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Anti-Kickback Statute and Stark Law Regulations: Final Rules Issued

On November 20, 2020, the Department of Health and Human Services (HHS) published two final rules that aim to reduce regulatory barriers to care coordination and accelerate the transformation of the healthcare system to value-based care. The HHS Office of Inspector General (OIG) issued the final rule “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements,” and the Centers for Medicare and Medicaid Services (CMS) issued the final rule “Modernizing and Clarifying the Physician Self-Referral Regulations.” The regulations are effective on January 19, 2021.*

Both final rules are extensive and we plan to provide further analysis on different sections.  Here, we examine one of the three new safe harbors for value-based arrangements under the Anti-Kickback Statute.  

New Safe Harbor Under Anti-Kickback Statute: Care Coordination Arrangements 

Previously, the Anti-Kickback Statute was seen as a potential regulatory barrier for health care providers wanting to engage in certain care coordination and value-based arrangements. The new care coordination safe harbor (42 CFR § 1001.952(ee)) is part of HHS’ Regulatory Sprint to Coordinated Careremoving potential regulatory barriers and allowing providers to engage with each other to improve quality, health outcomes, and efficiency. It protects only in-kind remuneration (non-monetary) and requires little or no assumption of risk.  [For those arrangements involving monetary remuneration, such as shared savings or performance bonus payments, the OIG designed new safe harbors for value-based arrangements with substantial assumption of risk.]  One exclusive aspect of the care coordination arrangements safe harbor is that it protects digital technology arrangements involving manufacturers of devices or medical supplies and durable medical equipment (DMEPOS) if certain requirements are met. The other new value-based safe harbors deem such entities ineligible for safe harbor protection. 

The new safe harbor offers health care providers an additional option under regulatory standards as they contemplate care coordination arrangements. Under the care coordination arrangements safe harbor, “remuneration” does not include the exchange of anything of value between a Value-Based Enterprise (definition provided below in the chart) and Value-Based Enterprise participant, or between Value-Based Enterprise participants, pursuant to a value-based arrangement if thirteen standards are met as follows:   

  1. In-kind remuneration being used predominantly to engage in value-based activities that are directly connected to the coordination and management of care for a target patient population 
  2. Commercial reasonableness 
  3. Terms set forth in writing and signed by the parties in advance;  
  4. Establishment of one or more legitimate outcomes or process measures;  
  5. Remuneration does not take into account the volume or value of referrals who are not part of the target patient population or business not covered under the value-based arrangement; 
  6. Recipient pays at least 15% of the offeror’s cost for the remuneration; 
  7. Does not limit a Value-Based Enterprise participant’s ability to make decisions in the best interest of its patients and does not direct or restrict referrals to a particular provider if a patient expresses a preference; 
  8. Exchange of remuneration by a limited technology participant and another Value-Based Enterprise participant or the Value-Based Enterprise must not be conditioned on any recipient’s exclusive use or minimum purchase of any item or service manufactured, distributed, or sold by the limited technology participant; 
  9. Monitoring and assessment to the Value-Based Enterprise’s accountable body or responsible person; 
  10.  Material deficiencies identified from the monitoring and assessment must be addressed within 60 days by either terminating the arrangement or a corrective action plan designed to remedy the deficiencies within 120 days; 
  11. The offeror does not and should not know that the remuneration is likely to be diverted, resold, or used by the recipient for an unlawful purpose; 
  12. Records retention period of at least 6 years for the Value-Based Enterprise or participant; and 
  13. Certain entities are ineligible such as a pharmaceutical manufacturerdistributor or wholesalerpharmacy benefit manager; laboratory company; pharmacy, but does allow a limited technology participant involving manufacturers of devices or medical supplies and DMEPOS. 

Embedded within the new safe harbor’s thirteen standards are the following terms and definitions specifically issued for the new value-based arrangement safe harbors. 

AKS Safe Harbor Term Definition 
Coordination and management of care (or coordinating and managing care) Means the deliberate organization of patient care activities and sharing of information between two or more VBE participants, one or more VBE participants and the VBE, or one or more VBE participants and patients, that is designed to achieve safer, more effective, or more efficient care to improve the health outcomes of the target patient population. 
Digital health technology  Means hardware, software, or services that electronically capture, transmit, aggregate, or analyze data and that are used for the purpose of coordinating and managing care; such term includes any internet or other connectivity service that is necessary and used to enable the operation of the item or service for that purpose. Limited technology participant 
Limited technology participant 

Means a VBE participant that exchanges digital health technology with another VBE participant or a VBE and that is:  

    • A manufacturer of a device or medical supply, but not including a manufacturer of a device or medical supply that was obligated under 42 CFR § 403.906 to report one or more ownership or investment interests held by a physician or an immediate family member during the preceding calendar year, or that reasonably anticipates that it will be obligated to report one or more ownership or investment interests held by a physician or an immediate family member during the present calendar year (for purposes of this paragraph, the terms “ownership or investment interest,” “physician,” and “immediate family member” have the same meaning as set forth in 42 CFR § 403.902); or  
    • An entity or individual that sells or rents durable medical equipment, prosthetics, orthotics, or supplies covered by a Federal health care program (other than a pharmacy or a physician, provider, or other entity that primarily furnishes services).
Manufacturer of a device or medical supply  Means an entity that meets the definition of applicable manufacturer in 42 CFR § 403.902 because it is engaged in the production, preparation, propagation, compounding, or conversion of a device or medical supply that meets the definition of covered drug, device, biological, or medical supply in 42 CFR § 403.902, but not including entities under common ownership with such entity. 
Target patient population 

Means an identified patient population selected by the VBE or its VBE participants using legitimate and verifiable criteria that:  

    1. Are set out in writing in advance of the commencement of the value-based arrangement; and  
    2. Further the value-based enterprise’s value-based purpose(s). 
Value-based activity 
    1. Means any of the following activities, provided that the activity is reasonably designed to achieve at least one value-based purpose of the value-based enterprise: 
      • The provision of an item or service; 
      • The taking of an action; or 
      • The refraining from taking an action; and 
    2. Does not include the making of a referral. 
Value-based arrangement 

Means an arrangement for the provision of at least one value-based activity for a target patient population to which the only parties are:  

    • The value-based enterprise and one or more of its VBE participants; or 
    • VBE participants in the same value-based enterprise. 
Value-based enterprise or VBE 

Means two or more VBE participants: 

    • Collaborating to achieve at least one value-based purpose; 
    • Each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise; 
    • That have an accountable body or person responsible for financial and operational oversight of the value-based enterprise; and 
    • That have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s). 
Value-based enterprise participant or VBE participant  Means an individual or entity that engages in at least one value-based activity as part of a value-based enterprise, other than a patient acting in their capacity as a patient. 
Value-based purpose 


    1. Coordinating and managing the care of a target patient population; Improving the quality of care for a target patient population; 
    2. Appropriately reducing the costs to or growth in expenditures of payors without reducing the quality of care for a target patient population; or 
    3. Transitioning from health care delivery and payment mechanisms based on the volume of items and services provided to mechanisms based on the quality of care and control of costs of care for a target patient population.  



*Except for the special rules on profit shares and productivity bonuses at section 411.352(i), which is effective January 1, 2022.

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