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HHS and CMS are offering safe harbor to Stark Law to promote value-based, coordinated care

Example of change is allowing a hospital to donate free cybersecurity software to each physician that refers patients to its hospital.

Susan Morse, Managing Editor

The Department of Health and Human Services is proposing changes to the Stark Law and Anti-Kickback Statute to allow providers to coordinate care for  a more value-based approach without running afoul of the law.

The proposed rule issued Wednesday by the Centers for Medicare and Medicaid Services acknowledges that incentives are different in a healthcare system that pays for value rather than volume of services.


There's been a longstanding concern that the current laws unnecessarily limits the way providers coordinate care. The changes would allow for flexibility for innovation through outcome-based payment arrangements that reward improvements in patient health.

The Stark Law would continue to protect against overutilization and other harms, but the changes would offer specific safe harbors for coordinated care, value-based care, data sharing and patient engagement activities.

For instance, a specialty physician practice could share data analytics services with a primary care physician practice.

A local hospital could improve its cybersecurity and the cybersecurity of nearby providers that it works with frequently.  To do so, it could donate, for free, cybersecurity software to each physician that refers patients to its hospital. The software would help ensure that hackers cannot attack the physician's computers. Improving each physician's cybersecurity would help prevent hackers from spreading the attack to other physicians and the hospital.

Hospitals and physicians could work together in new ways to coordinate care for patients being discharged from the hospital. The hospital might provide the discharged patients' physicians with care coordinators for follow-up care, data analytics systems and remote monitoring technology to alert physicians or caregivers when a patient needs an intervention to prevent unnecessary ER visits and readmissions.

A physician practice could provide smart pillboxes to patients without charge to help them remember to take their medications, and also provide a home health aide to teach the patient and the patient's caregiver how to use the pillbox. The pillbox could automatically alert the physician practice and caregiver when a patient misses a dose so they could follow up promptly with the patient. 

To improve health outcomes for patients with end-stage kidney disease, a nephrologist, dialysis facility or other provider could furnish the patients with technology that is capable of monitoring the patient's health and two-way, real-time interactive communication between the patient, facility, and physician. In addition, the facility could equip the physicians with data analytics software to help them monitor patients' health outcomes.


The proposed rules are part of HHS's Regulatory Sprint to Coordinated Care, which seeks to promote value-based care by examining federal regulations that impede efforts among providers to better coordinate care for patients.

The proposed rule supports the agency's "Patients over Paperwork" initiative by reducing regulatory burden.

The Stark Law has not been significantly updated since it was enacted in 1989, CMS said. At that time, healthcare was paid primarily on a fee-for-service basis.

The Stark Law recognizes that a profit motive could influence some physician behavior, CMS said. For this reason, the law prohibits a physician from making referrals for certain services paid by Medicare if the physician has a financial relationship with the other entity performing the service.

But since the law was enacted 30 years ago, Medicare and the private market have implemented many value-based healthcare delivery and payment systems to address unsustainable cost growth in the current volume-based system. The Stark Law has not evolved to keep pace with this transition.

CMS published a request for information on June 25, 2018, seeking input from stakeholders about how to address regulatory barriers to a value-based healthcare payment and delivery system under the Stark Law.

Commenters said regulations have not kept up with the evolution to a value-based system.


"President Trump has promised American patients a healthcare system with affordable, personalized care, a system that puts you in control, provides peace of mind, and treats you like a human being, not a number. But too often, government regulations have stood in the way of delivering that kind of care," said HHS Secretary Alex Azar. "Regulatory reform has been a key piece of President Trump's agenda not just for faster innovation and economic growth, but also better, higher-value healthcare. Our proposed rules would be an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve."

CMS Administrator Seema Verma said, "Administrative costs are driving up the cost of healthcare in America -- to the tune of hundreds of billions of dollars. The Stark proposed rule is an important next step in President Trump's healthcare agenda for Americans. We are updating our antiquated regulations to decrease burden for providers and helping bring down these increasingly escalating costs."

"This proposed rule would help patients to focus on their health, enable providers to better coordinate high-quality healthcare, and empower both to achieve improved health outcomes," said Acting Inspector General Joanne M. Chiedi.

Twitter: @SusanJMorse
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