HHS proposes reforms to Stark Law, Anti-Kickback Statute

The Department of Health and Human Services has issued proposed rules in an effort to modernize both the Stark Law on physician self-referral and the Anti-Kickback Statute to better support value-based payment and coordinated care.

“The proposed rules provide greater certainty for healthcare providers participating in value-based arrangements and providing coordinated care for patients,” according to Wednesday’s announcement by HHS. “The proposals would ease the compliance burden for healthcare providers across the industry, while maintaining strong safeguards to protect patients and programs from fraud and abuse.”


The Stark rule proposal from the Centers for Medicare and Medicaid Services includes exceptions for certain value-based compensation arrangements between or among physicians, providers, and suppliers. Specifically, CMS seeks to “create a new exception for donations of cybersecurity technology and related services” as well as “amend the existing exception for electronic health records items and services.”

Similarly, the HHS Office of Inspector General’s proposed rule revising safe harbors under the Anti-Kickback Statute would “add a new safe harbor for donations of cybersecurity technology and amend the existing safe harbors for electronic health records arrangements, warranties, local transportation, and personal services and management contracts.”

HHS provided examples that, if all applicable conditions are met, could potentially be protected under the proposals:

• In an effort to coordinate care and better manage the care of their shared patients, a specialty physician practice could share data analytics services with a primary care physician practice.

• A physician practice could provide smart pillboxes to patients without charge to help them remember to take their medications on time. The practice could also provide a home health aide to teach the patient and the patient’s caregiver how to use the pillbox. The pillbox could automatically alert the physician practice and caregiver when a patient misses a dose so they could follow up promptly with the patient.

• A local hospital could improve its cybersecurity and the cybersecurity of nearby providers that it works with frequently. To do so, it could donate, for free, cybersecurity software to each physician that refers patients to its hospital. The hospital and the physicians often share information about their patients, so it is important that there are no weak links that might compromise everyone else. The software would help ensure that hackers cannot attack the physician’s computers. Improving each physician’s cybersecurity would help prevent hackers from spreading the attack to other physicians and the hospital.

• To improve health outcomes for patients with end-stage kidney disease, a nephrologist, dialysis facility or other provider could furnish the patients with technology that is capable of monitoring the patient’s health and two-way, real-time interactive communication between the patient, facility and physician. In addition, the facility could equip the physicians with data analytics software to help them monitor patients’ health outcomes.

The American Hospital Association applauded HHS and its agencies for modernizing the rules to support—rather than hinder—coordination among healthcare providers.

“When healthcare providers are able to work together to coordinate care, it is patients that benefit the most,” said AHA President and CEO Rick Pollack. “For far too long, a group of out-of-date regulations has created unnecessary roadblocks to the kind of collaboration and coordination that enables caregivers to meet all of their patients’ healthcare needs, whether in the hospital, the doctor’s office or their own homes.”

While the American Medical Association is still assessing the HHS proposals, the physician group released a statement that it “greatly appreciates” that CMS and OIG are proposing to modernize and clarify the regulations that interpret the Stark Law and Anti-Kickback Statute.

“The AMA has previously called on the administration to modify the regulations in order to facilitate the move to value-based care,” said AMA’s President Patrice Harris, MD. “Currently, the Stark Law and Anti-Kickback Statute can have a negative impact on the ability of physicians to assist with coordination because they inhibit collaborative partnerships, care continuity and the engagement of patients in their care. These obstacles can hinder the healthcare system’s movement to value-based care.”

However, the Medical Group Management Association was decidedly negative in its assessment of the CMS proposed rule on the Stark Law.

“For medical groups that have been waiting years for relief from the complexity of the Stark law, this isn’t it,” said Anders Gilberg, MGMA’s senior vice president for government affairs. “Existing Stark regulations are fundamentally hyper-technical from beginning to end. This rule adds layers upon layers to a regulatory scheme that was originally intended to provide bright-line guidance for medical practices, but never has. The new proposal fails to clarify fundamental issues related to group practices and confirms our longstanding position that Congress needs to change the law.”