Relaxing the federal anti-kickback statute and Stark

Historically, Medicare payments for health care have been based on the fee-for-service (FFS) model—that is, Medicare pays for the service regardless of the patient outcome. This model results in (i) providers not coordinating with each other and (ii) expenditure of money without evidence of tangible results. With 78 million baby boomers retiring at the rate of 10,000 per day, the FFS model is not sustainable. As such, Medicare is pushing providers away from the FFS model…and toward the collaborative care model. Under the collaborative care model, (i) providers are encouraged to coordinate with each other and (ii) reimbursement is tied to patient outcomes.

The federal anti-kickback statute (AKS), the beneficiary inducement statute, and the federal Stark physician self-referral statute (Stark) have a chilling effect on the desires of providers to work together. Recognizing this dilemma, (i) the OIG requested comments on relaxing the restrictions of the AKS and the beneficiary inducement statute and (ii) CMS requested comments on relaxing the restrictions of Stark. Comments were due Dec. 31, 2019. AAHomecare submitted its comments on Dec. 20, 2019.

In its comments regarding the AKS and the beneficiary inducement statute, AAHomecare discussed (i) the importance of care coordination, (ii) the fact that care coordination, if not carefully implemented, can lead to fraud, and (iii) the chilling effect that the AKS and beneficiary inducement statute have on care coordination. AAHomecare then voiced its support for the proposed safe harbor entitled “Patient Engagement and Support to Improve Quality, Health Outcomes and Efficiency.” In doing so, AAHomecare recommended that this safe harbor not be limited to Value-Based Enterprise (VBE) participants. AAHomecare suggested that patient engagement tools and support include cash payments, gift cards, waiver or reduction of co-payments, and other cash equivalents. AAHomecare voiced its support of the OIG proposal to modify the Personal Services and Management Contracts safe harbor by (i) removing the requirement that the aggregate amount of compensation paid over the term of the agreement be set in advance, (ii) adding the requirement that the parties determine the arrangement's compensation methodology in advance, and (iii) removing the requirement that services provided on a periodic, sporadic, or part-time basis specify “exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.” AAHomecare expressed its support of the proposed expansion of the Local Transportation safe harbor and suggested that the safe harbor be expanded to include transportation to non-health venues that (i) benefit the patient's health outcomes and (ii) address social determinants of health. Lastly, AAHomecare took issue with the OIG's proposal to exclude DME suppliers from the definition of “VBE participant.” In particular, AAHomecare took issue with the OIG's statement that DME suppliers are less likely to be on the front line of care coordination and treatment decisions.

In its comments regarding Stark, AAHomecare addressed CMS's request for comment on whether physicians' arrangements with DME suppliers should be ineligible as Value-Based Arrangements (VBAs) on the basis that DME suppliers ostensibly have a lack of direct patient contact. In asserting that DME suppliers do have direct patient contact, AAHomecare stated that DME suppliers (i) visit the patient in his/her home and (ii) communicate regularly with the patient, the patient's caregiver (e.g., adult child) and the patient's physician. AAHomecare pointed out that care coordination by DME suppliers is enhanced by technological advances that result in “smart” equipment that, in turn, allows remote monitoring by the physician and the DME supplier. AAHomecare offered a modification to the definition of “commercially reasonable.” Lastly, AAHomecare discussed the in-office ancillary services exception that allows a physician to self-refer patients for an array of services that the physician can provide. Except for a few items, the exception does not include DME. In its comments, AAHomecare recommended that the exception not be modified—that is, that except for the few items, the exception should continue to exclude DME.

Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He represents pharmacies, home medical equipment companies, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. He can be reached at (806) 345-6320 or jbaird@bf-law.com.