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What Stark law, anti-kickback changes mean for value-based care at ASCs

HHS issued two rules on value-based care arrangements recently that will affect orthopedic surgeons and ASCs. CMS made adjustments to the Stark law, and HHS updated the federal Anti-Kickback Statute and the civil monetary penalties law to ensure healthcare providers could develop value-based care arrangements without fear of fraud and abuse charges.

The changes to the Anti-Kickback Statute make it easier to enter into value-based care arrangements, especially if providers take full risk. The exceptions create flexibility in how physicians are compensated. The exceptions don’t require setting compensation in advance, consistency with fair market value or determined in a way that doesn’t take the volume or value of physician referrals into account. But there is a commercial reasonableness standard for pay, and the exceptions apply to both Medicare and non-Medicare beneficiaries.

The new exceptions and safe harbors are for value-based arrangements when participants take on full risk, substantial risk with at least 10 percent downside, or arrangements where providers do not take on financial risk. There are incentive payments for participants who take on at least 10 percent risk.

Source: What Stark law, anti-kickback changes mean for value-based care at ASCs

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Federal Regulatory Compliance Issues Can Arise in State Court Matters

An interesting read regarding the use of federal regulatory compliance issues (e.g impermissible healthcare kickbacks) to support a state court tort claim.

The plaintiffs sued the manufacturer of a immunoglobulin infusion product alleging that the manufacturer improperly induced a physician to misdiagnose their condition by paying the physician impermissible kickbacks through bonuses and commissions. The plaintiffs did not assert Anti-kickback or Stark claims directly. Such claims must be brought as qui tam actions.

Instead, they alleged that the fact that the federal statutes prohibit such conduct illustrates that patient harm is a foreseeable consequence of the payment of kickbacks.

The gist is that these regulatory issues could find their way into your state court litigation case.

Source: Memorandum Order Denying Defendants’ Motion to Strike, Post v. AmerisourceBergen Corp., Northern District of West Virginia

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Cutting Out the “Middleman”? HHS Resurrects Anti-Rebate Rule for Medicare Part D

[T]he Final Rule will modify the federal health care program’s Anti-Kickback Statute (“AKS”) safe harbors in three key ways:

First, it will remove safe harbor protection under the AKS for rebates that a pharmaceutical manufacturer provides to Medicare Part D plan sponsors (either directly or indirectly through the PBMs with which they contract). In apparent recognition of how disruptive this change will be to current business models, the Final Rule postpones the effective date for this change until January 1, 2022.

Second, it will create a new safe harbor to protect certain price reductions given by pharmaceutical manufacturers that are passed through to beneficiaries at the point-of-sale. This new safe harbor will become available on January 29, 2021.

Third, it will create a new safe harbor, also effective as of January 29, 2021, that protects certain fixed fees paid by manufacturers to PBMs for PBM services.

Source: Cutting Out the “Middleman”? HHS Resurrects Anti-Rebate Rule for Medicare Part D

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OIG Finalizes Rebate Rules: Removal of Safe Harbor Protections for Rebates and Creation of New Safe Harbors for Other Discounts and Service Fees

As the title implies, this final rule clarifies and amends the discount safe harbor at 42 C.F.R. § 1001.925(h) under the federal Anti-kickback statute (AKS) such that rebates paid from drug manufacturers to Medicare Part D prescription drug plan sponsors or their pharmacy benefit managers (PBMs) are not protected from liability under the discount safe harbor. The rule also adds a new safe harbor for point-of-sale reductions in price that are passed on directly to a buyer (a defined term under the rule) and an additional safe harbor for “legitimate” service fees paid to PBMs by drug manufacturers.

Source: OIG Finalizes Rebate Rules: Removal of Safe Harbor Protections for Rebates and Creation of New Safe Harbors for Other Discounts and Service Fees

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HHS Finalizes Highly Anticipated Final Rules Amending AKS and Stark Law Regulations, Part III: Value-Based Arrangements

A value-based arrangement is an arrangement entered into between a value-based enterprise (VBE) and one or more of its participants, or among VBE participants in the same VBE, for the provision of one or more value-based activities for a target patient population. The final rule defines a VBE participant as an individual or entity that engages in at least one value-based activity as part of a value-based enterprise, other than a patient acting in their capacity as a patient.

