HHS Deputy Secretary Eric Hargan speaks to AHLA CEO David Cade about the newly unveiled Stark and Anti-Kickback Statute final regulations. Hargan discusses the broad goals of the reforms and how they fit into the agency’s ongoing efforts to advance value-based care and reduce regulatory burdens that impede care coordination. The podcast describes how the final rules will benefit providers and patients into the future and result in better care outcomes. Sponsored by JTaylor.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
HHS Deputy Secretary Eric Hargan speaks to AHLA CEO David Cade about the newly unveiled Stark and Anti-Kickback Statute final regulations. Hargan discusses the broad goals of the reforms and how they fit into the agency’s ongoing efforts to advance value-based care and reduce regulatory burdens that impede care coordination. The podcast describes how the final rules will benefit providers and patients into the future and result in better care outcomes. Sponsored by JTaylor.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Support for A H L A comes from j Taylor, a leading healthcare consulting firm, serving many of the nation's largest health systems, physician groups, ancillary providers, and private equity healthcare investors. They provide highly specialized transactional support through valuation, due diligence, quality of earnings, merger integration, managed care analytics, negotiation, and implementation. J Taylor's consultants have extensive knowledge and experience with valuation and fair market value analysis, and they understand that since every situation is unique, a one size fits all approach doesn't work. For more information, visit www.jtaylor.com.
Speaker 2:Hello, I am David Cade, c e o, the American Health Law Associate. Today we are happy to host Eric Hart, deputy Secretary of the US Department of Health and Human Services. Eric's also the Department Chief Regulatory Officer. Sir, welcome, Eric.
Speaker 3:Hey, good to be here. David,
Speaker 2:When we last spoke last Dr. October, you shared the administration's goals and what the draft stark and any kickback statute reforms to support coordinated and value-based care were designed to do.
Speaker 3:Mm-hmm.
Speaker 2:<affirmative>, now that the final rigs are out, please recap for our audience the problems that you were trying to solve and what you believe that you've accomplished.
Speaker 3:Well, David, uh, what we were trying to resolve was kind of a, a dilemma that has been, uh, sort of brewing for a while, which is that our system of healthcare has been trying to move towards a value-based system for some time, and has had gone forward in kind of fits and starts in some areas advancing very quickly and some areas not, and, and sort of moving out of the fee for service paradigm towards a value-based paradigm. But at the same time, we have outstanding existing regulations, uh, related to the physician self-referral statute or the Stark Law and the anti kickback statute that had really been seen as holding back the healthcare sector from moving forward and embracing value-based care, uh, completely. And so we looked at that as a, as a issue. This was a couple years ago, uh, as a, as a real issue that we needed to address. And so we got a couple of teams together, office Inspector General, and CMS that work through the two statutes in question to try to address the dilemma of how we transition to value-based care and allow there to be better patient care, uh, ultimately, uh, within the value-based paradigm, while still remaining faithful to the statutes that are, that are there to prevent abuses. So that was kind of the problem we were trying to solve. Um, and I believe that we have now established that platform as of a couple of weeks ago, we finalized the rules, and I think that we have accomplished to that, you know, there's, there's more to come because this isn't to dictate, this is actually a platform for providers, uh, uh, to, um, and healthcare sector more broadly, to use, uh, a way for them to comply with the statutes and still establish value-based arrangements and move towards value-based care.
Speaker 2:So it sounds like, um, a, it's a start and B, um, as you said, there were some barriers that you, you, you all had identified for some time and, you know, from the public, from the provider community. As you entered into this journey, uh, what were some of the most troublesome barriers that these changes seek to address?
