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Overview and Compliance Resources for Anti-Kickback Regulations and Stark Law

On November 20, 2020, the Office of Inspector General (OIG) and Centers for Medicare & Medicaid Services (CMS) jointly finalized changes to outdated federal regulations that have burdened health care physicians with added administrative costs and impeded the health care system’s move toward value-based reimbursement. The physician self-referral law (known as the Stark Law) generally prohibits a physician from making referrals to an entity for certain health care services if the physician has a financial relationship with the entity. The Anti-Kickback Statute prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward, among other things, the referral of business reimbursable under any of the federal health care programs. Changes to these policies and regulations went into effect on January 19, 2021. To help guide compliance and provide an overview of these regulations and policies, ACP has developed the below resources for your practice.

General Overview Of Stark Law and AKS

Q: On November 20, 2020, HHS, OIG, and CMS released new rules to improve the healthcare system and reduce the complexity of the Stark Law and AKS. What are the main goals of these new rules?

In publishing the Final Rule, the agencies included the following stated goals:

  • Help patients to better understand their treatment plans and empower decision-making to produce better quality outcomes
  • Encourage provider alignment along an end-to-end entire care continuum
  • Improve incentives for physicians to collaborate and encourage patient involvement
  • Encourage information sharing among physicians, while protecting patients’ access to data
  • Advancing the transition and removing barriers to value-based care and the coordination of care under both government and commercial insurance programs

Q: What is the effective date of both the new Stark laws and AKS final rules?

Both the new Stark Law and AKS final rules became effective January 19, 2021.

Q: Which government agencies are charged with enforcing the Stark Law and AKS, and what are the penalties for violation?

The Department of Justice (DOJ), the Department of Health and Human Services Office of Inspector General (OIG), and the Centers for Medicaid and Medicare Services (CMS) are all charged with enforcing these laws. Violation of these laws could result in criminal penalties, civil fines, exclusion from Federal health care programs, or loss of your medical license from your State medical board.

Q: Does ACP offer any resources to compare the Stark Law versus the Anti-Kickback statutes?

Yes, a breakdown of these rules and regulations can be found in the ‘Comparison Chart’ which is located on ACP Online under Regulatory Resources. This chart breaks down the Stark Law and AKS’ applicability, intent requirements, penalties, and other helpful information.

Physician Self-Referral Statute (Stark Law)

Q: What does the Stark Law prohibit?

The Stark Law prohibits a physician from referring Medicare/Medicaid patients to a health service provider in which the referring physician (or its immediate family member) has a financial interest. The Stark Law additionally prohibits health service physicians and other providers from billing Medicare/Medicaid for medical service(s) performed pursuant to a prohibited referral.

Q: Are there any exceptions to the Stark Law?

Yes, the Stark Law includes several exceptions. For purposes of the Stark law, exceptions can be divided into the below genres. Importantly, this is not an exhaustive list and you should consult your attorney for additional information regarding compensation arrangements that do not constitute a financial relationship.

  1. Ownership exceptions
  • Publicly traded securities/mutual funds
  • Rural “provider” exception
  • “Whole hospital” exception
  1. Service-based exceptions
  • Physician services
  • In-office ancillary services
  • Services provided by academic medical centers
  • Arrangements that facilitate value-based health care delivery and payment
  • Value-based arrangements with meaningful downside financial risk to the physician
  1. Compensation exceptions
  • Rental of office space and equipment
  • Bona fide employment relationships
  • Personal service arrangements
  • Physician recruitment
  • Isolated transactions

Q: What are the temporary Stark Law waivers that are in effect during the COVID-19 public health emergency (PHE)?

The Secretary of Health and Human Services (HHS) has issued blanket waivers for the Stark Law that went into effect March 1, 2020. These will remain in effect until the end of the PHE. It is important to remember that these waivers do not suspend the application of the Stark Law; rather, they temporarily exempt from sanctions certain arrangements that are “solely related” to COVID-19 purposes. Currently, COVID-19 purposes can include:

  • Diagnosis or medically necessary treatment of COVID-19 for any patient whether or not they are diagnosed with a confirmed case of COVID-19
  • Securing the services of physicians and other practitioners and professionals to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19
  • Ensuring the ability of health care physicians and other providers to address patient and community needs due to COVID-19
  • Shifting the diagnosis and care of patients to appropriate alternative settings due to COVID-19
  • Addressing medical practice or business interruption due to COVID-19 to maintain the availability of medical care and related services for patients and the community

Q: Many small practices and independent physicians do not employ large legal teams which help guide compliance. In beginning to assess whether a particular arrangement is compliant with the Stark Law, what are some things to consider?

