submit comments about the proposed rules. After the notice-and-comment process, a final rule may be published. Importantly, the proposed rule may be materially changed, and the final rule may differ greatly from what was initially proposed. That said, the proposed rules are substantial and emphasize innovation and value-based care. Below are highlights of the proposed rules related to the AKS and the Stark Law.

AKS Proposed Changes

The OIG’s proposed rule contains numerous changes to the AKS, including the addition of new safe harbors and defined terms. The proposed defined terms include value-based enterprise, value-based arrangement, target patient population, value-based participant, value-based activity, and value-based purpose. The defined terms are the crux of new value-based safe harbors contained in the proposed rules. The proposed value-based safe harbors include (1) care coordination arrangements, which protect in-kind remuneration exchanged between value-based participants; (2) value-based arrangements with substantial downside financial risk, which protect remuneration between value-based entities and participants that share financial risks; and (3) value-based arrangement with full financial risk, which protects remuneration between value-based entities and participants when the value-based entity assumes the full financial risk. The requirements to fall within a proposed value-based safe harbor decrease as the entity takes on more financial risk. Other proposed new safe harbors include arrangements for patient engagement and support, CMS-sponsored models, and cybersecurity technology and services.

In addition to the proposed new safe harbors, the OIG’s proposed rule modifies existing safe harbors by clarifying defined terms, proposing requirement changes, and safe harbor expansions.

Stark Law Proposed Changes

CMS’s proposed rule contains new exceptions to the Stark Law designed to complement the proposed AKS value-based safe harbors discussed above. The proposed Stark exceptions include a full financial risk exception, as well as an exception for value-based arrangements with meaningful downside financial risk to the physician. CMS also proposes protections for arrangements involving the donation of certain technologies and services like cybersecurity. Similar to the AKS proposed changes, the proposed changes to the Stark Law also seek to modify current rules and terminology in an effort to make them clearer. CMS proposes new definitions and requirements for key terminology, such as commercial reasonableness, fair market value, and group practice.

This client alert provides just a brief glimpse into the proposed rules. The substantive details of the proposals are extensive and reflect significant changes in definitions, AKS safe harbors, Stark Law exceptions, and provide numerous new terms and concepts for healthcare providers to consider.

Comments to both proposed rules are due on or before December 31, 2019. Chilivis Grubman will continue to monitor this matter and provide an update if and when the proposed rules are finalized.