In a coordinated effort, on November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) published final rules to modernize regulations implementing the federal physician-self-referral law, commonly referred to as the “Stark Law” (Stark), the federal Anti-Kickback Statute (AKS), and the beneficiary inducement provisions of the Civil Monetary Penalties Law (CMP Law). Together, the final rules implement a framework to support transitions to value-based payment models and promote improvements in technology infrastructure. Perhaps most notable, however, are the strides CMS has taken toward adding flexibility and attempting to clarify the Stark regulations.

On the same day, in an effort to increase transparency in drug pricing and lower those prices, the OIG separately released a final rule to alter the way prescription drug discounts are handled and to protect certain drug-manufacturer payments to pharmacy benefit managers (PBMs).

Although the regulations remain complex, the healthcare industry should be pleased with the new flexibilities to support innovation, the avenues to protect financial relationships with referral sources, and the clarifications to help fend off frivolous whistleblower lawsuits.

The changes in the Final Rules include:

  • New Value-Based Exceptions and Safe Harbors
  • Enabling Technology Infrastructure Improvements
  • Modernizing Stark and AKS: New Rules, Definitions, and Clarifications
  • AKS: Pharmaceutical Rebates and PBM Service Fees

Redline documents showing the final textual changes to the current Stark regulations are available here and to the AKS regulations are available here. The final rules published in the Federal Register are available here (final Stark rule), here (AKS) and here (AKS Pharma) (collectively, final AKS rules).

The Stark and AKS final rules aimed at modernization, clarification, and establishment of value-based arrangements are effective January 19, 2021, with one exception. The changes to the Stark group practice regulations at 42 CFR § 411.352(i) regarding the distribution of profits related to participation in a value-based enterprise will be effective January 1, 2022. The changes promulgated in the second final AKS rule, related to eliminating pharmaceutical rebates from the AKS discount safe harbor and creating new AKS safe harbors for pharmaceutical point-of-sale price reductions and PBM service fees, also become effective January 1, 2022. The delayed effective dates are in recognition that the industry may need additional time to comply with these new rules.

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