Revisiting Federal Physician Compensation Restrictions

Change is in the air for federal laws that restrict physician compensation. Recent requests for information from the Department of Health and Human Services (HHS) signal potential significant changes in the physician compensation arrangements that are permissible under the federal physician self-referral law, known as the Stark Law and the Anti-Kickback Statute. This effort, dubbed the “Regulatory Sprint to Coordinated Care,” is part of an ongoing initiative to transition from a fee-for-service to a value-based system that includes care coordination. To that end, HHS is seeking information to identify federal regulations that obstruct coordinated care; analyze whether certain obstructions are unnecessary; and issue guidance or regulations to address these barriers and incentivize coordinated care.

The Stark Law is a federal statute targeted to reduce the effects that financial incentives connected to patient referrals may have on patient care, such as patient choice and competition. The Stark Law prohibits physicians from making a referral for designated health services under Medicare to an entity in which the physician or the physician’s immediate family member has a financial relationship, unless the referral is permitted under one of the law’s specific exceptions.

The Stark Law carries a strict liability standard, meaning that a physician can violate the law simply by engaging in a prohibited referral regardless of whether the physician is aware of the prohibition.

On June 25, 2018, HHS requested information regarding aspects of the Stark Law that the Centers for Medicare & Medicaid Services (CMS) identified as potential unnecessary obstacles to coordinated care. Specifically, the requests seek information regarding the impact that existing exceptions to the Stark Law may have on the health care providers’ ability to enter into alternative payment models and novel financial arrangements. Also, whether new exceptions should be added to protect certain types of financial arrangements and remuneration that would promote care coordination. And, general feedback regarding the evaluation of certain aspects of compensation arrangements, including how to define “commercial reasonableness” and how the volume or value of referrals or business generated should be taken into account.

On August 27, 2018, shortly after the period for the Stark Law comments closed, HHS issued a second request for information, this time regarding the Anti-Kickback Statute and purporting to advance value-based care and enable coordinated care. The Anti-Kickback Statute criminalizes paying, offering, soliciting, or receiving remuneration to induce referrals of Medicare or Medicaid business, unless a safe harbor applies. In contrast to the Stark Law, the Anti-Kickback Statute is intent-based, meaning making or receiving the payment must be done knowingly and willfully.

It appears HHS may use the information for the following:

Revisiting potential arrangements that may implicate the Anti-Kickback Statute;
Adding safe harbors and exceptions to the definition of remuneration
Determining how to define and evaluate “value”
Reviewing what types of beneficiary incentive arrangements providers would like to provide to improve care
Deciding whether medication adherence and medication management incentives should receive special treatment
Considering whether relieving or obligations might improve care delivery
Identifying patient care scenarios where cost-sharing obligations are problematic; and
Developing protections or safeguards for cost sharing obligations

In the same request for information, HHS sought feedback regarding exceptions to the civil money penalty (CMP) portion of the statute that allows the imposition of CMPs in administrative proceedings or the exclusion of a violator from participation in federal health care programs.

Health care providers whose policies, practices, and agreements are regulated by these laws should monitor changes to the existing regulations carefully. Public comments regarding the requests for information and any proposed changes to the regulations are available for review through the Federal Register website: www.regulations.gov.

The Stark Law and the Anti-Kickback Statute are often hyper-technical in application, and it can be difficult for providers to sort through the available exceptions and safe harbors to determine what arrangements may or may not be acceptable. The availability of public comment on potential regulatory changes is a way for providers to make their voices heard and to help existing laws accommodate the changing landscape of healthcare in America.

Jamie Dittert is a healthcare and insurance defense attorney with Sturgill, Turner, Barker & Moloney, PLLC. She may be reached at 859.255.8581 or jdittert@sturgillturner.com. This article is intended to be a summary of state and/or federal law and does not constitute legal advice.