Medtech POV Blog

Just the Beginning: Anti-Kickback Statute Reforms to Advance Value-Based Care

  1. Christopher L. White General Counsel & Chief Policy Officer

Earlier this month, as part of its Regulatory Sprint to Coordinated Care, the Department of Health and Human Services (HHS) published highly anticipated final rules to modernize and reform the regulations that interpret the federal Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark Law).  Like so many other health attorneys, I have been poring over the details of the lengthy and complex HHS rules to assess the impact on the medtech industry. 

A product of close coordination between the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS); input from the greatest legal minds across industries; and bipartisan support, these final rules represent sensiblehistoric changes to an outdated framework and a starting point for delivering on the agency’s promise to “provide greater flexibility for healthcare providers to participate in value-based arrangements and to provide coordinated care for patients[, and] . . . ease unnecessary compliance burden[s] . . ., while maintaining strong safeguards to protect patients and programs from fraud and abuse.”

Changes to the AKS Safe Harbors

The changes are expansive, encompassing (i) three new “tiered” AKS safe harbors that offer increasing flexibility with increasing financial risk for innovative value-based health care arrangements, (ii) a new AKS safe harbor for the donation of cybersecurity technology and services, (iii) three additional new AKS safe harbors, including one related to patient engagement tools and supports, and (iv) a number of changes intended to ease compliance with existing AKS safe harbors, including new protection for certain outcomes-based payments and part-time arrangements under the modified AKS safe harbor for personal services and management contracts.

Notably, in the AKS final rule, OIG chose to list entities ineligible to use each value-based safe harbor, including (i) pharmaceutical manufacturers, distributors, and wholesalers, (ii) pharmacy benefit managers, (iii) laboratory companies, (iv) pharmacies that primarily compound drugs or primarily dispense compounded drugs, (v) manufacturers of devices or medical supplies, (vi) entities or individuals that sell or rent durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), and (vii) medical device distributors and wholesalers. Importantly, OIG carved out a special pathway for medical device manufacturers and DMEPOS companies to participate as “limited technology participants” in protected care coordination arrangements that involve digital health technology, provided that certain enumerated requirements are met. Similarly, OIG created a separate pathway for certain medical device manufacturers to use the patient engagement and support safe harbor.

Reflection on the Changes to the AKS and the Stark Law

Given that medtech companies are on the front lines of care coordination and management –indeed, the crucial role currently played by medtech innovators in the fight against COVID-19 has only made this more readily apparent— the fact that device and DMEPOS manufacturers cannot use all of the new value-based safe harbors or the new outcomes-based payments safe harbor is disappointing. Nevertheless, there are many “wins” to glean from the value-based final rules that would not have been possible without the brilliant work of AdvaMed’s members—wins for America’s patients and caregivers who experience firsthand the powerful lifesaving and life enhancing solutions innovative medtech delivers everyday.

This result would not have been possible without the numerous real-life examples provided by our members demonstrating how medtech manufacturers are health technology companies, which OIG and CMS described in the proposed rules as integral to value-based health care.

For all the above reasons and more, I’m immensely proud of the progress that AdvaMed’s members have accomplished to date, and I remain awed by tremendous potential of medtech innovation and optimistic about the potential for continued progress.

Looking Ahead to Continued Reform

As President-elect Biden maps out his health care policy agenda, additional reforms to the AKS should be at the top of the list. Technology, data analytics and innovation advance at unprecedented rates and medtech companies are uniquely positioned to partner with providers to achieve the full potential of value-based health care. Medtech should be fully included in the new value-based framework.  America’s patients deserve no less.

This is just the beginning.

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