HHS Regulatory “Sprint” to Coordinated Care Really More of a “Mosey”

August 27, 2020 - Scott R. Landau

Yesterday, much to the dismay of lawmakers, providers, and my fellow “Stark nerds,” CMS gave itself yet-another year to finalize long-anticipated and much needed changes to regulations promulgated under the Physician Self-Referral Law (a/k/a the “Stark” law).  With this additional delay, it is now beyond question that the U.S. Department of Health and Human Services’ (HHS) so-called “Regulatory Sprint to Coordinated Care” is really more of a “mosey.” 

As currently structured, the Stark regulations and those promulgated under its cousin the Antikickback Statute (AKS) aim to prevent fraud and abuse concerns inherent in a fee-for-service based payment system (such as overutilization and overbilling). These rules were not only built for what is fast becoming an outdated system as we shift from fee-for-service to value-based payment, they actually discourage providers from pursuing innovative quality and value-based delivery and compensation models (I’ve previously described them as “analog regulations for a digital world”). And it is not tenable to mandate, by law (the Accountable Care Act, among others), that healthcare providers transition to a value-based system when the regulations still on the books inhibit them from doing so.

Recognizing this dilemma, in 2018 HHS launched its “Regulatory Sprint to Coordinated Care” with the laudable goal of reducing the regulatory hurdles prohibiting innovate value and quality-based delivery arrangements and care-coordination activities. Soon thereafter, HHS requested public comments on ways that the Stark and AKS regulations could be improved and modified to encourage care coordination and value-based care, and it seemed like things were quickly moving in the right direction. 

But then, nothing.   

It took almost a whole year from the request for comments for CMS and HHS to issue proposed rules to “modernize and clarify” the Stark and AKS regulations, which they did in October 2019.  And though the proposed rules included new value-based exceptions and safe-harbors and modified and clarified many others that are frequently relied upon by providers, many  commentators noted that the proposed changes did not go far enough to provide the relief providers needed to encourage them to explore innovate arrangements and effect systemic meaningful change. Those who voiced concerns were proven right when the COVID-19 crisis hit, and HHS had to issue blanket waivers of certain Stark law prohibitions (and corresponding yet aggravatingly-impotent AKS “enforcement discretion”) in order to permit providers to pursue innovative arrangements designed to expand care delivery to patients.  Yet despite overwhelming support for regulatory reform from all sides – including providers, facilities, patients, and policymakers – all of whom agree that paving the way for providers to participate in payment models where physicians and facilities can share financial rewards for delivering lower cost and higher-quality care, no permanent changes have yet to be made.  And so, the old “analog” rules remain in place.

Earlier this week, more than 70 members of Congress wrote to HHS and the White House Office of Management and Budget (OMB) asking them to “finalize already” (not a direct quote) the proposed Stark and AKS rule changes in order to allow for increased coordination and improved care for patients.  In response, the next day CMS issued its notice indicating that final updates to the Stark regulations would not be issued until August 2021.  Though there is no official word yet regarding timing of finalizing changes to AKS regulations, it seems likely that those efforts will be delayed as well, as the proposed Stark and AKS rule changes were proposed in tandem and in many ways are interrelated. 

We recognize that the COVID crisis necessarily delayed these processes and understand that regulators are still “working through the complexities of the issues.”  We also appreciate that regulators can exercise enforcement discretion in certain situations.  But such discretion can only go so far, and without actual, meaningful regulatory reform, providers will remain discouraged from fully and whole-heartedly pursuing value and quality-based care delivery and payment arrangements, and the costs associated with vetting innovative arrangements for compliance with antiquated regulations will continue to be incurred.  And ultimately it is patients who will suffer without fully coordinated care, and taxpayers who will bear the costs of our increasingly inefficient systems. 

We will of course continue to monitor the landscape and provide updates as soon as they are available.  But unfortunately, our hopes for regulatory reform anytime soon are fast-fading.