While it is recommended that you consult with legal counsel to determine what is/is not permissible under the Stark Law as applied to your specific situation, there are a few questions you may ask to guide the analysis:

  1. Is there a referral from a physician for a designated health service (DHS)?
  2. Does the physician have a financial relationship with the entity furnishing the DHS (e.g., the hospital)?
  3. Does the financial relationship fit into an exception?
  4. Is the transaction commercially reasonable (in the absence of referrals)?

The Federal Anti-Kickback Statute

Q: What does the AKS prohibit?

The AKS prohibits anyone from soliciting or receiving remuneration of any kind in exchange for referring a patient for services or for purchasing an item or service paid for by a federal healthcare program.

Q: Are there any exceptions to the AKS?

Yes, OIG, which is charged with enforcing the contours and parameters of the AKS, has established several Safe Harbors. These are expanded yearly. The below list represents a few Safe Harbors currently in effect, but a more complete list may be found here.

  • Ambulatory surgical centers
  • Discounts
  • EHR items and services
  • Electronic prescribing items and services
  • Equipment rental
  • Health centers
  • Investment interests
  • Payments made to bona fide employees
  • Personal services and management contracts
  • Practitioner recruitment
  • Referral services
  • Space rental
  • Warranties

Q: With respect to the COVID-19 public health emergency, has OIG established any blanket waivers for AKS?

Yes, OIG issued a policy statement on April 3, 2020 stating that it would not impose sanctions under the AKS for arrangements that satisfied the Stark Law blanket waivers.

Q: Are there limitations to offering coupons to federal health care program beneficiaries who receive the COVID-19 vaccine?

Since Medicare and other federal health care programs reimburse for COVID-19 vaccine administration, offering coupons to beneficiaries that receive the vaccine from a particular physician or other provider or supplier would implicate the federal AKS. However, in the limited context of the COVID-19 public health emergency, a physician or other provider, supplier, or managed care organization offering or providing a reward or incentive in connection with the beneficiary receiving the COVID-19 vaccine (either one or both doses) would be at a sufficiently low risk under AKS if the following safeguards were met:

  • The incentive or reward is furnished in connection with receiving a required dose of a COVID-19 vaccine (which could include either one or two doses, depending on vaccine type);
  • The vaccine is authorized or approved by the Food and Drug Administration as a COVID-19 vaccine and is administered in accordance with all other applicable federal and state rules and regulations, as well as those conditions for the physician (or other provider) and supplier receiving vaccine supply from the federal government;
  • The incentive or reward is not tied to or contingent upon any other arrangement or agreement between the entity offering the incentive or reward and the federal healthcare program beneficiary;
  • The incentive or reward is not conditioned on the recipient’s past or anticipated future use of other items or services that are reimbursable, in whole or in part, by federal healthcare programs;
  • The incentive or reward is offered without considering the insurance coverage of the patient (or lack thereof) unless the incentive or reward is being offered by a managed care organization and eligibility is limited to its enrollees; and
  • The incentive or reward is provided during the COVID-19 public health emergency.

Stark Law and AKS as Applied to Value-Based Arrangements

Q: Under the Stark Law, what would qualify as a “value-based arrangement”?

A value-based arrangement is any arrangement established for the provision of at least one value-based activity for a target patient population to which the only parties are: the value-based enterprise and one or more of its value-based activity participants; or value-based activity participants in the same value-based enterprise.

Q: In the Final Rule, CMS pays particular attention to the advent of value-based arrangements, as well as the continuing importance of fair-market value and commercial reasonableness. The Stark Law permits a wide range of parties that are able to be the “VBE participant” in these agreements. What is a VBE participant?

In the Final Rule, “VBE participant” is defined to mean a person or entity that engages in at least one value-based activity as part of a value-based enterprise. The definition of “VBE participant” finalized does not exclude any specific persons, entities, or organizations from qualifying as a VBE participant.

Q: In the previous question there is a reference to a “value-based enterprise” (VBE). What is a VBE?

