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Addressing the Unintended Consequences of the Stark Law and Anti-Kickback Statute

October 12, 2016
2:27 pm

In the new era of healthcare in which value-based care is steadily pushing aside the fee-for-service model, outdated rules and regulations continue to hinder the progress of healthcare reform.  The Healthcare Leadership Council (HLC) has been focusing on what the barriers to innovation are and how the pathway can be cleared.  HLC’s National Dialogue for Healthcare Innovation (NDHI), a platform that builds consensus among the health industry, patient groups, government and academia on issues affecting healthcare progress, hosted a webinar discussing one area considered to be a barrier, the Stark Law and Anti-Kickback Statute.

The Stark Law and Anti-Kickback Statute have been detrimental to the development of alternative payment models.  There is agreement that updates are necessary in order for broader collaboration to occur among healthcare providers, without the fear of penalties.  This uncertain environment has caused many organizations to hesitate in moving forward, and is delaying the switch from fee-for-service to value based payments.  Stephanie Zaremba, of athenahealth, voiced concerns regarding this issue in a recent blog post.

NDHI released a report at the beginning of this year that offered up six viable solutions to transform healthcare, which included the Stark Law.  Also earlier this year, the Senate Finance Committee held a hearing to examine possible ways to modernize the law.  The interest and focus on this matter is growing, and HLC/NDHI will continue to engage with cross-sectoral stakeholders in developing recommendations.  Stay tuned for the whitepaper being released in the near future.

The full athenahealth blog post can be viewed below:


A healthcare law held together by duct tape

By Stephanie Zaremba | August 12, 2016 | Opinion

The drive to fix healthcare is full of big ideas — major overhauls of how physicians are paid, patients are insured, health information is documented, and care is coordinated.

But some of the most important fixes might come from focusing on less exciting details. For example: How outdated fraud and abuse laws are squeezing innovation from the system.

Imagine our existing healthcare laws as a building. Ideally, it is well constructed at the outset, regularly maintained, and remains useful for decades into the future.

But when a law becomes riddled with exceptions — and then with addendums to close the loopholes to the exceptions — its integrity starts to fail. Pretty soon, it’s dilapidated, having exceeded its useful life, held together with a complex web of duct tape and a door that only opens if you know exactly where to kick it.

Our fraud and abuse laws — specifically, the Stark Laws and Anti-Kickback Statute — were written in the era of fee-for-service. They were essential, at the time, to addressing the fundamentally misaligned incentives created by a payment system that rewards physicians for volume.

The basic premise of the laws is simple: A physician can’t receive a financial benefit for referring a patient to another care provider or prescribing a drug, treatment, etc. As patients, we want our providers recommending care based on what is best for our health, not best for their wallets.

But as we shift away from fee-for-service and toward value-based care, Stark and Anti-Kickback are not keeping up. We increasingly see behaviors that are desirable but technically prohibited, such as a hospital paying for the electronic health record used by community physicians. So over time, each law has been subject to a few dozen exceptions and hundreds of advisory opinions carving out specific acceptable behaviors.

Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program receive broad waivers to Stark and Anti-Kickback in recognition of the fact that these laws directly prohibit what is required for ACO success: sharing of costs, infrastructure, and savings.

The Department of Health and Human Services has set aggressive goals for tying payments to value, not volume, and our fraud and abuse laws must be reformed for those goals to be realized. Currently, physicians and hospitals are prohibited from a long list of desirable behaviors under a value-based model: advising patients on the selection of a high quality post-hospital care facility; providing patients with cab rides to appointments or scales to help monitor their weight between visits; and paying for the cost of exchanging patient information electronically, to name a few.

When physicians are financially incentivized to coordinate care, they need a legal framework that encourages innovation around how healthcare providers organize, share costs, exchange information, and engage across the broad continuum of care.

But instead of reform, to date the policy changes necessary to implement this shift are piled on top of a rickety foundation and, as a result, innovation suffers.

The good news is that members of Congress are looking at ways to address problems with the Stark Laws and Anti-Kickback Statute. As they dive in, policymakers need to recognize this crumbling building for what it is: Something that needs comprehensive rebuilding, not another round of patches.

Stephanie Zaremba is director of government and regulatory affairs for athenahealth.

