Stark, anti-kickback rulemaking underway at HHS

HHS is ramping up its work to overhaul Stark Law and anti-kickback regulations in what HHS Deputy Secretary Eric Hargan characterized as a "sprint" to reform rules as part of the shift toward paying for value.

The department hopes to have a notice of proposed rulemaking out on both Stark Law reform and new health system exceptions for the anti-kickback statute this year in what observers expect will be a long regulatory process.

In a speech at the Brookings Institution in Washington on Wednesday, Hargan said the department has a lot of ideas and possibly would conduct the rulemaking in two rounds.

"Right now we're currently in the fermenting stage in the development of the rule, but we're very far along, I would say," Hargan said, noting that HHS started work on the issue early in the Trump administration under the first HHS Secretary Tom Price. Hargan served as acting secretary for the department after Price resigned.

HHS issued two requests for information from industry on reforming Stark Law regulations as well on carving out anti-kickback exceptions, known as "safe harbor" for the healthcare industry.

The HHS Office of Inspector General needs to write the anti-kickback exceptions, and the two notices will likely come separately, said Kimberly Brandt, principal deputy administrator for operations at the CMS.

However, Brandt said, the department hopes to coordinate on the timing so the two notices are released close together this year.

Hargan framed the overhaul as serving the administration's broader push away from fee for service toward paying for value, as well as for more competition.

"In some ways, as I well know, existing laws incentivize coordination through mergers and acquisitions," Hargan said. "For example, if a hospital can only incentivize a physician if he is employed by the hospital, then the rational response may be for hospitals to buy up physician practices."

On the Anti-Kickback exceptions, Hargan declined to go into policy specifics but said many comments focused on parts of the statute that blocks providers from helping patients with transportation and other support for chronic conditions, such as heart monitors.

All in all, HHS gathered 3,500 pages of comments on Stark Law reforms. It's unclear whether this Congress will pick up legislation on either issue.

Last Congress, Republicans of the House Ways & Means Committee launched a Medicare Red Tape Relief project that focused on the Stark Law and introduced subsequent deregulatory legislation at the end of 2018. Democrats of the committee haven't yet stated whether they will continue that work.

Brandt, in a follow-up panel to Hargan's speech, said the agency feels it has a fair amount of leeway for Stark Law changes, but said the administration would welcome proposals from Congress.

Tim Gronniger, president of Caravan Health — a company that helps build accountable care organizations, or ACOs — noted that since Anti-Kickback is a criminal statute it's likely Congress will need to step in with reforms at some point.

"I think clearing up criminal statutes that really get into Medicare payment policy prerogatives is a place where only Congress can play," Gronniger said. "Ideally this would be a low enough wattage issue where it could be done iteratively, not something where it's like you get one bite at this every 10 to15 years. It's not a clear enough set of policy issues where you'd want to do big bang approach."