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Our Take: CMS, HHS propose rules to ease restrictions imposed by Stark Law, anti-kickback statute

Oct 14, 2019

Last Wednesday, CMS and the Department of Health and Human Services (HHS) proposed reforms to the Physician Self-Referral Law, a.k.a. the Stark Law, and federal anti-kickback laws.

Their goal is to “modernize” laws that were put into place when the U.S. health care system functioned primarily within a fee-for-service, or volume-based, payment and delivery structure. Now, though, as the health care system shifts toward value-based care, these complex laws often hamstring providers in their efforts to coordinate care, improve patient outcomes, and reduce waste.

In a press statement, HHS said the proposed rules would “ease the compliance burden for health care providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse.”

CMS’ proposed rule would create new, permanent exceptions to the Stark Law that would allow physicians and other health care providers “to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law,” the agency said, adding that the exceptions “would apply regardless of whether the arrangement relates to care furnished to people with Medicare or other patients.”

HHS’ proposed rule would add safe harbor protections under the federal anti-kickback statute “for certain coordinated care and associated value-based arrangements between or among clinicians, providers, suppliers, and others that squarely meet all safe harbor conditions.” Of particular note, it would add a safe harbor for donations of cybersecurity technology and amend existing safe harbors pertaining to electronic health records.

Our Take: Quality
On the surface the changes do appear to address many perennial complaints providers and other stakeholders have with Stark and the anti-kickback laws.

So far, industry reception to the proposed rules has generally been positive. And we agree that, for instance, making it easier for hospitals and independent physician groups to share information — with less risk of having their computer systems hacked and without the fear of incurring a stiff criminal penalty — would be tremendously beneficial to patients and providers.

But whenever regulations are loosened, unscrupulous parties will also find opportunities to benefit. Having greater flexibility is not only helpful to those who are well-intentioned; it’s also helpful to those that HHS referred to as “bad actors.”

As Aledade’s CEO, Dr. Farzad Mostashari, noted, “[I]t’s important that these rules safeguard against misuse by clinically integrated networks and provider groups who seek to control referral patterns and ultimately increase costs.”

Something that raised a flag for us in CMS’ proposed rule is a requirement that health care entities provide the government with a written document delineating their value-based arrangements, including the targeted patient population and the outcomes they will measure. Those outcomes are to be monitored to ensure that the arrangements don’t violate the Stark Law. The entities themselves will be responsible for monitoring the compliance of their value-based arrangement. … Pause and think about that. … CMS said it is seeking comments about this requirement, and we anticipate that plenty of comments will be made.

In contrast with most industry responses to the proposed rules, the Medical Group Management Association (MGMA) expressed disappointment:

“For those fortunate medical groups that can utilize the new value-based exceptions, this proposal is a step in the right direction. For medical groups that have been waiting years for relief from the complexity of the Stark law, this isn’t it,” MGMA said in a statement posted on its website. The organization added that the new proposal “confirms [MGMA’s] longstanding position that Congress needs to change the law.”

Clearly, changes in the Stark law need to be made, and we’d like to think that the proposed rules are, indeed, a step in the right direction — even if only for a segment of the industry. But those “strong safeguards” that HHS referred to must be firmly lodged before any loosening of the restrictions takes place.

What else you need to know
Dartmouth-Hitchcock Health and GraniteOne Health signed an agreement to combine the two health systems into one called Dartmouth-Hitchcock Health GraniteOne. They had signed a letter of intent in January; now, they’re preparing submissions to state and federal regulatory agencies for approval to merge. If the merger is approved, all organizations within the combined system will retain their existing names and local leadership, according to a joint statement released last Wednesday, and GraniteOne’s Catholic Medical Center will continue to operate under the Catholic model of care.

Walmart is testing new health benefits to help employees receive appropriate care. One, the Featured Providers program, is being piloted in select markets to help connect employees with affordable, quality physicians in their area. Walmart is partnering with Embold Health on the program; data from public and private insurers will be used to create reports on providers in eight specialties, including primary care, and Walmart will then “curate” a list of providers that have a track record of providing consistent quality care. Other benefits noted in Walmart’s news release were the Personal Healthcare Assistant — a concierge service designed to simplify the health care system — and expanded telehealth offerings that will include preventive health, chronic care management, urgent care, and behavioral health services.

The Institute for Clinical and Economic Review, better known as ICER, pulled a draft evidence report it released in late September on three new rheumatoid arthritis drugs. The drugs all belong to a new class called Janus kinase (JAK) inhibitors: AbbVie’s successor to Humira (adalimumab), Rinvoq (upadacitinib), Pfizer’s Xeljanz (tofacitinib), and Eli Lilly and Incyte’s Olumiant (baricitinib). Reviewers said in the report that Rinvoq and Xeljanz provide “marginal” clinical benefits and that not enough data are available on Olumiant to conduct an adequate cost-effectiveness analysis. Then, last Wednesday, ICER posted an update on its website stating that it had decided to re-evaluate the modeling approach used in the draft report and would be issuing a preliminary revision within several days.

UPS is set to expand its drone delivery service to hospital campuses nationwide. The company announced Tuesday that its Flight Forward subsidiary received the first-ever full Part 135 Standard certification from the Federal Aviation Administration to operate a drone airline. That certification places no limits on the size or scope of operations, UPS noted. Flight Forward has been making non-commercial drone deliveries as part of a pilot program launched in July at WakeMed Health’s hospital campus in Raleigh, N.C., but under a considerably more restrictive certification. Meanwhile, Walgreens is partnering with Alphabet subsidiary Wing to test an on-demand drone delivery service to deliver food, over-the-counter drugs, and other health and wellness products (but not prescription medications), initially to customers in Christiansburg, Va.

Civica Rx’s first drug has been administered to patients. The nonprofit generic drug company was founded a year ago by Intermountain Healthcare and half a dozen other prominent health systems to address drug shortages and high prices. On Wednesday, the company announced that patients at Riverton Hospital in Utah had been treated with Civica Rx’s vancomycin, an antibiotic that has been in short supply at thousands of U.S. hospitals, Civica Rx noted. The vancomycin, which is supplied through a partnership with Xellia Pharmaceuticals, should be available to all health systems later this month, Civica Rx said. Daptomycin, another antibiotic, will be the next drug Civica Rx delivers, followed by as many as 15 others.

Dr. Patrick Conway has stepped down as CEO of Blue Cross Blue Shield of North Carolina after recent news of his arrest in June for driving while impaired and a related charge. Gerald Petkau, who is the company’s chief operating officer, has been named interim CEO. Consequent to the change in leadership, Cambia Health Solutions issued a short statement that said the two companies have withdrawn their applications for regulatory approval for a strategic affiliation they’d announced in March. Dr. Conway had been tapped to lead the combined entity.

The White House issued an executive order Thursday directing the Department of Health and Human Services to come up with proposals to improve Medicare, with a focus on expanding plan options, improving the enrollment process, giving beneficiaries in Medicare Advantage plans better access to providers, and streamlining regulatory requirements so that providers can spend more time with patients.

What we’re reading
Designing the Future of Healthcare. Journal of Healthcare Management, Sept/Oct 2019 (ACHE membership or subscription required) 
130 ACOs to know – 2019. Becker’s Hospital Review, 9.20.19







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