House Lawmakers Looking to Relax Anti-Kickback Rules in Value-Based Care Arrangements

A bipartisan group of U.S. lawmakers is looking to relax federal anti-kickback rules related to how, when and where physicians refer their patients.

Doing so could mean smoother referral relationships for home health providers, especially the biggest ones and those operating within an accountable care organization (ACO).

Efforts to loosen anti-kickback regulations come from the 33-member Bipartisan Health Care Innovation Caucus, formed in May 2018 by U.S. Reps. Mike Kelly (R-Pa.) and Ron Kind (D-Wis.). Specifically, the caucus is currently drafting and discussing legislation that seeks to “modernize” the Stark Law, in part by excluding certain value-based arrangements from anti-kickback rules and physician self-referral prohibitions.


“Too often, Congress is mired in short-term health care problems instead of pushing the limits on true innovation that will not only improve the quality of care but also lower costs for consumers,” members of the Bipartisan Health Care Innovation Caucus wrote in a letter to their congressional colleagues. “With the highest health care spending per person in the world at $10,209 per year, the United States needs to be more inventive with payment models and care coordination to drive efficiencies in the health care market.”

Enacted in 1989, the Stark Law is a set of federal rules prohibiting physician self-referrals, in particular, a referral by any physician of a Medicare or Medicaid patient to an entity providing designated health services if the physician has a financial relationship with that entity. Designated services include home health care.

Penalties for violations of the Stark Law include denial of payment for the services provided or a refund of monies received by physicians and facilities for amounts collected. Additional penalties include fines of up to $15,000 for each service that a person “knows or should know” was provided in violation of the law — and three times the amount of improper payment the entity received from the Medicare program.


Violators may also be excluded from Medicare and Medicaid while facing as much as $100,000 in civil penalties for attempting to circumvent the law for any given scheme.

In general, physicians often act with extreme caution to ensure they’re not actively breaking Stark Law, health care expert say. That caution has led to some feeling hesitant to send patients downstream to home health providers they may be affiliated with — even in ACO structures.

“The health care system is rapidly transforming from a volume-driven system to one that rewards value and outcomes,” the innovation caucus wrote. “It is vital that we maintain this acceleration by encouraging a marketplace for multiple payment models and using lessons learned to improve care for consumers while controlling costs.”

In the first three years of the Medicare shared savings program and with home health agencies playing major roles, 428 ACOs served 9.7 million beneficiaries, achieving a net spending reduction of nearly $1 billion, according to a 2017 report from the Office of Inspector General (OIG).

Later studies have somewhat damped enthusiasm of the ACO model, however.

In June, the National Association of Accountable Care Organizations (NAACOS) urged the Centers for Medicare & Medicaid Services (CMS) to loosen home health requirements for participating in ACOs and new alternative payment models.

“More freedom to use skilled home care services could help patients receive care in a setting they choose while aiding [direct contracting entities] (DCEs) in controlling costs,” NAACOS officials argued.

The draft legislation being discussed by the Bipartisan Health Care Innovation Caucus additionally includes provisions directed the Government Accountability Office (GAO) to study the extent to which value-based agreements improve patient outcomes and lower overall health system costs.

Notably, caucus membership includes Rep. Terri Swell (D-Ala.), the lead sponsor of the Home Health Payment Innovation Act, legislation focused on the Patient-Driven Groupings Model (PDGM) and its widely opposed behavioral assumptions.

Broadly, the main focus of the Health Care Innovation Caucus is to explore and advance successful, innovative payment models — and the technologies that support them. Apart from Stark Law modernization, its ongoing areas of interest include rural health care, global capitated payment models and telemedicine.

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