Patients Need Both Innovation and Accountability

September 29, 2016
1:42 pm

Let’s begin this post by stipulating the concept behind the creation of the Center for Medicare and Medicaid Innovation (CMMI) is both sound and important.

CMMI was created as part of the Affordable Care Act to test new payment and delivery mechanisms that have the potential to improve patient care while containing costs.  Given the healthcare system’s current movement toward value-based care, and the need to strengthen Medicare’s financial sustainability, having a CMMI to serve as a testing center for new ideas makes sense.

However, as the op-ed below by former Congressional Budget Office director Dan Crippen points out, CMMI has taken actions that go beyond the scope of what anyone would define as a limited demonstration project.  As Mr. Crippen writes, referring to a project affecting payment for drugs administered in a physician’s office, “Untested payment changes for Medicare benefits, especially when mandatory and applied to tens of millions of recipients, should receive much more consideration than a brief comment period before the initiation of the new policy.”

This is an issue about which we’re going to hear a great deal more in the weeks and months ahead.  The Medicare and Medicaid programs, and the millions of Americans they serve, need innovation to bring about care that is both high-quality and cost-efficient, but there also need to be built-in accountability guardrails having to do with the scope of projects and the transparency of decision-making.

Mr. Crippen is absolutely right in describing Patrick Conway, who heads CMMI, as a conscientious, effective public servant.  We look forward to working with him and elected lawmakers in Congress to assure that CMMI fulfills its intended mission in improving healthcare for current and future generations.

Here is the Dan Crippen op-ed:

I have the utmost respect for Patrick Conway, who heads the Center for Medicare and Medicaid Innovation at CMS, the federal agency that runs Medicare and Medicaid. Conway, like thousands of others in and out of government, is looking for ways to improve the health care of our nation.

However, action taken in the closing days of an administration, especially if it supersedes congressional authority and oversight, needs to be carefully examined. Last week, the House Budget Committee held a hearing taking a closer look at this with regard to CMMI and how the Congressional Budget Office evaluates costs associated with it, putting the CBO squarely in the middle of the struggle between the branches.

As recent proposals by CMMI to alter Medicare payments highlight, there are serious problems with the expansive reading of CMMI’s statutory authority. And the result is a significant shift of power from Congress to the executive branch.

The Affordable Care Act, which created CMMI, authorized CMMI to conduct demonstration projects for any part of Medicare and some of Medicaid, with the goal of saving money and improving quality. To conduct these experiments, the ACA allows the Secretary of HHS to waive virtually any part of Medicare and exempt a limited but important number of Medicaid provisions (e.g. the requirement that state Medicaid programs pay actuarially sound rates for managed care).

If HHS determines that a demonstration produces savings (or does not increase costs) and preserves or increases quality, it can expand the policy through rulemaking to the entire Medicare or Medicaid population. The process does not require any congressional approval or assessment, or review of the claims of savings and quality by the CBO or the Government Accountability Office.

With this process, HHS/CMMI can alter benefits and potentially reduce access for beneficiaries, and expose the federal budget to financial risks based on estimates generated solely by the executive branch. Given the uncertainty in savings and the somewhat nebulous definitions of quality in some of these demonstrations, it is not difficult to imagine that the use of this process could vary dramatically with changes of administration.

In a recent example, CMMI has proposed to change the Medicare payment system for drugs that treat diseases such as cancer and rheumatoid arthritis, which are administered in a doctor’s office. The new payments would go into effect on a mandatory basis in roughly half the country, but Medicare payments would be left unchanged in the other half. Payments, benefits, and potentially access to care, would depend on where the Medicare beneficiary lived. This approach is a nationwide policy experiment introduced unilaterally by the executive.

There are many reasons this new policy, and others like it, should receive congressional review before implementation. Untested payment changes for Medicare benefits, especially when mandatory and applied to tens of millions of recipients, should receive much more consideration than a brief public comment period before the initiation of the new policy. Whatever the good intentions, a major and mandatory change in payment is not something (most of) Congress contemplated.  In fact, many members of Congress have publicly expressed concern to HHS regarding this proposal.

To compound the problem, congressional budgetary rules generally impose a “pay-as-you-go” requirement. Since HHS claims the new policy will save money, any legislation to delay or modify CMMI’s proposals would likely be scored by CBO as lost future savings. Therefore, legislation to limit the experiment would have to be offset by cutting spending or raising revenues by an equal amount. Congress would be forced to “pay for” the delay or repeal of untested policy created by the executive branch.

