Stark Law and Anti-kickback Statute Proposed Updates

On October 9, 2019, the Department of Health and Human Services (HHS) announced proposed changes to clarify the Physician Self-Referral Law (“Stark Law”) and the Federal Anti-Kickback Statute. Comments on these proposed changes are due by December 31, 2019.

First, let’s review the impacted law.

  • The Federal Physician Self-Referral or “Stark Law” prohibits physicians from making referrals of designated health services to entities with which a physician has a financial relationship, unless the financial relationship meets an applicable exception.
  • The Federal Anti-Kickback Statute (AKS) prohibits offer, receipt, or solicitation of remuneration to influence furnishing of Federal Health Care Program items and services.
  • Additionally, there are Civil Monetary Penalties against persons who offer or transfer remuneration to a Medicare/Medicaid beneficiary that’s likely to influence beneficiary selection of provider/supplier of Medicare/Medicaid payable services.

Second, let’s take a look at the recent history of Stark Law changes. These modifications are aligned with HHS’s Regulatory Sprint to Coordinated Care. On August 27, 2018, OIG issued a request for information regarding the Federal antikickback statute and beneficiary inducements CMP on August 27, 2018. On June 2018, CMS published a Request for Information Regarding the Physician Self-Referral Law in June 2018. Taking into account the information provided during both of these periods, HHS has issued the proposed changes.

Finally, let’s review the proposed changes.

There are six proposed enforcement changes for Stark Law:

  • Exceptions for Value-Based Arrangements
    • Create new, permanent exceptions to the Stark Law for value-based arrangements
    • Incentives are different in a healthcare system that pays for the value, rather than the volume, of services provided 
    • Soliciting comments about the role of price transparency in the context of the Stark Law and whether to require cost-of-care information at the point of a referral for an item or service
  • New Guidance and Clarifications
    • Additional guidance on several key requirements that must often be met in order for physicians and healthcare providers to comply with the Stark Law (fair market value)
    • Provides clarity and guidance on a wide range of other technical compliance requirements intended to reduce administrative burden that drives up costs

Other New Exceptions

  • Protection for non-abusive, beneficial arrangements between physicians and other healthcare providers (ex: donations of certain cybersecurity technology that safeguard the integrity of the healthcare ecosystem, regardless of whether the parties operate in a fee-for-service or value-based payment system)

There are ten proposed rule changes for enforcement of the anti-kickback statute:

  • Value-Based Arrangements
  • Patient Engagement
  • CMS-Sponsored Models
  • Cybersecurity Technology and Services
  • Electronic Health Records Items and Services
  • Outcomes-Based Payments and Part-Time Arrangements
  • Warranties
  • Local Transportation
  • Accountable Care Organization (ACO) Beneficiary Incentive Programs
  • Telehealth for In-Home Dialysis

As we move toward a healthcare system that rewards providers for value instead of volume, updates to Stark Law and Anti-Kickback Statutes will continue to be necessary. The proposed updates are intended to remove barriers for providers engaged in value-based arrangements without increasing fraud and abuse. The increase in innovation, however, should not be taken as an invitation to increase flexibility and decrease compliance policies. There will likely be a lot of innovation, especially around patient engagement strategies. Large organizations and hospital systems will likely reap the benefits since they are most likely to engage in risk contracts. However, the new regulations are lengthy, therefore the complexity of the regulations have not lessened. Most of the definitions, exceptions or safe harbors, and special rules present an opportunity for healthcare organizations to make mistakes. My advice, if these regulations do indeed move forward: Proceed with Caution.


Maria Nikol

About the Author


Maria Nikol

Maria Nikol is a senior business consultant with 10 years of experience in healthcare operations and healthcare strategy. Her specialization includes process improvement and the application of emerging models of healthcare delivery such as Patient-Centered Medical Homes and Accountable Care Organizations. She holds a Master of Jurisprudence in Health Law from Widener University and a Bachelor of Science in Pharmaceutical Marketing and Management from the University of the Sciences in Philadelphia.

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