Revised Stark Law, Anti-Kickback Statute Rules Are Good News for Labs

Federal regulators wanted to incorporate common definitions into both sets of regulations

This is an excerpt of a 1,385-word article in the March 22, 2021 issue of  THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.

CEO SUMMARY: The Dark Report explains how changes to the Stark Law and Anti-Kickback Statute will benefit labs, according to attorneys representing clinical labs and pathology groups. They consider the new final rules to be helpful for clarifying how labs and other providers are to comply with these two laws. At the same time, federal regulators have yet to address the conflicting language in the EKRA statute.

COMPLIANCE BY CLINICAL LABORATORIES AND ANATOMIC PATHOLOGY GROUPS with the federal Anti-Kickback Statute and the Stark Law should be less confusing following the publication of a new final rule for each law last December. 

This is positive news for the clinical lab industry. Attorneys representing labs say these finalized changes to the Stark Law and the anti-kickback statute will give clinical laboratories more flexibility in routine business arrangements they make with physician practices.

“Not only do we now have some nice synergies between the Stark Law and Anti-Kickback Statute, but we also have new guidance in areas where well-meaning laboratories have gotten tripped up in the technicalities over the years. These new rules are really refreshing because I think they will help us get through some of those technical lapses,” said Jane Pine Wood, legal counsel for Bio-Reference Laboratories, when she spoke during the annual meeting of the American Clinical Laboratory Association (ACLA) on March 10 (held virtually).

Karen Lovitch, an attorney with Mintz, agreed. “This is a rare instance where the provider community really wants these changes to go into effect,” she said. “That doesn’t happen very often.”

Changes to these laws were first proposed on Oct. 9, 2019. The revisions were finalized Dec. 2, 2020, by both the Centers for Medicare and Medicaid Services (CMS) and the Health and Human Services Office of Inspector General (OIG) and became effective Jan. 19, 2021. CMS published the revised rules on the Stark Law while the OIG published rules on the Anti-Kickback Statute. (See TDR, “Feds Revise Stark Law, Anti-Kickback Statute,” Dec. 7, 2020.) 

When announcing the final rules, the federal Department of Health and Human Services (HHS) said that both the Stark Law and Anti-Kickback Statute rules seek to reduce the burden laboratories and other providers face when engaging in value-based or coordinated-care arrangements by lowering the barriers that labs face when contracting with health insurers and physician groups in care-coordination arrangements.

In recent years, the Medicare program has taken strong steps to encourage closer coordination of care across providers, as well as ensure different forms of reimbursement are based on the value delivered by providers. Federal officials recognized that the Stark Law and AKS, as currently written, were impeding progress in both areas. 

Strict Liability-Based Law

Because the Stark law is a strict liability-based statute and compliance with an exception is obligatory, clinical laboratory arrangements that comply with Stark are likely to also comply with AKS, explained Wood. The Stark law is also more complex, which is why most attorneys tend to focus on that first when analyzing arrangements for compliance.

In general, the Stark law prohibits the referral of certain designated health services—including clinical laboratory and anatomic pathology services—if there is any ownership or compensation relationship between the laboratory and the referring physician, and if the services are covered by the Medicare program. 

The AKS prohibits individuals and entities from a willful and knowing payment of remuneration—or anything of value—in exchange for patient referrals that are reimbursable by a federal healthcare program. 

One significant change to both the Stark Law and Anti-Kickback Statute is that CMS has now decoupled the two sets of regulations. Previously, many of the exceptions to the Stark Law also included a requirement that the arrangement also fall under a safe harbor in the AKS. CMS has now removed that requirement for most exceptions (but not for the fair market value exception).

But What About EKRA?

While recent changes to the Anti-Kickback Statute (AKS) may provide clinical laboratories with more flexibility in setting up routine business arrangements, there is no such flexibility under the Eliminating Kickbacks in Recovery Act (EKRA), which significantly restricts how lab sales and marketing representatives are paid.

EKRA, passed in 2018, creates criminal penalties for any individual who solicits or receives any remuneration for referring a patient to a recovery home, clinical treatment facility, or clinical laboratory, or pays or offers any remuneration to induce a referral. 

EKRA also prohibits payments made by an employer to an employee or independent contractor if that person’s payment is determined by or varies by the number of individuals referred, the number of tests or procedures performed, or the amount billed to or received from a payer. EKRA applies to arrangements reimbursed by all payers (including commercial and third-party payers), not just federal healthcare programs, as is the case under the AKS.

EKRA Is More Restrictive

EKRA is more restrictive than the AKS and actually prohibits certain compensation that is expressly permitted under the Anti-Kickback Statute, says Emily Johnson, an attorney with McDonald Hopkins.

“Specifically, AKS includes a safe harbor for bonafide employees that gives an employer wide discretion in how employees are paid, including permitting percentage-based compensation,” wrote Johnson in a special report, titled, “Getting Paid for COVID-19 Test Claims,” soon to be published by The Dark Report. “EKRA does not afford bonafide employees that same protection.”

Although the recent changes to the Stark Law and AKS provide more flexibility to clinical laboratories, there has been no similar guidance or flexibility issued with respect to EKRA, says Johnson.

Will the changes to the Stark Law and Anti-Kickback Statute make life easier for your lab? Please share your thoughts with us in the comments below.