As a former director of the CBO, I know firsthand how difficult it can be to estimate the impacts of regulatory changes. The assessment of new regulations (and scoring of legislation affecting them) is especially difficult — the effects are necessarily prospective and somewhat speculative. As CBO said last year:

(CBO) … expects that only a few (CMMI) models … will reduce program spending. However, CBO cannot predict which models will succeed, and CMMI has not operated long enough to determine its overall track record.

Given this shift in balance of power between the two branches, and the difficulty in measuring the true cost savings from any particular CMMI experiment, Congress should not set precedent by attempting to legislatively offset the cost of delay or repeal of any CMMI proposal, particularly if it has not gone into effect and there is no track record.

Having worked both in the Congress and the White House, I understand the frustrations and tensions between the congressional and executive branches. And at the end of an administration, which I also experienced, there is always unfinished business. As a member of the team that reviewed end-of-term proposals, I can confidently say this CMMI proposal is not one we would have approved. With limited ability for oversight under this framework, Congress should exercise its authority and halt this experiment until it can properly consider the effects of the proposed policy.

The Challenge of Assessing Value in a Value-Based Healthcare System

September 21, 2016
5:56 pm

The Healthcare Leadership Council released its National Dialogue for Healthcare Innovation (NDHI) policy recommendations earlier this year. One of the core policy reforms we advocate involves concrete steps to speed the process by which new treatments and therapies receive federal approval and become accessible to patients and physicians.

However, just as important as accelerating the approval process is ensuring that patients have access to these treatments once they become available. HLC is pleased to cosponsor an upcoming event that will look at factors that could have a profound effect on patient access to care and health system value.

The National Pharmaceutical Council is hosting a conference in Washington, D.C., on September 29 that will be dedicated to the issue of value assessment frameworks. These frameworks are being developed by various organizations to evaluate new biopharmaceutical treatments and medical technologies and determine if they add value to the health system or, conversely, if they simply add excessive costs without a commensurate improvement in patient health. These initiatives are intended to ultimately have an impact on coverage and reimbursement decisions.

HLC strongly advocates the health system’s transition from fee-for-service to pay-for-value, but we have also insisted that cost containment must be balanced with improved care quality. The development of value assessment frameworks will have a significant impact on maintaining this balance. We look forward to the September 29 forum at which these issues will be discussed in detail.

Let the Public Option Rest in Peace

August 24, 2016
12:40 pm

Most will remember that one of the most spirited debates during congressional consideration of the Affordable Care Act, back in the early days of the Obama administration, concerned the proposed creation of a government-run health insurance plan that would compete alongside private plans in the new insurance exchanges.  Lawmakers rightly rejected the idea, arguing that it would create a degree of federal involvement in health insurance far exceeding the comfort level of moderates and conservatives, create an uneven and potentially destabilizing playing field in the health coverage marketplace, and cause a displacement of employer-based insurance as a result of federally-set, artificially-low premiums and deductibles.

Even HHS Secretary Kathleen Sebelius said, at the time, that the public option was not “an essential element for reform.”

As we’re witnessing the health insurance exchanges facing some well-publicized difficulties today, we’re hearing more calls from candidates and interest groups to bring back the public option.

We need to give those calls a deaf ear.

No doubt, the next Congress and administration will need to address the state of the Obamacare exchanges, making the right policy decisions to enable health plans to compete without absorbing unsustainable losses.  Forcing those plans to compete with a taxpayer-subsidized insurance alternative will only bring less stability, not more.

And just as important to the long-term sustainability of our healthcare system and accessibility to care for a growing number of patients, the public option is detrimental to physicians and hospitals.  A government-run plan that reimburses for services at Medicare rates will “disrupt the fragile financial system that sustains hospitals today.”

The quotation in the previous paragraph came from a letter jointly written this summer by the American Hospital Association and the Federation of American Hospitals.  Their letter points out that Medicare is paying less than the actual cost of care being delivered to patients.  They note, “adding millions more enrollees whose health care would be reimbursed at Medicare rates would likely threaten access to needed health care services, particularly for those in vulnerable communities.”

They added, “We continue to believe the framework of health care exchanges providing subsidized coverage, combined with expansion of the Medicaid program, was the best means of achieving universal coverage.  The addition of a public option at this time would only introduce greater uncertainty to a health care system that is experiencing rapid transformation.”