A VBE means two or more VBE participants:

  1. Collaborating to achieve at least one value-based purpose;
  2. Each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise;
  3. That have an accountable body or person responsible for the financial and operational oversight of the value-based enterprise, and;
  4. That have a governing document that describes the value-based enterprise and how VBE participants intend to achieve its value-based purpose(s).

Q: As follow-up to the previous question, what is a value-based purpose?

A value-based purpose means any of the following:

  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, and;
  4. Transitioning from healthcare 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.

Q: What would qualify as a “value-based activity” (VBA)?

A value-based activity means any of the following activities, provided that the activity is reasonably designed to achieve at least one value-based purpose of the value-based enterprise:

  • The provision of an item or service;
  • The taking of an action; or
  • The refraining from taking an action.

Q: While the Stark Law does not exclude specific persons, entities, or organizations from qualifying as a VBE participant, the AKS does. Regarding AKS, what entities do not qualify for value-based safe harbors?

The following entities do not qualify for value-based safe harbors (known as the “ineligible entity list”):

  • Pharmaceutical manufacturers, distributors, and wholesalers (referred to generally as “pharmaceutical companies”);
  • PBMs;
  • Laboratory companies;
  • Compounding pharmacies;
  • Manufacturers of devices or medical supplies;
  • Entities or individuals that sell DMEPOS, other than a pharmacy or a physician, provider, or other entity that primarily furnishes services, all of which remain eligible, and;
  • Medical device distributors or wholesalers that are not otherwise manufacturers of devices or medical supplies (e.g., some physician-owned distributors).

Q: By way of ‘best practices’, what are some items to include in the value-based enterprise or value-based arrangements?

Items which need to be in the governing document include:

  • Identification of a person or group that oversees the financial and operational aspects of the VBE
  • List value-based participants (after checking that there is no person from the AKS ineligible list)
  • Identify the value-based purpose
  • Identify the target population (this needs to be hyper-focused; e.g., diabetics, using weight as a measure for inclusion/exclusion)
  • Incorporate how the objectives are going to be achieved, tracked, and monitored
  • Identify what value-based programs are already in play

Q: Is it necessary for the value-based enterprise to be a separate legal entity with independent contracting power?

While the value-based enterprise does not need to be a separate legal entity with independent contracting power, it may be prudent to do so – based on size and complexity of the VBE.

Q: In assessing one’s compliance with the Stark Law and AKS, as applied to value-based arrangements, what are some common compliance issues?

The most common compliance issues include:

  • No signed or written agreement
  • Compensation based, in part, on the volume or value of referrals
  • Above or below FMV
  • Commercially unreasonable agreements
  • Changed course of dealing/performance over time
  • Retroactive payments or adjustments
  • Amendments made within one year
  • Basic contract adherence
  Physician Self-Referral Statute (Stark Law) [42 USC § 1395nn] The Federal Anti-Kickback Statute (AKS) [42 USC § 1320a-7b(b)]
Prohibition

Prohibits a physician from referring Medicare/Medicaid patients to a health service provider in which the referring physician (or his/her immediate family member) has a financial interest

Prohibits health service physicians (and other providers) from billing Medicare/Medicaid for medical service(s) performed pursuant to a prohibited referral

Prohibits offering, paying, soliciting, or receiving remuneration of any kind in exchange for referring a patient for services or for purchasing an item or service paid for by a federal healthcare program

Regulator

Regulated by CMS

Regulated by HHS-OIG/DOJ

Referrals

Referrals from a physician

Referrals from anyone

Federal Health Care Programs

Limited to Medicare and Medicaid

Applies to all federal health care programs

Items/Services

Applies to a list of Designated Health Services (DHS)*

Covers all services or items for which payment is sought from a government healthcare program

Exceptions

Excludes several “exceptions” from the scope of law (please reference FAQ for additional details on exceptions)

Voluntary safe harbors

Intent

No intent standard for overpayment (strict liability)

Intent required for civil monetary penalties for knowing violations

Intent must be proven (knowing and willful)

Penalties

Civil

  • Denial of payment of a claim
  • Refunds of amounts collected in violation of the statute
  • Civil monetary penalties up to $15,000 for each claim submitted in violation of the statute

Criminal

  • Fines up to $25,000 per violation, felony conviction punishable by imprisonment up to five years, or both

Civil/Administrative

  • Possible exclusion from participation in federal healthcare programs
  • Civil monetary penalties
  • False Claims Act liability
  • Civil assessment of up to three times the amount of kickback

*Code list for Certain Designated Health Services (DHS)