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CMS/OIG Issue Long Anticipated Stark and Anti-Kickback Proposed Rules

on Tuesday, 5 November 2019 in Health Law Alert: Erin E. Busch, Editor

For quite some time, many in the industry have anticipated new rulemaking from CMS and the OIG related to the Stark law and the Federal Anti-Kickback Statute.  Furthering the “Regulatory Sprint” to care coordination and value-based care, the agencies have delivered.  In a coordinated effort, on October 17, 2019, CMS and the OIG issued proposed rules that include new exceptions as well as make significant revisions to existing definitions, exceptions and safe harbors. 

Likewise, comments and analysis provided in preamble to both rules provide ample evidence of the agencies’ intent related to relaxation and flexibility.  What CMS and the OIG cannot do, however, is altogether eliminate these laws.  That can only take place by act of Congress.  Thus, while CMS and the OIG have provided substantial help and flexibility to providers in these areas, Stark and the Anti-Kickback Statute will continue to exist and be enforced by the respective agencies.

To highlight some of the more important changes:

  • New exceptions and safe harbors were created to address payments made by and through certain value based arrangements
  • New Stark and Anti-Kickback Statute exceptions/safe harbors were proposed to address the provision of cybersecurity software and services
  • CMS created a new “Limited Remuneration to a Physician” exception to protect aggregate compensation to a physician under $3,500 per year
  • CMS clarified that the “Payments by a Physician” exception can be used for transactions between hospitals and physicians and is only limited when statutory Stark exceptions would otherwise apply
  • CMS clarified that the “Remuneration Unrelated to DHS” exception can be used when a payment is made that is “not related to patient care services”

CMS and the OIG also provided some important clarifications and interpretations of existing law and exceptions:

  • Arrangements do not have to be “profitable” to satisfy the commercial reasonableness test
  • Mistaken payments may not per se result in Stark non-compliance so long as the payment was consistent with fair market value, was promptly corrected upon identification, and was correct while the underlying arrangement was ongoing
  • Compensation terms need not be in writing to satisfy the “set in advance” standard. The written requirement related to the “set in advance” standard is only a deeming provision
  • Both the writing requirement and the signature requirement enjoy a 90-day temporary non-compliance exception 

It is important to remember that these are only proposed rules.  None of the new exceptions or safe harbors may be relied upon or are final law.  Nonetheless, preamble commentary will be helpful guidance as parties continue to grapple with minor and/or technical errors or failures.  Comments on the proposed rules are due by December 31, 2019, and we look forward to many, if not all, of the proposed rules becoming final. 

Andrew D. Kloeckner

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