Speaker 3:Yeah, well, one of them was the sort of broad issue of the sharing of when, when two entities say have share patients essentially. So say a hospital in a nursing home, both share patients who have dementia, for example. Um, and, you know, they, they wanna collaborate. Maybe the hospital wants to say they think it would be better if, say a, a dementia nurse, uh, with training in that area, uh, goes to the nursing home and follows the patients around or tries to train the nursing home staff on how to treat these patients. That would be a positive thing, but in many cases, you just can't do that unless the nursing home pays, you know, fair market value for the nurses' services or could be viewed as a kickback. So we saw these areas of, broadly speaking, the sharing of, of patients and information between two different systems that both had patients enrolled in their system, but couldn't really collaborate effectively, uh, without a, a real problematic, uh, establishment. No, not problematic necessarily, but kind of maybe lawyer involving, I know we're both lawyers<laugh>, we're both healthcare lawyers. Uh, but a lot of people would like to be able to do these collaborative arrangements without, um, necessarily, um, employing staffs of lawyers to be able to get these things across. In many cases, these collaborative arrangements just won't, uh, be able to be entered into if they have to be done in compliance with the current set of regulations. And we think that's been happening all along. Um, another thing that, uh, is a troublesome barriers, the fact that in many cases, particularly with the Stark Law, there had been definitions like fair market value or volume or value of referrals, things that hadn't been clearly set out. And we wanted to create clarity around these definitions. Um, the way I had put it is that we had, I think what was a welcome flexibility in the definitions at the beginning that's turned into a paralyzing vagueness that, you know, at the beginning people could say, oh, look, we've, we don't have a definition here. Let's innovate in this space, but not really. Over time, it became an area where people just avoided any, any potential problem here, especially given the fact that the fines, the strict liability that could be incurred by the star law or in the case where they view that there were problems that they were addressing. The kickback side, obviously criminal potential, criminal liability attached to that. So those were the barriers, probably the sharing of patients, the it, the inability to establish value-based arrangements, uh, easily between different, uh, parts of the healthcare sector, and then kind of some of the clarity around these things. And that's why the new safe harbor's under the ig and a lot of the clarity coming out of the Stark Law, uh, regulations, I think should be welcome.
Speaker 2:And so there's a, there's a theme I that, you know, I've picked up on in looking at the, at the regulation and the draft and, and in our prior conversations, and, you know, I I, I mean innovation is, is is no doubt a strong theme throughout the work that you all have done. Flexibility is a another strong one. Um, yep. Clarity comes in, uh, quality is another one. Um, and, and, and empowerment as I, I know, yes, you are. Right. Uh, we are both lawyers and we, we started, um, at least our affiliation in the department some years ago. Um, and, and, and one of the themes that you're touching on, and, and I just wanted to lift up that empowerment one, because the, the changes are designed to provide benefits to both the providers and the patient community. That's a hard thing to balance. And so can you describe for us some of those key changes that impact these two populations, the patient and the provider, and how you've actually balanced these so that there are not winners and losers, which is often the case when there's a tension between providers and patients, but that we actually have winners and winners both benefiting from the changes that you've pro that you've proposed.
Speaker 3:Yeah, I mean, I, I think that, for example, the provision for patient engagement tools is something where I think both providers and patients are, are going to win in this circumstance. So, for example, if, if a physician is, is allowed to give, say, a smart pillbox or an ear purifier or some other thing that allows the patient or patient engagement tool, some piece of medical technology that the patient is able to take back with them, uh, that empowers the patient. For example, if you have like a, uh, a, a, uh, digital device that, you know, allows you to, uh, check whether there's an ear infection that, you know, perhaps a mother would want to check with her or check her the ear infection remotely, rather than bringing the kid in every day or two to see whether the ear infection is cleared up, the doctor's able to kind of allow the parents to take one of those that can, that can really empower the patient, allows them to stay out. It allows the provider, the doctor to be able to not to be able to do somewhat more rapidly an analysis of these things and really get the patient well, uh, without having to go through a lot of the, the ways that we would have to do these things in the current circumstance providing, say, an air purifier to an asthmatic at home. Uh, there are lots of ways in which creatively people can think about these things. A smart pill box to allow patients to be able to do both the doctor to be able to monitor the, you know, the, obviously the patient's adherence to a pharmaceutical regimen and the, and the patient to be able to have something that's gonna help them at home. Those are examples of those. And the other examples I talked about a little earlier are other things like the provision of care coordinators to a patient in a post-acute care setting after surgery, say, so that the patient can have a care coordinator who will sort of be able to move, sort of help coordinate the care of the patient as they move through different, um, modalities and locales in a post-acute care circumstance after they've gotten, say, surgery, they may need to go to several different locations to be able to have a care coordinator provided by, say, the hospital would be a huge benefit, I think, to a patient. It kind of, you know, in many cases, because of the problem with care coordination in this country, the patients are often their own care coordinators. They kind of establish relationships and move from one to another to another, to another. That's a real problem. Um, and on the other hand, I think that our regulations have been kind of invisible wind blowing towards consolidation in the healthcare sector that, you know, these, the exceptions say for employees for there to be value-based arrangements, safe with your own employees, you can provide bonuses to those kind of things, has been a force, um, of greater or lesser extent that pushes towards consolidation, purchase of physician groups and so on in the healthcare sector. And that can be rational or not, it can be a good idea or not a good idea, but one thing it probably shouldn't be is motivated by regulations that aren't intended to address that point.
