There is good news for health care providers this holiday season with HHS’s recent announcement of numerous revisions liberalizing the AKS, Stark and CMP Laws. Among the helpful changes are modifications to the popular AKS personal services and management contracts safe harbor for part-time arrangements, and new AKS safe harbors and Stark exceptions for care coordination activities that could benefit post-acute care providers.

For example, the HHS OIG will no longer require that compensation amounts be set in advance under the AKS personal services safe harbor, requiring instead that only the compensation formula be set in advance. This revision resolves the issue of unknown future compensation amounts in part-time or sporadic compensation arrangements. Also, in what HHS touts as its “Regulatory Sprint to Coordinated Care,” a new care coordination AKS safe harbor and Stark exception will allow providers to benefit from innovative care coordination arrangements that reward providers for achieving specific goals for a defined patient population.

On November 20, 2020, the HHS OIG and CMS announced these sweeping final rules in an HHS press release: https://www.hhs.gov/about/news/2020/11/20/hhs-makes-stark-law-and-anti-kickback-statute-reforms-support-coordinated-value-based-care.html?utm_source=news-releases-email&utm_medium=email&utm_campaign=november-22-2020. The revisions are scheduled to be published in the Federal Register on December 2, 2020 and will generally take effect on January 19, 2021 (*see fn #1 below).

The revisions are comprehensive - including modifications to existing AKS safe harbors regarding electronic health records, personal services and management contracts, warranties, and local transportation; the addition of new AKS safe harbors for value-based arrangements, patient engagement and support, CMS-sponsored models, and cybersecurity technology and services; a CMP Rule revision regarding telehealth for in-home dialysis; and new Stark exceptions for value-based care arrangements, along with other technical Stark revisions.

Significantly, the longstanding AKS personal services and management contracts safe harbor has been modified by eliminating, in 42 C.F.R. § 1001.952(d)(1), a prior requirement that aggregate compensation had to be set in advance, to a more liberal requirement that only the methodology for determining such compensation be set in advance. Also eliminated is the prior requirement that agreements for part-time services had to specify the schedule, length, and the exact charge for such services. As the HHS OIG notes in the preamble to the final rule, these revisions modernize the safe harbor and should provide enhanced flexibility for innovative arrangements, especially those involving part-time or sporadic compensation.

Among the numerous regulatory revisions in the final rules is one new AKS safe harbor scenario highlighted in the HHS press release that may be of particular interest to the nursing home industry:

The new AKS care coordination safe harbor could facilitate an arrangement to “improve the coordination and management of patient care and the engagement of patients in their treatment if all applicable regulatory conditions are met, including … [a] hospital [that] may wish to provide support and to reward institutional post-acute providers for achieving outcome measures that effectively and efficiently coordinate care across care settings and reduce hospital readmissions.  Such measures would be aligned with a patient’s successful recovery and return to living in the community.”

For such an arrangement to avoid running afoul of the AKS (i.e., by removing any such payments from being considered “remuneration” under the Statute), it would need to satisfy the numerous requirements specified in newly established 42 C.F.R. § 1001.952(ee), including the following examples:

1. ·         The arrangement is value-based and between a value-based enterprise (VBE) and one of its VBE participants or between two VBE participants, all terms as defined in the Regulation;

2. ·         the remuneration exchanged is “in-kind,” meaning items or services, but not monetary remuneration;

3. ·         The remuneration must be used predominately to engage in value-based activities that are directly connected to the target patient population;

4. ·         The remuneration is not used for patient recruitment purposes or unlawful purposes; and

5. ·         The recipient must pay at least 15 percent of the offeror’s cost for the remuneration, at fair market value.

Whether hospitals and nursing homes will avail themselves of this new HHS described safe harbor scenario as they participate in VBEs remains to be seen. The new AKS care coordination safe harbor also applies to VBEs and participants involved in partial or full risk sharing arrangements (similar to shared savings arrangements common in accountable care settings) that providers may utilize as value-based arrangements become more prevalent.

CMS has likewise established new exceptions to the Stark law for value-based arrangements that will, for example, allow physicians to earn incentive payments under a value-based arrangement for providing certain post-discharge services to patients following their discharge from a hospital, assuming all of the relevant Stark exception requirements are met. Also added are revised Stark definitions that clarify fair market value, commercial reasonableness, and other related concepts.

We continue to monitor regulatory updates in general and these new regulations in particular, and will alert our clients regarding further developments once the final rules are published in the Federal Register on December 2, stay tuned.

*Footnote #1: The Congressional Review Act requires that federal agency rules not take effect until 60 calendar days after the rule has been both published in the Federal Register and submitted to Congress. Here, because the rules are scheduled to be published on December 2, 2020, they would normally not be effective until January 31, 2020. However, since that date extends past Inauguration Day on January 20, 2021, these rules have apparently been made effective one day prior to inauguration. Whether such a technical violation of the Congressional Review Act will affect the rules’ implementation is unclear. Also unclear is how these effective dates are affected by a new administration’s usual pause of any regulations not in effect by the inauguration, which typically allows a review for consistency with the new administration’s policies. Notwithstanding the above, given the reported generally bipartisan support for these revisions, it is likely that the rules will be effective as is and unchallenged by a new administration.