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Analysis

Deputy HHS Secretary Hargan Talks Stark Law, Kickbacks

By Jack O'Brien  
   January 30, 2019

HHS is examining ways to modernize the Stark Law to provide patients with more care options without undermining the rule's protections, according to Deputy Secretary Eric Hargan.

Deputy HHS Secretary Eric Hargan said Tuesday that the department is in the final stages of introducing rules to modernize both Stark Law and anti-kickback policies.

Hargan made his comments at an event hosted by the Brookings Institution at the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California.

Relating to HHS' efforts to drive competition and lower prescription drug prices for consumers, Hargan said the department is focused on applying a similar approach to healthcare services in the transition from volume to value-based care.

"Outdated policies from HHS mean not only less than desirable results for taxpayers and for beneficiaries of our programs, but often for patients and payers in the private market as well," Hargan said. "The role played in paying for services by our own policies at HHS is dominant, which means where we aren't innovating, we hold things back." 

Related: Stark Law Reform Push Sees Movement on Multiple Fronts

Hargan said the complete move to value-based care requires a 'radical reorienting,' including a holistic review of Stark Law, an anti-kickback statute, HIPAA, and 42 CFR Part Two, a substance use privacy law.

This has taken place in the form of HHS' Regulatory Sprint, which Hargan said is vital as the Trump administration interprets the Stark Law, first passed by Congress in 1989. 

However, Hargan added that examination of Stark Law occurred even before the Regulatory Sprint, as CMS sought comments on how burdens placed by the legislation are impeding care coordination.

Related: 3 Takeaways for 2019 From Deputy HHS Secretary Eric Hargan

Two of the most prominent questions facing HHS, according to Hargan, were how physicians were expected to navigate the healthcare system and be held accountable if they were subject to outdated regulations, and how providers can be expected to embrace payments based on outcomes if they are not free to experiment and coordinate with each other.

While praising the initial goals of Stark Law, such as preventing doctors from steering where patients receive care in pursuit of financial incentives, Hargan said that it was most effective in the fee-for-service environment.

But as healthcare moves closer to value-based care, Hargan sees opportunities for new interpretations of the law to improve on previous payment models and provide quality care options for patients.

"In a system where we're paying for value, where the provider is ideally taking on some risk for outcomes and cost overruns, we don't have nearly as much need to interfere with who's getting paid for each service," Hargan said. "Of course, in considering changes to the Stark Law, we have to remain acutely aware of the need for competition in the healthcare marketplace. In an ideal world, we can do both at the same time." 

Hargan added that some healthcare players have responded to incentives introduced by Stark Law through increased M&A activity, including purchasing more physician practices. He said HHS aims to have its regulations be as 'agnostic' about ownership as possible.

After receiving approximately 3,500 comments solely on Stark Law last August, Hargan said HHS is looking forward to rule-making on the regulation 'soon.' 

Related: Michigan Hospital to Pay $84.5M to Settle Stark Law, Kickback Claims

Hargan said the comment period on the anti-kickback statute ended in October and the department is seeking to maintain the program's integrity while making modern changes in an approach mirroring those forthcoming for Stark Law.

“The role played in paying for services by our own policies at HHS is dominant, which means where we aren't innovating, we hold things back.”

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: WASHINGTON, DC - JANUARY 12, 2019: DEPARTMENT OF HEALTH AND HUMAN SERVICES sign at headquarters building. - Image / Editorial credit: Jer123 / Shutterstock.com


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