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Are the New Value-Based AKS and Stark Rule Changes in Effect Now?

On November 20, 2020, the Department of Health and Human Services (HHS) in coordination with CMS and OIG released final rules that substantially revise regulations governing the federal Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark Law).

The rules were formally published in the December 2, 2020 issue of the Federal Register and were notably dense due in part to extensive commentary and responses from when the proposed rules were issued in late 2019.

As discussed in our previous blog, the changes bring broad updates and clarification to the AKS and Stark law as a means “to reduce regulatory barriers to care coordination and accelerate the transformation of the health care system into one that better pays for value and promotes care coordination.”

This is evident in new exceptions and safe harbors specific to value-based arrangements and activities, as well as modifications that provide pharmacies with additional freedom to enter into collaborative arrangements with physicians, hospitals, and other providers to improve patient outcomes.

Are the Rules in Effect Right Now?

While the changes were much-anticipated, there remains some uncertainty regarding the effective date of various rules included in the package. There are a few reasons why:

CRA 60-Day Delay Requirements

The effective date for Final Rules published in the December 2, 2020 Federal Register, with the exception of certain rules pertaining to Stark Law group practice provisions, was January 19, 2021.

However, a report issued by the U.S. Government Accountability Office (GAO) in mid-December found that the Final Rules failed to meet the 60-day delay required by the Congressional Review Act (CRA).

The CRA is a law that creates a streamlined process by which Congress can review and disapprove and therefore nullify new rules issued by federal agencies before the rules take effect. Under the CRA:

  1. All rules must be reported to Congress.
  2. Congress, after receipt of report, has 60 legislative working days (which is longer than 60 calendar days) to introduce a special joint resolution of disapproval of the rule, which can be discharged from committee and avoid the Senate’s filibuster.

Unlike the power of legislative veto, which was struck down by the U.S. Supreme Court in 1983 and became the model for the CRA, joint resolutions of disapproval passed under the CRA must still get the President’s signature to become law.

A New Administration

The major point of uncertainty here is that the Final Rules came as part of a flurry of “midnight regulations” passed in the final weeks of Trump Administration, leaving a new administration under President Joe Biden to act quickly in order to stop rules that had not yet taken effect.

On January 20, 2021, a memo issued by the Biden Administration indicated the administration may place a regulatory freeze on rules that have been published in the Federal Register but which have not yet taken effect, in order to review “any questions of fact, law, and policy” the rules may raise.

The result was that many in health care were unsure as to whether any of the Final Rules were effective, and if the rules could be retracted. The memo, however, was merely a communication which asked agencies to “consider postponing the rules’ effective dates” for 60 days.

CMS Issues Statement That Rules Are in Effect

In response to growing uncertainties about whether the new rules were at risk of delay or replacement, CMS issued a statement clarifying its position that the regulations are in effect as scheduled:

“The regulations finalized in CMS-1720-F (Medicare Program; Modernizing and Clarifying the Physician Self-Referral Regulations) are effective, except for the revisions to 42 CFR 411.352, which have the delayed effective date set forth in the final rule in order to give physician practices that qualify as ‘group practice’ time to comply with any changes that may affect their physician compensation models.”

The Bottom Line: Work with Counsel to Ensure Compliance

Amid the uncertainty of a rocky transition of power and technical deficiencies under the CRA, the CMS statement has led many to believe it is unlikely the Biden Administration will act to alter the new rules in any profoundly disruptive way. What’s more, the majority of providers and health care entities to whom the rules apply, or would apply, did not need to act or the address them at this time.

There is some expectation that once the nominees for the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) – Xavier Becerra and Chiquita Brooks-LaSure, respectively – are both confirmed, the two health care leaders will clarify the standing of the rule changes. (As of the publication date of this article, only Becerra has been confirmed.)

The health care regulatory landscape is rarely clear and concise, and recent events only add to the chaos. For providers with questions about the Stark and AKS Final Rules, valued-based arrangements, and other issues of regulatory compliance, there is simply no substitute for experienced counsel.

Hendershot Cowart P.C. is a Houston-based firm with a robust health and medical law practice advising, consulting, and representing health care professionals and providers in a range of regulatory endeavors. To speak with a health care lawyer from our team, call or contact us online.

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