Experts on healthcare law say the proposed revisions to the Stark Law and Anti-Kickback Statute will create more opportunities for providers, and challenges.

What can we anticipate with the Stark Law and Anti-kickback Statute proposed revisions put forward this month by the Trump administration?

We asked four healthcare attorneys for their initial assessments of the proposed revisions and how it may change the landscape for healthcare delivery.

Here's what they said. Their responses have been slightly edited for length.

HLM: Will these proposed revisions deliver the promise of reducing regulatory burdens on providers?
 

Danielle Sloane: Bass, Berry & Sims.

The proposed changes add flexibility and some important clarifications. For example, the newly proposed value-based exceptions and safe harbors are generally broad and flexible, which will stimulate innovation with respect to value-based payment models.  Moreover, several of the changes will help facilitate greater patient engagement in value-based programs.

There are also a number of valuable Stark regulatory clarifications and changes that will alleviate some of the regulatory burdens.  For example, CMS clarified its aim to interpret the Stark statutory prohibitions narrowly and the exceptions broadly; and in doing so, broadened the applicability of several exceptions.  Also, the industry likely breathed a collective sigh of relief upon seeing CMS's proposed definition of "commercial reasonability," which clearly states that profitability is not determinative of commercial reasonability. 

At first blush the proposals do not lessen the complexity overall; nor, could the agencies really have achieved that absent statutory changes. The length of the proposals alone is evidence of the continuing complexity. At the end of the day, these laws contain a maze of definitions, exceptions or safe harbors, special rules and thousands of pages of preamble guidance; and, the risk of any missteps remains high.

Karl Thallner and Nicole Aiken-Shaban: Reed Smith Life Sciences Health Industry Group. 

For healthcare systems and physician providers, these changes provide welcome clarification to key concepts of the Stark Law, and provide some clarity on the types of features that the government expects to see in permissible value-based arrangements. Other providers, including certain manufacturers and suppliers, may want to provide comments in response to the proposed rules in order to carve out a place for themselves at the value-based table.

William Maruca, a partner at Fox Rothschild LLC
Most of these changes don't address regulatory burdens as much as uncertainty about whether different kinds of relationships among providers, payors and Medicare are legal. Given that the Stark Law is a strict-liability law, anything that didn't fit squarely within an exception before was considered too risky. These changes will have minimal impact on most current arrangements but may encourage the growth of new minimally-integrated networks of providers sharing risk and coordinating care in ways we haven't seen. The goal is to break the stranglehold of fee-for-service on the economics of healthcare so that delivering quality outcomes is more important and more lucrative than churning visits, procedures and RVUs.  

HLM: What real-world impact will we see if these proposals are approved?
 

Sloane: The proposals, if finalized, are likely to spur expansion of value-based models used by healthcare organizations.  Given, however, the sophisticated data analysis necessary to implement these programs and the continuing regulatory complexities, consolidation across the industry is likely to continue, if not accelerate.  We are likely to see new start-ups emerge that aim to help start, facilitate and manage value-based payment models. Hopefully, the proposals will result in fewer frivolous whistleblower lawsuits or, at least, make them easier to defend. Also, the revised EMR and new cybersecurity safe harbors and exceptions should help effectuate cybersecurity improvements across the industry that will better protect all of our personal data.

Thallner and Aiken-Shaban: For healthcare systems and providers, like hospitals and physicians, if finalized, these proposals will bring greater certainty to the compliance of the value-based enterprises such providers engage in currently, or seek to develop. Furthermore, the Stark Law clarifications will allow providers greater certainty on how to structure arrangements within existing exceptions that rely on key concepts of fair market value, commercial reasonableness, and that the remuneration not vary with the volume or value of referrals between the parties. This and other changes should reduce the need for self-disclosures of non-compliant arrangements to CMS, and enhance defenses in related False Claims Act litigation based on alleged non-compliance with those exceptions.

Maruca: The Medicare ACO program is only one form of value-based reimbursement, but its results suggest many other approaches to care coordination and risk-bearing will be developed in the coming years. It is likely to take some time for the results to appear. The value-based models promoted under these new rules will primarily benefit larger organizations and health systems who have the infrastructure to monitor costs and outcomes. Independent medical practices have survived many premature obituaries but this is another pressure point that may encourage some of the survivors to sell or at a minimum to contract with the organizations who are better positioned to participate in these models.

HLM: Are there any unforeseen consequences of these actions?
 

Sloane: There is some risk people will take the relaxation of certain regulations too far. Healthcare companies should not use these proposals (assuming finalized) as a reason to reduce their compliance efforts. Many of the changes, particularly with respect to Stark, seem like defensive safeguards against a violation of Stark in the event existing policies and procedures (e.g., contracting procedures) unintentionally break down. For example, we would not recommend any hospital stop or carve back its physician contracting procedures because certain inpatient hospital services are no longer DHS.

