Legal Updates & Information: November 2019

Breaking Down Proposed Changes to Anti-Kickback, Stark Law

Proposed updates to the Anti-Kickback Statute and Stark Law would support value-based care, but compliance could be an issue for some, a healthcare consultant explains.

Jacqueline LaPointe

October 17, 2019 ( – HHS recently made moves to update the Stark Law and Anti-Kickback Statute, two healthcare fraud rules created decades ago that have prevented physicians, hospitals, and other healthcare providers from engaging in activities that support healthcare’s newest venture: value-based care.

In an action long sought by providers, the federal department proposed updates earlier this month to two statutes that have banned physicians and other providers from referring patients if the referral benefits the provider financially.

The Stark Law, which is otherwise known as the physician self-referral law, prohibits referrals by a physician to another provider if the physician or his immediate family has a financial relationship with the provider.

Similarly, the Anti-Kickback Statute bars the exchange of remuneration – which according to this law is anything of value – for referrals that are payable by a federal healthcare program like Medicare.

Policymakers devised the federal healthcare fraud rules to protect patients against bad actors in the fee-for-service system. But the rules do not easily align with value-based arrangements that seek to reimburse providers for value, not volume, as well as encourage care coordination across the care continuum.

Exceptions to both rules exist, but are limited, preventing many providers from engaging in value-based activities. So, new and permanent exceptions for providers engaging in value-based care are being welcomed by the provider community.

The American Medical Association (AMA), for example, applauded the HHS agencies for their efforts, saying new exceptions to the Medicare fraud laws would better enable providers to engage with “collaborative partnerships, care continuity, and the engagement of patients in their care.”

The American Hospital Association (AHA) also commended HHS for “putting patients first and taking action to modernize the rules so they support, rather than hinder, the teamwork among health care providers that is so essential to providing the best, most comprehensive patient care.”

According to HHS, some of the new partnerships and opportunities that would available to providers include sharing data analytic services with another provider and providing smart pillboxes to patients at no charge. Hospitals and physicians would also have more flexibility to collaborate in new ways to coordinate care for patients being discharged from the hospital.

Venson Wallin, CPA, managing director in BDO’s Healthcare Advisory practice, agrees that the proposed rules open new possibilities for value-based care. But complying with the new exceptions if they are finalized would present challenges, he warned.

“There’s a world of opportunity for well-operated organizations to be successful with this, but they just have to pay attention to the details,” he recently told

Who will and will not benefit from new exceptions?

HHS proposed updates to the two healthcare fraud rules to further pave the pathway to value-based care. And those new stipulations would benefit physicians, hospitals, vendors, and other healthcare stakeholders who are already demonstrating value, Wallin stated.

However, providers dragging their feet with value-based care may be left behind once HHS finalizes the two rules, he cautioned.

Many providers are still rooted in fee-for-service. According to the Health Care Payment Learning & Action Network, only 34 percent of healthcare payments were tied to an alternative payment model in 2017, the most recent year for which the organization had data. That percentage was up just five percentage points compared to 2015.

“If you as a provider or vendor cannot demonstrate how your services or products improve the care of a patient or how you have modified your services or products to benefit quality of care, then you’re probably not going to be a partner that a lot of people want to work with,” Wallin explained.

“The key to these rules is value-based care. That’s really what HHS is driving at, and if you’re not getting the value, you’re probably not going to get paid,” he added. :So, the ones that may be disadvantaged from these rules are those who cannot adequately demonstrate how they contribute to the improvement of patient care.”

But even providers demonstrating value should be prepared to defend their value-based care arrangements, he stressed.

Complying with updated healthcare fraud laws

The proposed rules have the potential to open the door for value-based care, permitting a greater number of arrangements to exist and a wider range of providers to participate. However, Wallin pointed out that documentation may become a major issue for providers applying for the exceptions.

“There will be a lot of legal review to make sure that each of those individual arrangements are appropriate, given the new rules and regulations,” he predicted. That differed from the past when HHS officials and their attorneys would review one agreement and either approve or deny it, he explained.

The proposed rules would require HHS to examine all agreements a provider has with others across the care continuum.

“You’ll probably have several different agreements with partners that will all need to be reviewed. So, in that instance, you’re seeing a larger pool of documents and agreements that will need to be reviewed,” Wallin said.

“You’ll have to be able to document how the working relationships will benefit the patient because that’s one of the criteria of these exceptions and revisions,” he continued. “There would be documentation of not only the specific issue, but also documentation of the arrangements themselves.”

New documentation requirements will also necessitate greater use of analytics, Wallin noted.

“You will need to really look at what goes into the analytics and the calculations themselves,” he explained. “You want to make sure you don’t have garbage in, garbage out, and you also want to make sure that the calculations are being performed correctly.”

In the proposed rules, HHS acknowledged that providers and other stakeholders are using analytics to meet certain value-based requirements and goals. So, the federal department is likely to take a closer look at a provider’s data when reviewing value-based arrangements for healthcare fraud rule exceptions, Wallin predicted.

The healthcare consultant also advised healthcare organizations to create a government policy department or review team in order to comply with these new exceptions and healthcare fraud updates in the future.

“There needs to be some type of government policy department or review because, first of all, these are only proposed regulations, and HHS even says that there may be some modifications to the proposed regulations,” he said. “There needs to be an understanding of what the proposed regulations are versus what the final regulations are, and what the requirements are associated with each.”

“Then, moving forward, there are likely to be some significant changes and enhancements to some of these regulations as actual arrangements are reviewed and litigated,” he added. “The importance of having a government relations department review and keep abreast of what’s happening cannot be overstated.”

©2012-2019 Xtelligent Healthcare Media, LLC. All rights reserved. is published by Xtelligent Healthcare Media, LLC