AHLA's Speaking of Health Law

Expert Insights - The Stark Reality

August 16, 2019
AHLA's Speaking of Health Law
Expert Insights - The Stark Reality
Chapters
AHLA's Speaking of Health Law
Expert Insights - The Stark Reality
Aug 16, 2019
AHLA Experts
AHLA experts take a deeper dive into legal developments affecting the health care industry.
Show Notes Transcript

Melissa Scott, Senior Managing Director with GlassRatner's health care industry group, speaks to Julie Kass, Baker Donelson Bearman Caldwell & Berkowitz PC, and David Matyas, Epstein Becker & Green PC, about their presentation at AHLA's 2019 Annual Meeting in Boston discussing the forthcoming Stark reforms and other Stark-related issues.  Sponsored by GlassRatner.



MS:
0:00
Hello, I'm Melissa Scott, Senior Managing Director with GlassRatner's Health Care Industry Group. As part of AHLA's Expert Insights podcast series, I am here with Julie Kass and David Matyas at AHLA's Annual Meeting in Boston. They're presenting a session entitled, "The Stark Reality: the Past, the Present, and the Future of the Stark Law." Julie and David, I'm excited to talk to you about this hot topic. Tell us a little bit about yourselves and your practice.
DM:
0:26
Melissa, thank you very much, and I want to thank GlassRatner for sponsoring this podcast. I have been practicing health law for a little over 25 years. My practice is focused on fraud and abuse issues and health regulatory compliance. I work with clients generally in three ways. First, I educate clients on the health regulatory laws that impact the manner with which they conduct their business. Second, I defend clients who are subject to a government investigation. And third, I counsel private equity and other investors in health care to try and understand the regulatory landmines relevant to that particular segment of health care and the particular segments of that company.
MS:
1:07
Excellent.
JK:
1:08
And I'm Julie. My practice is similar to David's. I've been practicing for about the same length of time. I do concentrate my practice in the Stark, Kickback, and False Claims Act work, trying to help clients on the front end structure things so that they meet and comply with all of the various regulatory requirements. If the government takes a different view, we help them with those investigations. And we also help clients who have found things out themselves that they think may or may not be compliant with the laws and helping them determine whether they need to self-disclose or how they should handle that, in making sure that they're running a compliant organization.
MS:
1:48
Very good. What's the one thing from your session that you would like attendees to take away?
JK:
1:58
So I think with the Stark Law, because we're talking about the reality: past, present, future. Right now, we're dealing with the Stark Law as it is. I think people are looking forward to a Stark Law that allows more coordination between providers, and coordination really does lead to financial relationships - and the Stark Law has a lot of impact because that's what it's dealing with - financial relationships between providers, and I think one of the overarching pieces of what we're talking about is we can look at cases and see what is going on in cases today, which is looking at the Stark Law the way it is - but how can it be changed in the future to really allow folks to take advantage of the coordination? But looking at that through a lens where this payment system is still very much based in fee-for-service medicine rather than value-based medicine. And so that sort of overarches everything that's going on and really shows why things may not be changing as rapidly as people would want to see it.
DM:
2:53
So I want people to walk away with this small little thing, which is "don't give Stark advice on the fly." I do a disproportionate amount of my work for the last 20 plus years in Stark law. And anyone who asked me off the cuff what my answer is, I always caveat, "but I need to go back to the statute, the regulations, and the regulatory guidance" because there's so much innuendo in the preamble. CMS on occasion has flip flopped between what they said was okay one year and then four years later they're like, "well we don't really think that's okay" and my memory isn't good enough. I have to go back to the actual resources and double check and triple check myself that what I'm saying and thinking is actually right and it's only one statute. It's one set of regulations, but there's numerous sets of preambles out there, and I like to remind people: "always go back to the resources."
MS:
3:53
Sure. I think the one constant we have in health care is change, right?
DM:
3:55
Yes.
JK:
3:55
They change, but I don't actually think that Stark is going away no matter what they do in the future. There will still be some version of a Stark law for all of us to work on.
MS:
4:05
Are there any particularly noteworthy cases or settlements related to the Stark law over the past year that you want to reflect upon?
DM:
4:10
So in 2018 there was one settlement that I thought was important, which was on Hancock Hospital. That was a settlement for a little over $20 million, and that was one where the government declined to intervene. There was a time when if the government declined, most of the cases would disappear; if the government declined, maybe there would still be a settlement because of the nuisance value associated with it. So it would be a six-figure settlement. This was the government declining when there still was an eight-figure settlement. So to me, again, it was a Stark and Anti-Kickback case, dealing with physician financial relationships. That was important. But to me still in this day and age, the fact that the settlement was that high in a matter that the government declined, I thought it was important.
JK:
4:59
And I think that part of that was it went all the way to the court. There were two arrangements that were actually looked at by the court and there was going to be a settlement, well, there was going to be a verdict on those two. If you looked at all of the arrangements because there were much more than two, it could have been an astronomical number. And I think what's interesting is while the government declined to intervene, you still got this very large number, but you also had the government coming back in and helping to ultimately negotiate a settlement that got rid of the whole complaint and all of the arrangements. And so I think it's a balance. David is absolutely right. You wouldn't normally see a declined case with such a high settlement. I do think that the government, it sounds like came in and tried to help what could have been a much higher settlement. But I think the takeaway there is just because the government is declining a case doesn't mean it's gone away, which in the past it may.
MS:
5:56
Julie, you touched on some of the Stark law implications, moving from a fee-for-service to a value-based care payment model. How do you think the Stark law stands in the way of the shift to value-based payment?