It is clear that the OIG is on the lookout for any unintended consequences of the new value-based payment safe harbors. The OIG notes that value-based arrangements come with their own risks of things like inappropriately reducing care, cherry picking lucrative or adherent patients, lemon dropping expensive or noncompliant patients, and manipulating performance data. In part for these reasons, the OIG's value-based safe harbors are more restrictive than the Stark exceptions.

Thallner and Aiken-Shaban: For those categories of healthcare manufacturers and suppliers proposed to be excluded from the value-based exceptions, it draws into question their continued ability to rely on existing exceptions and safe harbors that they have historically used to protect or assess the risk posed by value-based and shared savings arrangements.

Maruca: People and organizations can be expected to react to financial incentives, so there may be issues where unscrupulous players try to game the new system by fudging outcomes, screening out the sickest patients, or just undertreating patients to generate savings they can then share in. Both CMS and OIG are anticipating these concerns in their preambles and both acknowledge that there may be more risks that cannot be foreseen. This is one reason proposed rulemaking is published for comment. Watching the comments come in will be one way to identify potential consequences unanticipated by the regulators. Another challenge will be measuring quality of outcomes, adjusting for severity of illnesses across populations to minimize any ill effects of financial rewards that are designed to discourage unnecessary care and end up reducing necessary care.

HLM: Are there any icebergs looming for this proposal that may jeopardize implementation?
 

Sloane: These laws impact every healthcare provider, supplier and practitioner. A lot of discussion and many viewpoints will emerge in the coming months. CMS and OIG will get a lot of comments, which will likely slow the release of the final rule. But in the end, a lot of these proposals will be finalized.  

Thallner and Aiken-Shaban: The manufacturer and supplier community may not have seen the types of changes it had hoped to see with regard to value-based pricing, and therefore may oppose the proposals strongly. Additionally, in their proposals, OIG and CMS offered a large number of alternative structures, elements, and definitions on which they solicited comments, which leaves stakeholders uncertain as to the likely contours of the final regulations, and which might give OIG and CMS more challenges in finalizing the proposed value-based rules in a timely fashion.

Maruca: Fortunately for the agencies, no vote is needed in Congress, since there is little chance for any consensus there. There will be a 75-day comment period where stakeholders can provide input, then CMS and OIG will need to react to those comments. One area of controversy is that the OIG has decided to exclude certain players from participating in Safe Harbor-approved "Value Based Enterprises", specifically pharmaceutical manufacturers; manufacturers, distributors, or suppliers of durable medical equipment, prosthetics, orthotics or supplies; and laboratories. They are also considering excluding pharmacies, specifically compounding pharmacies, and pharmacy benefit managers and have requested input.

Researchers suggest that a cap on per-resident funding could rechannel money toward community-based physician training. 

Capping Medicare Graduate Medical Education funding at $150,000 per resident could free nearly $1.3 billion that could be used to alleviate physician shortages in underserved areas, a new study in JAMA Internal Medicine suggests.

"Our study suggests Medicare GME may be overpaying some hospitals up to $1.28 billion annually," study lead author Candice Chen, MD, MPH, said in comments accompanying the study.

"Those funds could be redirected and used to strengthen the physician workforce, especially in underserved areas," said Chen, an associate professor of health policy and management at the George Washington University Milken Institute School of Public Health.

The researchers looked at cost reports to calculate GME payments to hospitals from 2000 through 2015. They found that GME annual funding rates for teaching hospitals can vary by more than $75,000 per resident. In 2015, for example, 25% of hospitals receiving less than $105,761 while 25% received more than $182,233 per resident.

The researchers then calculated the savings if Medicare capped GME payments at $150,000 per year, which is the rate used for the Teaching Health Center Graduate Medical Education (THC) program, which trains residents in community health centers, and other community-based settings in underserved areas.

Chen said residents trained under the THC GME program are more likely to enter primary care, and practice in rural and underserved areas. Funding for the program dries up in mid-November unless Congress appropriates more money.

Medicare's current funding mechanisms for GME have resulted in some teaching hospitals – often located in urban areas – receiving a disproportionate share of the money. Residents who train at these big city hospitals tend to remain in urban settings, Chen said.

"Our study suggests that the savings produced by capping all hospitals at the THC GME rate would add up enough to expand the THC program by tenfold," Chen said.

Atul Grover, MD, PhD, executive vice president of the Association of American Medical Colleges, said his organization has "several concerns about this recommendation."

"The most critical being that the authors fail to adequately distinguish between the purposes of Medicare Direct Graduate Medical Education (DGME) and Indirect Medical Education (IME) payments and fail to recognize the impact of $1 billion in annual Medicare reductions," Grover said in an email exchange with HealthLeaders.

"These cuts would have a devastating impact on patients and communities, reducing access to the critical services teaching hospitals provide, such as trauma centers, burn units, neonatal intensive care units, and other specialized and standby services," Grover said.

"Additionally, while we agree that the Teaching Hospital Center (THC) GME program is an important, targeted tool for training physicians, HRSA estimates that the GME rate used for the THC GME program covers the full costs incurred by THCs when training residents," Grover said.

