Stark Law Changes Should Benefit Telehealth, Remote Patient Monitoring

New safe harbors proposed for the Stark Law and Anti-Kickback Statute could help providers expand their telehealth and remote patient monitoring platforms.

A Final Rule issued last week by the Health and Human Services’ Office of the Inspector General creates seven new safe harbors for value-based arrangements, and modifies five already in place. The new guidelines are designed to enable different groups – such as healthcare providers, telehealth and mHealth vendors and others – to collaborate on connected health services without running afoul of federal laws on fraud, waste and abuse.

Specifically, the Stark Law, otherwise known as the physician self-referral law, prohibits referrals by a physician to another provider if the physician or his immediate family has a financial relationship with the provider. The Anti-Kickback Statute, meanwhile, bars the exchange of remuneration – which according to this law is anything of value – for referrals that are payable by a federal healthcare program like Medicare.

The healthcare industry has long lobbied to change what it considers to be an outdated Stark Law and Anti-Kickback Statute to better align with the shift from fee-for-service to value-based care. The law is particularly troublesome in telehealth, hindering opportunities for large health systems and companies to work together and to help smaller systems and hospitals develop their own platforms or take part in a larger telemedicine network.

Last week’s Final Rule follows up on changes originally proposed in 2019, and opens the door to more “value-based enterprises,” which are defined as two or more “VBE participants” working together to coordinate care, improve outcomes and reduce costs for a target population while transitioning into value-based care.

They also reflect the changes in healthcare delivery brought about by the coronavirus pandemic, which is forcing many providers to develop virtual care programs and create hybrid models of telehealth and in-person services that challenge policies that govern care delivery.

According to Carrie Nixon, co-founder and managing partner of Nixon Gwilt Law, the  OIG’s Final Rule “gives healthcare providers and digital health companies more flexibility to enter into new business arrangements that incentivize care coordination and patient engagement as a means of improving outcomes and reducing the overall cost of care.”

“These new protections allow players in the digital health space – including Remote Patient Monitoring companies, telehealth companies, and healthcare predictive analytics platforms – to take on an unprecedented role in helping healthcare providers move the needle on patient outcomes and costs by providing in-kind and even monetary remuneration to these providers in the form of free or reduced cost items/services or shared savings arrangements,” she summarized in a recent article on her law firm’s website.

“The value-based safe harbors do not include the traditional requirement of Fair Market Value for goods/services or the prohibition against taking volume or value of referrals into account,” she wrote “For example, under one of the new safe harbors, a remote patient monitoring company could create a VBE and enter into value-based arrangements to provide participating healthcare providers with an embedded clinical staff member at no cost to the providers to help identify, onboard and monitor patients in an RPM program.”

The new AKS safe harbors are:

• Care Coordination Safe Harbor: one of three so-called value-based safe harbors, this carries no assumed financial risk. It permits in-find remuneration among participants for care coordination and management, including digital health technology provided by vendors.
• Safe Harbor for Value-Based Arrangements with Substantial Financial Risk: also a value-based safe harbor, this protects both in-kind and monetary remuneration for items and services among participants who are sharing substantial financial risk.
• Safe Harbor for Value-Based Arrangements with Full Financial Risk: also a value-based safe harbor, Nixon says this model gives its participants more flexibility for in-kind and monetary remuneration, since they’re assuming full financial risk. This safe harbor does require a quality assurance program to make sure the items and services are used properly.
• Patient Engagement and Support Safe Harbor: this safe harbor focuses on patient engagement and support tools – including telehealth and mHealth – provided by a participant to patients in a target population.
• Safe Harbor for CMS-Sponsored Models: this applies to payment and delivery models and incentives sponsored by the Centers for Medicare & Medicaid Services that, Nixon says, would otherwise require separate fraud and abuse waivers.
• Cybersecurity Technology and Services Safe Harbor: this is just as it sounds – a safe harbor for the remuneration of cybersecurity technology and services, designed to improve security in programs that might be exposing sensitive information. It’s also a significant threat as health systems look to conduct more of their business online and through telehealth platforms.

In addition, the Final Rule adds an exception to the Beneficiary Inducement Civil Monetary Penalty, allowing for programs that use telehealth in home-based dialysis treatment.

Finally, the Final Rule modifies five existing safe harbors:

• Electronic Health Records Safe Harbor: the OIG is altering this model to improve interoperability, clarify cybersecurity protections in an EHR arrangement, and remove the sunset provision and prohibition of donated equivalent technology.
• Personal Services and Management Contracts Safe Harbor: this change allows more flexibility in how personal and/or management services are defined, offering opportunities for part-time or occasional arrangements and those for which compensation is determined later.
• Warranties Safe Harbor: this amendment redefines “warranty” and includes protection for warranties for one or more items and services.
• Local Transportation for Beneficiaries Safe Harbor: this change allows beneficiary transport in rural areas up to 75 miles, while removing limits to the distance a beneficiary can be transported from the hospital back to the home. It also allows for ride-sharing.
• ACO Beneficiary Incentives Program: this change creates a statutory exception to the definition of remuneration under the Medicare Shared Savings Program.