Effort to Improve Care Coordination by Modernizing Anti-Fraud Regulations Proposed > Hospital Association of Pennsylvania


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Effort to Improve Care Coordination by Modernizing Anti-Fraud Regulations Proposed

October 09, 2019

The Trump Administration today issued two proposed rules that will modernize fraud and abuse laws. The rules make good on a pledge by U.S. Health and Human Services Secretary Alex Azar to tackle antiquated regulations that “stand in the way of paying for health and treating American patients in a collaborative, caring way.”

Specifically, the proposed rules address restrictions on physician self-referrals, known as the Stark Law, and relax some constraints in the Federal Anti-Kickback Statute that limit the ways in which providers can coordinate care for patients.

The 1989 Stark Law bans physicians from referring patients for health services to hospitals, labs, and other entities from which they or an immediate family member financially benefit. It originally was passed to eliminate any financial motivation for physicians to send patients for unnecessary testing that could raise the overall cost of health care. The law later was changed to prohibit Medicare-participating physicians who had direct or indirect financial relationships with an entity from making referrals to that entity.  

The current Stark law, based on a fee-for-service payment model, does not meet the objectives of the new value-based payment (VBP) system that the Administration and the Centers for Medicare and Medicaid Services (CMS) are promoting. VBP rewards quality of the care that the provider delivers over the quantity of care. Stark compensation regulations hinder partnerships between physicians and other health care providers, which could result in more coordinated and less costly care. By design, the new value-based exceptions acknowledge that incentives are different in a health care system that pays for value and quality outcomes instead of volume of services.

Last August, the American Hospital Association (AHA) sent a letter to CMS in response to the Administration’s request for feedback about the undue impact and burden of the Stark Law and ways to remove barriers to value-based care transformation. The AHA called for specific exceptions to the law to enable hospitals and physicians to coordinate care and improve patient outcomes, including:

  • Protection for value-based payment methodologies––specifically, a new exception for VBP arrangements, and modifications to the personal services and risk-sharing exceptions
  • Clear, authoritative, and timely guidance––specifically, defining key elements of compensation exceptions and revise the Advisory Opinion process
  • Refocused regulations that eliminate provisions that do not address overutilization; adding an alternative method for demonstrating compliance with documentation requirements; modifying the payment-by-physician exception; and decoupling compliance with Stark from compliance with the Anti-Kickback Statute

In an August 2018 comment letter, HAP echoed the comment letter issued by the AHA, endorsing efforts to modernize Stark Law to enable hospitals and physicians to coordinate care and improve patient outcomes.

The hospital community is pleased that the proposed rules address concerns raised about Stark Law barriers for providers in VBP arrangements, and establishes new safe harbors under the Anti-Kickback Statute. These changes represent significant steps forward in creating policy that allows for greater care coordination and VBPs, and supports health care providers participating in CMS payment and delivery system models. Prior to these proposed rules being issued, the Stark Laws had not been significantly updated since they were enacted during 1989.  

HAP will continue to review the proposals and provide more information to members.

Please contact Jeff Bechtel, HAP’s senior vice president, health economics and policy, or Laura Stevens Kent, HAP’s vice president, federal advocacy, for more information about federal Stark law modernization efforts or to provide insight to inform HAP’s response to the proposals.

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