"Medicare DGME payments to teaching hospitals only cover 21% of the training costs. At a time when our growing and aging population is driving a physician shortage of up to 46,900 to 121,900 by 2032, it makes little sense to slash funding for vital care and services available almost exclusively at teaching hospitals and destabilize a system that has produced high-quality doctors and other health professionals for more than 50 years and is widely regarded as the best in the world," he said.

Chen acknowledged that the study does not look at how much it actually costs to train residents at particular hospitals, or if some hospitals have characteristics that make it costlier to provide GME.

She called capping the Medicare GME payment rate "a limited reform."

"More comprehensive approaches to GME reform would involve restructuring payment and increasing accountability for these publicly funded training programs," she said.

In a new poll, most adults ages 50-80 expressed concerns about the quality of care that comes with remote provider visits.

Older adults and seniors are not exactly embracing telemedicine, but that doesn't mean they're unwilling to try it, a new survey shows.  

A survey of 2,250 adults aged 50 to 80 conducted by the National Poll on Healthy Aging found that only 4% of respondents had had a video-based telehealth visit with a provider via smartphone or computer in the past year.

Their reviews were mixed.

More than 70% of the respondents voiced concerns that providers couldn't do a physical exam over a webcam or smartphone camera, and 68% suggested that remote care wouldn't be as good. With a small minority who had used telehealth, 58% said office visits offered better care quality, and 48% were concerned about privacy.

Meanwhile, more than half of all those polled didn't know if their health providers offer telehealth visits at all. More than 80% of older adults polled expressed at least one concern about seeing a doctor or other provider virtually rather than in person. And 47% worried about getting the technology to work.

But 64% said they'd be willing to try telehealth in some situations, for instance if they got sick while traveling and 58% said they'd be receptive to telemedicine if they needed follow-up on a previous office visit.

With that in mind, Preeti Malani, MD, the poll's director and a professor of internal medicine at Michigan Medicine, said targeting certain types of telehealth visits could help older adults get comfortable with the idea.

"Telehealth won't replace in-person medical examinations completely, but for situations where in-person visits aren't essential, they can save time and resources for patients and providers alike," Malani said.

"Providers shouldn't assume older adults aren't receptive to virtual visits, but they should understand and work to overcome some of the reasons for hesitation," she said.

Of the one-third of the respondents whose providers don't offer telemedicine, 48% said they'd be willing to try it for primary care, but fewer were willing to use it for specialty or mental health services.  

Beginning in 2020, Medicare Advantage health maintenance organizations will reimburse providers for telemedicine. In addition the Veterans Administration has increased access to telemedicine, along with some Medicaid and commercial plans.

Alison Bryant, senior vice president of research for AARP, said the poll findings suggest that providers need to do a better job informing older patients that telemedicine is an option, explaining how it works, and how it could benefit them.

"Many older Americans can benefit from being able to get care through telehealth without long trips to their doctor's office," Bryant said. "Telehealth allows people to schedule health-related appointments, request prescription refills, and link to healthcare providers when time or distance is a barrier. It can also support family caregivers who are taking care of their loved ones."    

Rutgers study calls for improved prevention strategies for potentially lethal infections.

New infection sources have emerged for people with heart disease, and defective or artificial heart valves.

That's according to a new study from researchers at Rutgers Robert Wood Johnson Medical School, published this month in The American Journal of Cardiology.

The researchers warned that these potentially lethal cardiac infections pose an increasing threat to hospital patients admitted for other diseases.

"In the past, infective endocarditis was associated with rheumatic heart disease and most often caused by bacteria in the mouth," study lead author Abel Moreyra, MD, a professor of medicine at Rutgers, said in comments accompanying the study.

"However, new risk factors, such as intravenous opiate abuse, compromised immune systems, hemodialysis and implanted heart devices have emerged," Moreyra said.  

In 2007, the American Heart Association revised guidelines and recommended antibiotics only for patients at high risk for infection.

The researchers looked to find how the revised guidelines changed infection rates. They analyzed 21,443 records of people who were diagnosed with infective endocarditis in New Jersey hospitals from 1994 to 2015.

The researchers were surprised to find that, beginning in 2004, there was a significant decline in the number of patients hospitalized with infective endocarditis as the primary diagnosis for their reason for admission.

Coupled with that was a significant increase in the number of patients developing the infection in the hospital, or a secondary diagnosis.

In total, 9,191 people were hospitalized with infective endocarditis as the primary diagnosis and 12,252 with secondary diagnosis, the researchers found

The decline in primary diagnosis was attributed by researchers to improved dental care and the rarity of rheumatic heart disease, where streptococcus plays a key role in the infection.

"However, 60% of infective endocarditis that developed after admission were caused by a different microorganism, staphylococcus bacteria, which is abundant in hospitals and implicates health care as a possible source of infection," Moreyra said.

The researchers believe that, by identifying the different time trends of primary and secondary diagnosis of infective endocarditis, the findings can help hospitals tailor different strategies for the prevention of this potentially lethal infection.