We agree.  Let’s strengthen the health insurance exchanges and leave the public option as an interesting chapter in the history of healthcare policy debates.

Campaigns, Honesty and the Future of Medicare

August 17, 2016
10:20 am

It’s like a bad rerun, but one with real consequences.  Every two years, some political candidates and the interest groups that support them decide the best way to boost their share of the 65-and-older vote is to scare these seniors into believing that the candidate on the other side is going to place their Medicare program in grave danger.  This tactic is obviously successful or candidates wouldn’t keep doing it, but its effectiveness doesn’t make it right.

There is no reasonable disagreement that the Medicare status quo is not sustainable.  The Medicare Board of Trustees, in its most recent actuarial projection, said the program will become insolvent in 2028.  We need to discuss solutions to strengthen Medicare.  Campaigns are traditionally the platform through which new ideas can be submitted for public debate and consideration.  That’s not happening, though, when opportunistic groups portray any reform ideas as a weapon that will obliterate grandma’s healthcare.

This is happening already in the 2016 campaign.  In New Hampshire, for example, Senator Kelly Ayotte (R-NH) is being falsely accused by a national labor union of advocating reforms that will cost seniors thousands of dollars.  This isn’t true, and an op-ed I wrote on the subject was published today in the Manchester Union Leader.  I’m sharing it with you below.

Those of us who realize the need for sensible, essential Medicare reform need to speak out against these exercises in political misinformation.  The stakes are high and we need to fight their version of Mediscare horror fiction with the facts.   Here is the text of the Union Leader op-ed:

One of the most tried and true campaign strategies, utilized for decades now, is to scare senior citizens to the polls by convincing them that their Medicare and Social Security are being threatened. Politicians and their allies keep doing this, regardless of the tactic’s moral and ethical implications, because it works. Medicare is such an important lifeline to seniors, they naturally respond if they think they’re about to lose it, or if they believe their care will start costing them more money.

New Hampshire voters are the current targets for Medicare scare tactics. The American Federation of State, County and Municipal Employees labor union (AFSCME) has been airing television ads showing a woman caring for an elderly relative and saying that Sen. Kelly Ayotte wants to turn Medicare into a “voucher program, costing us thousands.” It’s a well-produced piece of television that would give any Medicare beneficiary or caregiver, not armed with facts, reason for concern.

Here’s the problem. This ad specifically, and most of those in its genre, rely on gross distortions and, in many cases, outright untruths to frighten the bejeebers out of its target audience. And people and organizations dedicated to building a stronger Medicare program deplore campaign propaganda like this because it makes it all the more difficult to take action to save a program that has a very short solvency timeframe.

New Hampshire voters should be clear on one thing. Nobody in Congress has proposed changes to Medicare that will cost them thousands of dollars. In fact, just the opposite is true. The nonpartisan Congressional Budget Office has said that the reforms advocated by Sen. Ayotte, and others from both parties, would actually save most seniors money on their Medicare out-of-pocket costs.

When groups like AFSCME use scary terms like “voucher program,” they are actually referring to giving seniors greater power of consumer choice to have the kind of health coverage that meets their specific needs. This works well, for example, in the Medicare Part D prescription drug program, in which seniors choose from among various plans with different premium costs and coverage levels. A recent national survey showed the Part D program enjoying an 88 percent approval rating among its enrollees. And the Medicare Advantage program, which has seen a significant rise in beneficiary participation, also allows seniors a choice of plans that are competing to offer the best value.

Consumer choice is not as ominous a phrase, however, as voucher program.

The larger problem here lies in the fact that campaigns set the stage for future policy making. To advocate no changes to Medicare is tantamount to supporting its demise. Medicare’s actuaries reported this year that the program will become financially insolvent in 2030. AFSCME and others that want to punish proponents of Medicare reforms are essentially saying they’re fine with future generations, and even today’s middle-aged workers, being out of luck when they reach 65 and expect Medicare coverage.

New Hampshire voters, and all of us in this country, for that matter, deserve more honesty and more responsibility in the way campaign rhetoric is carried out. We need a forthright, candid national discussion on the future of Medicare without falsely accusing Kelly Ayotte and others of wanting to bankrupt someone’s grandmother. Even if it has historically worked to scare seniors to the polls, it has never been the right thing to do.