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Trump Administration Eyes Lifting Health Kickback Curbs

Aug. 24, 2018, 7:54 PM

Members of the health-care industry have told the government “there are a lot of places where they feel chilled from coordinating with each other” to improve care, the No. 2 official in the Department of Health and Human Services told Bloomberg Law.

Eric Hargan, the deputy HHS secretary, described Aug. 24 the latest effort by the Trump administration to get input on changing the health-care regulatory landscape. Stakeholders have told the HHS that the Stark law on physician referrals--named after its congressional sponsor--and the anti-kickback statute have presented barriers to care innovation.

As part of its work, the Trump administration wants to remove the presumption that giving a provider something means a medical product manufacturer or other provider is trying to buy business from them, Hargan said.

The HHS inspector general’s office issued a request for information for public comments Aug. 24, asking how the department can foster care coordination by modifying or adding safe harbors to the anti-kickback statute. This is part of a larger trend from the administration toward value-based care.

The anti-kickback statute is a law that prohibits payments for recommending products or services to patients covered by Medicare or Medicaid. The law is meant to protect against fraud and abuse, but medical device companies see it as potentially preventing them from arrangements to coordinate better care for patients. Safe harbors are conduct the government specifically says will not violate an already existing law.

Comments are due Oct 26 on the latest RFI (RIN 0936-AA10), which is set for Aug. 27 Federal Register publication. This request for information follows RFIs from the administration on topics including the Stark law.

Share Risk, Benefit

The RFI is aimed at “finding ways to allow health-care providers to collaborate and share risk and benefit if they can produce better health outcomes without facing kickback risk,” Thomas Bulleit, a health-care attorney at Ropes & Gray, told Bloomberg Law Aug. 24.

Hargan said he has seen a lot of enthusiasm from the HHS staff about these RFIs and that it is reflective of where the staff has wanted to make changes to these laws.

Value-based care is a “focus on outcomes as opposed to procedures,” Hargan said. It avoids the tendency to focus on process and procedures.

Hargan said he didn’t believe changes to the anti-kickback restrictions would raise serious budget implications, but that the department wouldn’t be calling on the government to pay for them.

Coordinated Care Initiative

The RFIs on kickbacks and the Stark law—for which comments are due Aug. 24—are the “first of a regulatory sprint to coordinated care,” which will also involve the Office for Civil Rights and the Substance Abuse and Mental Health Services Administration, Hargan said.

The HHS has asked four agencies—the Centers for Medicare & Medicaid Services, the inspector general’s office, the civil rights office, and SAMHSA—to put out RFIs on things that stand in the way of coordinated care. The OCR will ask for information on potential changes to the Health Insurance Portability and Accountability Act, and SAMHSA will ask for information on potential changes to the Confidentiality of Substance Use Disorder Patient Records regulations.

Hargan said the CMS already has gotten a lot of input on the Stark law RFI.

A rule about removing safe harbor protections for pharmacy benefit managers, currently under review by the Office of Management and Budget, is part of a separate initiative from the RFIs, Hargan said.

Still Preventing Fraud

“The issue has been how to make the changes narrow enough to promote better health outcomes without facilitating … payments for referrals,” Bulleit said.

Modifications to the anti-kickback statute could allow drug or device makers to make their prices contingent on patient outcomes, such as re-hospitalizations, Bulleit said.

A potential safeguard against paying for referrals could be asking device or drug manufactures to accept financial risk for patient outcomes, attorney Troy Barsky with Crowell & Moring told Bloomberg Law. The RFI specifically asked about that, and it follows the Medicare agency’s push for sharing in financial risk in the most recent Medicare Shared Savings Proposal rule.

—With assistance from Jacquie Lee

To contact the reporter on this story: Shira Stein in Washington at

To contact the editor responsible for this story: Brian Broderick at