Legal Update

HHS Continues Its "Regulatory Sprint"
By Elizabeth "Issie" Karan 

As part of the Department of Health and Human Services’ (HHS’) “Regulatory Sprint to Coordinated Care,” the Centers for Medicare & Medicaid Services (CMS) and the HHS Office of the Inspector General (OIG) both released final regulations on Friday, November 20, 2020. The Regulatory Sprint aims to reduce regulatory barriers to care coordination and accelerate the transformation of the health care system into one that better pays for value and promotes care coordination. Most provisions of both regulations take effect January 21, 2020.

AKS and CMP Law Overview and Changes

The anti-kickback statute (AKS)¹ provides for criminal penalties for whoever knowingly and willfully offers, pays, solicits, or receives remuneration to induce or reward, among other things, the referral of business reimbursable under any of the Federal health care programs, including Medicare and Medicaid. Health care providers and others may voluntarily seek to comply with statutory and regulatory safe harbors so that they have the assurance that their business practices will not be subject to sanctions under the AKS. The Beneficiary Inducements provisions of the civil monetary penalties (CMP)² provides for the imposition of CMPs against any person who offers or transfers remuneration to a Medicare or State health care program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program.

The OIG Final Rule implements seven new safe harbors, modifies four existing safe harbors, and codifies one new exception under the Beneficiary Inducements CMP. It also addresses comments from previous rulemaking, including: describing how medical device manufacturers and durable medical equipment companies may participate in protected care coordination arrangements that involve digital health technology; and lowering the level of “downside” financial risk parties must assume to qualify under the new safe harbor for value-based arrangements with substantial downside financial risk. Additionally, the OIG Final Rule broadens the new safe harbor for cybersecurity technology and services to cover remuneration in the form of cybersecurity-related hardware.

Regarding the local transportation safe harbor, the OIG Final Rule changes to expand mileage limits for rural areas (up to 75 miles) and eliminate mileage limits for transportation to convey patients discharged from the hospital to their place of residence. Additionally, it clarifies that the safe harbor is available for transportation provided through rideshare arrangements.

Stark Law Overview and Changes

The physician self-referral law (or “Stark Law”)³ prohibits a physician from making referrals for certain healthcare services payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity performing the service. There are statutory and regulatory exceptions. Importantly, the Stark Law is a “strict liability” law meaning that physicians can be held liable for violating its prohibitions regardless of their intent. CMS has regulatory authority over the Stark Law.

In the Stark Final Rule, CMS is establishing a new, permanent exceptions to the physician self-referral law for “value-based” arrangements and definitions for terminology integral to such a system. The Stark Final Rule also includes clarifying provisions and guidance intended to reduce unnecessary regulatory burden on physicians and other health care providers and suppliers, while reinforcing the physician self-referral law’s goal of protecting against program and patient abuse. CMS also is establishing new exceptions for non-abusive arrangements for which there is currently no applicable exception to the physician self-referral law’s referral and billing prohibitions.

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¹ 42 U.S.C. § 1320a-7b(b).
² 42 U.S.C. § 1320a-7a(a)(5).
³ 42 U.S.C. 1395.