JK:
6:08
Well, I'll start. I do think that when you're looking at the Stark law, everything has a financial relationship, and lots of coordination of care models in order to bundle payment, in order to get patients moved from one provider to another, there's a lot of financial arrangements that go along. Not all of them can meet very clearly the Stark tests. You can sort of put a square peg into a round hole by looking at a personal services exception. But as most people know, those exceptions require you not to pay based on the volume or value of referrals and pay something that's commercially reasonable, and pay something that's fair market value. And when you're dealing with these kinds of arrangements where maybe you're not looking at paying for a particular service but want to emphasize keeping patients out of the hospital or pay them for less readmission rates, it's hard to say, "what is the volume or value or are you paying for that? What is the fair market value?" How do you decide that when it's not a very easy service arrangement and you're not paying on the amount per hour that someone's working on? So all of those things, every time you look at one of these arrangements you can't, you have to stop and it's somewhat of a stumbling block. And are you comfortable saying in this coordination of care life that we're living in that it does meet a volume or value? Ask evaluators. They sort of can come up with some things, but it would be much easier to tell our clients, "in these kinds of models you can look at this a different way."
DM:
7:41
Yeah, I completely agree with Julie, from the notion this is a statute and regs that are based upon a fee-for-service world and when you go outside of fee-for-service world - and where I will give the OIG and CMS on the Stark law side credit - is you can't necessarily come up with exceptions that have 10 requirements in a non-fee-for-service world that will apply to non-fee-for-service kinds of things. It's, it's just instead of, again, I don't like all of the requirements that some of the exceptions currently provide, but it's straightforward. You do this, this, and this because it's in a fee-for-service world. But if you're talking about something that's completely different, and what they did do, at least on the Medicare shared savings program side, was to say, "in this world, it doesn't apply." Now, did they go far enough? No. Do they need to go further? Yes. But we have to change the mindset as to "does Stark apply or are we trying to find exactly that, you know, square peg, square hole in order to make it fit." It's going to be really hard with, with the statute that was based upon a presumption of overutilization.
MS:
8:55
So the big question in everybody's mind is when will CMS issue its Stark law regulatory reform proposal? Do you have any sense of when that might be?
JK:
9:02
Well, they just went to the Office of Management and Budget on June 5. They have at least 90 days to look at it. They could come sooner, they could come later. If you listen to the folks from CMS, they're still working and going back and forth. And even if the 90 days hits, which is what OMB is generally given in order to release a rule, that doesn't mean if they haven't come out that it's just yes, that OMB can still keep a rule for longer than 90 days. So it could be quite a while until the proposed rule comes out and then we'll see what the proposal is. And then of course everyone gets to comment and then you'll get a final rule. So until we get a final rule, it will be quite some time.
MS:
9:46
What are some of the reforms you expect to see in the proposal?
DM:
9:51
Well, because I lost my Tarot cards and I am not able to foresee into the future, I don't know. I'm not sure what's really going to be included in there. I'm hoping - because knowing who the regulators are right now - that they're going to try to promote the idea of "it's a different kind of world. It's a different type of payment structure." We need to create different definitions, different notions of what alternative payment models basically are - and if you need that, then you need not even think about the Stark law. But I don't know if they're going to be able to get there. There's, again, they're the career employees at CMS who've been working on this a long time and they know what they're doing and saying. There's people who are appointed. There's an administration. It's just not clear to me what will, what step one will take. And then before we get it, there's going to be eight more steps that it has to go through.
MS:
10:49
How far can regulatory reform go to remove the barriers that the Stark law creates dividing these different arrangements?
JK:
10:56
I think there's probably a lot of things that they can do. A lot of the interpretations of what the statute says have been by regulations, and so I think in those cases, CMS can have a lot of influence and impact. Certain things I think probably do need to be done by Congressional mandate and changes to the legislation. But I think that there is a lot of room for CMS to make a big impact just by some regulatory changes.
DM:
11:21
And I'd agree, just as lawyers, I'm putting the words on it, there's a lot that they can do. It's not necessarily clear what they will do or will be allowed to do. I agree - in the past there have been administrations, there have been leaders who have said, "our hands are tied. We can't do any more without legislative change." And if you look at it very strictly, you can say that that's correct, but there can be ways to do it. And it's just a matter of who's looking at it at, at what time, and what their insight is as to how the system is changed.
JK:
12:04
And I think in this administration, where lots of things are being done by executive order, not even regulations, that there's probably more likelihood to, if it's going in the direction that they'd like to see it, probably more flexibility to change things to regulations than it might've been in different administrations.
MS:
12:25
So it sounds like you both feel like that momentum is going to continue.
JK:
12:28
Absolutely.
DM:
12:29
Yes.
JK:
12:33
I do think if changes are not made and business is still struggling that you'll still see Congress getting involved to make changes to other things that might not have been taken care of with CMS and the regulations.
DM:
12:47
And I agree in the notion that I think Congress is constantly going to be challenged with looking at it. There's too much special interest involved. We still, you know, Julie, how many times has Congress debated physician ownership in hospitals and created, you know, moratorium, and then exceptions, and then exceptions to the exceptions. And, again, I make a living off of it, but sometimes it gets tiresome - like, didn't we do that 10 years ago - and evaluate that it's still gonna keep coming up.
MS:
13:20
Any other comments that either of you would like to add on this topic? Thank you both.
JK:
13:24
Thank you.
DM:
13:25
Thank you.
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