Arrangements, Exceptions, and Modifications - OIG and CMS Challenge the Status Quo

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) issued their long-awaited proposed rules in connection with the Regulatory Sprint to Coordinated Care today.  Transforming our healthcare system to one that pays for value is one of the Department’s top four priorities, and the Deputy Secretary launched the Regulatory Sprint to remove potential regulatory barriers to care coordination and value-based care.

OIG’s proposed rule revising the safe harbors under the anti-kickback statute includes a number of noteworthy proposals, but by far the most significant are the proposed new safe harbors for value-based arrangements and patient engagement arrangements.  The breadth and scope of the proposed new safe harbors is remarkable; unlike OIG’s previously issued safe harbors, if finalized, they would protect arrangements of unknown design and unproven efficacy as long as the parties reasonably anticipate the arrangement will advance the coordination and management of care of a target patient population and the arrangement satisfies all of a safe harbor’s other requirements. The proposed rule also includes a new safe harbor for cybersecurity donations, and modifications to the personal services and management contracts safe harbor that would provide new protections for outcomes-based arrangements such as shared savings, gainsharing, and pay-for-performance arrangements. Given the challenges associated with designing safe harbor protections for emerging healthcare arrangements, OIG took great pains to emphasize that it had not yet made a final determination that the arrangements described in its proposals should be exempt from liability under the anti-kickback statute and that any final safe harbors would provide only prospective protection.

Although most within the industry surely will welcome OIG’s proposed rule, others will be unhappy with it, including pharmaceutical manufacturers; manufacturers, distributors, or suppliers of durable medical equipment, prosthetics, orthotics or supplies (DMEPOS); and laboratories, all of which would be excluded from participating in value-based and patient engagement arrangements.

CMS has taken the next step in the regulatory sprint to coordinated care by proposing new exceptions to the Stark Law that specifically address various types of value-based arrangements and has created a special rule related to indirect value-based arrangements.  Similar to OIG, CMS also is proposing a new exception related to donations of cyber security technology and services to physicians.  In addition to these broad sweeping new exceptions recognizing the changes in the reimbursement system, CMS also made other modifications to the existing exceptions and notably have provided clarity in definitions.  On first blush, the new rule appear to allow for opportunities for more flexible arrangements.

Stay tuned to updates on Health Law Advisor for an in-depth analysis of both the OIG’s proposed rule and CMS’ special rule.