HHS: Stark Law, Anti-Kickback Statute are barriers to innovative payment models

HHS recently released a report that provides observations on the effect healthcare fraud and abuse laws have on the industry's transition to value-based payment models.

HHS released the report pursuant to Section 512(b) of the Medicare Access and CHIP Reauthorization Act, which requires HHS in consultation with the Office of Inspector General to submit a report to Congress outlining options for amending existing fraud and abuse laws to permit gainsharing or similar arrangements that can improve care while reducing waste and increasing efficiency.

In the report, HHS said some gainsharing and similar arrangements can be structured in a way that does not violate the Anti-Kickback Statute and meets the requirements of an exception to the physician self-referral law known as Stark Law. However, HHS noted the current fraud and abuse laws "may serve as an impediment to robust, innovative programs that align providers by using financial incentives to achieve quality standards, generate cost savings and reduce waste."

Stark Law has numerous exceptions, each of which carries its own detailed requirements. Many of the exceptions require compensation paid to a physician to not take into account the value or volume of a physician's referrals or other business generated between the parties to a gainsharing agreement. Due to this, "the physician self-referral law presents a particularly difficult obstacle to structuring effective programs that do not run afoul of the fraud and abuse laws," wrote HHS. 

Legislators and hospital leaders have expressed similar concerns about the physician self-referral law in recent years. During a Senate Finance Committee hearing last July, Chairman Orrin Hatch (R-Utah) said Stark Law has become too complex, creating obstacles in the transition from the antiquated fee-for-service model.

His views were echoed by several healthcare leaders, including Ronald Paulus, MD, CEO of Asheville, N.C.-based Mission Health. Dr. Paulus said problems with the physician self-referral law can't be fixed by tinkering around the edges. He believes a full repeal is necessary to allow health systems to move forward with population heath efforts.

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