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HHS Proposes Sweeping Changes to Anti-Kickback Statute and Stark Law

On October 9, 2019, the Department of Health & Human Services (HHS) announced significant changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (known as the Stark Law) through proposed rules issued by the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS).  The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which aims to promote value-based care and ease regulatory burden on health care providers, particularly with respect to the AKS and the Stark Law.

Below is a high-level overview of key provisions in the proposed rules. We will provide in-depth summaries and analysis of the proposed rules in our upcoming blog series.

OIG’s Proposed Revisions to the AKS and the Civil Monetary Penalty Law

New Safe Harbors for Value-Based Arrangements

Noting that the broad reach of the AKS potentially inhibits beneficial value-based care arrangements, the OIG's proposed rule includes three new safe harbors for remuneration exchanged between participants in value-based arrangements.  The safe harbors separately address (i) care coordination arrangements; (ii) value-based arrangements where the value-based enterprise assumes substantial downside financial risk; and (iii) value based-arrangements where the value-based enterprise assumes full financial risk.  Notably, the new safe harbors do not protect arrangements with pharmaceutical manufacturers, manufacturers, distributors, DMEPOS suppliers, and laboratories.  OIG notes that it seeks comments on these exclusions and is considering separate rulemaking to address value-based arrangements with pharmaceutical manufacturers.

New Safe Harbors for Patient Support Tools and Cybersecurity Donations

The OIG also proposes new safe harbors for:

  • certain tools and supports furnished to patients to improve quality, health outcomes, and efficiency;
  • certain remuneration provided in connection with a CMS-sponsored model, which should reduce the need for the OIG to issue separate and distinct fraud and abuse waivers for new CMS-sponsored models; and
  • donations of cybersecurity technology and services.

Modifications to Existing Safe Harbors – EHR, Personal Services, Warranty, and Transportation

Additionally, in an effort to reduce the regulatory burden associated with the AKS, the OIG has proposed modifications to existing safe harbors, including:

  • creating protections for certain cybersecurity technology and removing the sunset date to the safe harbor for electronic health records items and services;
  • amending the personal services and management contracts safe harbor to add flexibility with respect to outcomes-based payments and part-time arrangements;
  • revising the definition of “warranty” and providing protection for warranties for one or more items and related services under the warranty safe harbor; and
  • expanding the mileage limits for rural areas and for transportation for discharged patients under the local transportation safe harbor.

Beneficiary Inducement Protection for Telehealth Technologies Furnished to Home Dialysis Patients

The OIG’s proposed rule also includes a proposed amendment to the definition of remuneration in the Civil Monetary Penalty rules on beneficiary inducement for telehealth technologies furnished to certain in-home dialysis patients.

CMS’s Proposed Changes to the Stark Law

Exceptions for Value-Based Arrangements

Similar to the proposed AKS safe harbors on value-based arrangements, CMS's proposed rule includes four new Stark Law exceptions for:

  1. value-based arrangements where a value-based enterprise has assumed full financial risk for patient care services for a target patient population;
  2. value-based arrangements under which a physician is at meaningful downside financial risk for failure to achieve the value-based purpose of the arrangement;
  3. other value-based arrangements that satisfy certain criteria; and
  4. indirect compensation arrangements that include a value-based arrangement.

Clarification of Fundamental Stark Law Terminology and Requirements

CMS’s proposed rule also includes critical guidance and clarification on fundamental Stark Law terminology and requirements, including proposed definitions on key concepts such as commercially reasonable, the volume or value standard, the other business generated standard, and fair market value.

The OIG and CMS are seeking comments to these proposed rules, which are due about six weeks after the rules’ publication dates.  These proposed changes, if adopted, will have a far-reaching impact on the health care industry.  Stay tuned for more insights from the Mintz team on the proposed rules!

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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.
Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.
Rachel Yount is a Mintz attorney who focuses her practice on health care industry transactions. Her clients include hospitals, health systems and plans, physician organizations, and pharmacy benefit managers.