For purposes of the OIG’s new safe harbors, a VBE is two or more participants that: (1) are collaborating to achieve at least one value-based purpose; (2) are each a party to a value-based arrangement with the other (or at least one other participant in the same VBE); (3) have an accountable body or person responsible for financial and operational oversight of the VBE; and (4) have a governing document describing the VBE and how its participants intend to achieve the VBE’s value-based purpose(s).

The size and structure of a VBE can vary greatly from a large network of providers and suppliers; a separate legal entity, like an Accountable Care Organization (ACO); or just two providers contracting together to form a value-based arrangement.Finally, a value-based purpose is (1) coordinating and managing the care of a target patient population; (2) improving the quality of care for a target patient population; (3) appropriately reducing the costs to, or growth in expenditures of, payors without reducing the quality of care for a target patient population; or (4) transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.

Source: HHS Finalizes Highly Anticipated Final Rules Amending AKS and Stark Law Regulations, Part III: Value-Based Arrangements | Mintz

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New Stark and Anti-Kickback Statute Comparisons

A great resource of the a redline versions of the regulations that highlight the changes for the new revisions to Stark and the Anti-Kickback Statute. The documents may be accessed here:

The Federal Register versions of the revised regulations and accompanying commentary may be accessed here:

Hat tip to Holland and Hart.

Source: New Stark and Anti-Kickback Statute Comparisons

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OIG Issues Final Rules on Anti-Kickback Statute and the Civil Monetary Penalty

In its final rule, the OIG defined what constitutes “telehealth technologies” more broadly than in its proposed rule, but otherwise chose to track the conditions for the exception contained in the underlying statute and not to implement any of the additional conditions that were included in the proposed rule.

Source: OIG Issues Final Rules on Anti-Kickback Statute and the Civil Monetary Penalty

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Fifth Individual Charged in Health Care Kickback Conspiracy

The defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders that were used to submit claims for payment to federal health care programs.  The conspirators obtained patient information, including protected health information and personally identifiable information, and used the information to create fictitious physicians’ orders.  The conspirators then sold the physicians’ orders to each other and to other durable medical equipment providers.  Within approximately eight months, the defendants collectively obtained more than $2.9 million in proceeds from the criminal scheme.

Source: Fifth Individual Charged in Health Care Kickback Conspiracy

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Stark + AKS Final Rules

The final rules for changes to the Stark Law and Anti-Kickback Statute (healthcare fraud & abuse laws) have been published and go into effect on January 19, 2020. Of course, health lawyers love this stuff, but it could impact other practice areas too.

Transaction attorneys, you already know to be very careful if your transaction or arrangement, in any way, involves a hospital, doctor, or any other healthcare provider or entity. Even if your deal does not involve a healthcare provider, but could impact reimbursement by any federal program, these statutes may be implicated.

Litigators, these statutes can apply to your cases too. If your case involves one of these improper payments or an improper business structures, you might have a contractual avoidance theory available to you, if you’re the defendant, or an additional claim of fraud, if you are the plaintiff.

The key point is that these statutes can apply in ways that don’t seem immediately obvious.

Source: Stark + AKS Final Rules

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Houston physician sentenced to prison for $17M billing fraud

Yolanda Hamilton, MD, was found guilty by a federal jury of participating in a Medicare scheme that involved signing false “plans of care” and other medical documents for home health services that were used to submit fraudulent claims to Medicare. She allegedly received $30,000 in kickbacks during the four-year scheme. Prosecutors alleged that Dr. Hamilton and her co-conspirators submitted more than 2,500 fraudulent claims to Medicare, according to the Houston Chronicle.

Source: Houston physician sentenced to prison for $17M billing fraud