On July 17, 2018, U.S. Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan testified before the House Ways and Means Subcommittee on Health concerning possible regulatory reforms to both the Stark Law and the Anti-Kickback Statute (AKS). The Committee on Ways and Means is the chief tax-writing committee in the House of Representatives. The committee exercises its jurisdiction over revenue and related issues such as tariffs, reciprocal trade agreements, and the bonded debt of the United States.

Concurrent with the full Committee, the Subcommittee on Health jurisdiction includes matters referred to the Committee on Ways and Means that relate to programs providing payments (from any source) for health care, health delivery systems, or health research. More specifically, the jurisdiction of the Subcommittee on Health includes bills and matters that relate to the health care programs of the Social Security Act, Medicare, social services programs, and tax credit and deduction provisions of the Internal Revenue Code dealing with health insurance premiums and health care costs.

At the hearing, Deputy Secretary Hargan testified about HHS’ efforts to review and address obstacles that longstanding fraud and abuse laws pose to shifting the Medicare payment system to a value-based, coordinated care payment system. He noted that these laws were appropriate in a fee-for-service environment, but may not serve the same purpose in a value-based (pay for performance) system.

The AKS and Stark Law were initially created to prevent self-dealing and fraud in the healthcare industry. However, these laws were designed in a fee-for-service model and now serve as a barrier to value-based arrangements, former HHS secretaries, Kathleen Sebelius and Tommy Thompson, wrote in an op-ed for The Hill. “Adding to the challenge of moving from volume to value is the fact that these laws often overlap one another, yet have different interpretations, centers of authority, and requirements,” the pair wrote. “Stark and anti-kickback laws are a remnant of the fee-for-service world and harm the very patients they are supposed to protect by deterring more comprehensive patient-centered, coordinated care.”

Parallel to the op-ed, Hargan said modernizing the Stark Law would drive coordinated care models, lowering costs and improving quality. He also blamed the law for incentivizing provider consolidation that some experts have pinpointed as the reason behind high cost of care. “We have heard back from stakeholders that the consolidation in the provider community is in many cases being driven by considerations of the Stark Law,” Hargan said. “In other words, the law is actually driving a lot of the business transactions and consolidation that’s happening in the industry.”

According to Hargan’s testimony, “the goal of the sprint is to remove regulatory barriers to coordinated care while ensuring patient safety. We want to genuinely engage stakeholders in this effort, and solicit feedback at each stage—but this is a sprint, not a jog. These words were chosen specifically because we want to fix, as quickly as possible, the regulatory processes that have increased provider burden.”

As part of this Sprint, the Centers for Medicare & Medicaid Services (CMS) issued a broad Stark Law Request for Information (RFI) that solicited public comments[1] on how the physician self-referral law (Stark Law) impedes care coordination and how Stark Law exceptions could be modified or create to promote such coordination as well as on how other exceptions may require regulatory change to reduce regulatory burden. In addition, the HHS plans to release a RFI seeking public input on how the intersection with the AKS burdens compliance with both laws.

The four-agency task force – composed of CMS, the HHS Office of Inspector General (OIG), the HHS Office of Civil Rights, and the Substance Abuse and Mental Health Services Administration (SAMHSA) – is working together to examine obstacles to coordinate care related to the Stark Law, the AKS, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and rules under 42 CFR Part 2 related to opioid and substance abuse disorder treatment.

See OIG Moving Ahead On Changes To Anti-Kickback Safe Harbor Protection For Drug Rebates To Plans, PBMs

[1] Comments to the Stark Law RFI are due August 24.

Author: Bradley Byars

Co-Author: Shairoz H. Virani