Speaker 2:I wanna, I, I appreciate that. Thank you, Eric. And I, I wanna lift up two points that you made. One, you know, that we enter into this with a belief that the patient is the care coordinator. And indeed, you're right. The patient is oftentimes viewed as in charge of his or her own care yet Yep. Oftentimes that is a weak link in the system as a, as, as any one of us may be a patient. And you, you, you kind of marry that concept up with the point you raised earlier. You know, in essence, more is to come, this is a, in essence, a framework because yes, this regulation, and I want to to give you an opportunity to sort of amplify this for the audience. This is a regulatory framework that's not Lockton stone. It doesn't capture innovation established in December of 2020. It allows for innovation beyond. Yep. Is that fair?
Speaker 3:That's exact, yeah, you've got it. Exactly. This is, this is, as I call it, a platform. This is something that isn't directive and doesn't say so, whereas in the, in some of the previous iterations of an, of regulations in this area, you're more or less given an an interpretation that's kind of like a rifle shot. It says, this is allowable and therefore people know that they're allowed to do this one thing. Right? And so it's, that's more like a rifle shot approach where you sort of say, this is allowable and everyone then feels comfortable going towards that particular and sort of fitting in that particular exception or safe harbor. This is a platform to allow much more broad-based innovation towards value-based goals. So it's not meant to sort of say, you know, here's some examples. You must hit those examples. Exactly. They're, and those are the only ways that you can do this. Um, it's meant to provide a platform for people to, once they have, um, set a goal among a value-based goal among two or more participants, they can establish a value-based enterprise, put somebody in charge of it, uh, to sort of superintendent it, document the arrangement, uh, pick a targeted patient population, pick one of the value-based goals that are set forth, uh, in the regulations, and then, you know, kind of keep track of their progress towards it, bring the arrangement down if it's not working. Um, so that, you know, it's clear that, you know, this isn't just intended to achieve some other maybe nefarious purpose, but is in fact intended to achieve the goals that are sort of set out there. That's, that's a pretty broad-based platform for providers to innovate on, and a flexible platform that allows them to innovate around the different arrangements that are particular for them and their patients to allow these levels of care coordination, uh, and value to be opened up for the patients and for the providers. So that, and for the system in general, and again, these things are targeted to provide value. They're meant to be, you know, that for this to be empowering at a much sort of more basic local level for providers in this space who, who have already been working towards these things with a variety of models. And those models continue, but this is intended to kind of provide a much more, a much broader and more permanent platform for people to innovate on, not necessarily just to achieve the goals of a particular model, but to kind of be able to go beyond that.
Speaker 2:Yeah, no, and I, I appreciate you providing that extra amplification because I, I worry that, you know, in the old paradigm, you know, folks get stuck on, I can't, I can't because I don't wanna violate this regulation or the statute. Uh, and I think it's important as you, as you shared with the audience, this is that platform, it's empowering, it's an empowerment platform for the providers to continue to innovate and for the patients to feel that their care is at the center of the discussion and folks are working towards finding better, more efficient pathways to improve the he, uh, healthcare outcomes.
Speaker 3:Yep. Yeah, that's the whole idea here. I mean, ultimately you have to, you know, provide that quality care. That's the value for the patient. It's, it's better care and really allows there to be more creativity on the part of providers and to provide more ability for the patient to bridge from one locale to another. You know, it's, it's, and for them to be able to have more tools available for them to engage in their own care, uh, that allows them to, I believe, ultimately move out of this endless round of moving from one setting to another to another, but have a more seamless, um, care circumstance for themselves. It's just gonna be more seamless for them. They're gonna be able to have better coordinated care, uh, at the end of this. Uh, and you're not gonna have these breakdowns between one, um, location, one site of care and another. I mean, there still will be right<laugh>, because, you know, that's the nature of life. But we're at least trying to make sure that the, the platform, the regulatory reform is in place that will allow providers to provide a much richer, uh, package of care and care coordination for the patients so they can manage their own care, move seamlessly. And really, I believe have, as we always say, live longer, healthier lives. That's the ultimate goal here. And I think that this, this package will enable providers to be able to offer that across different sites of care without it having to be within a single consolidated, um, and owned and operated, uh, system.
Speaker 2:Well, it's definitely a complicated task, uh, to protect the patient, to embrace the benefit and move towards improve healthcare outcomes. Doing all of this while still being true to the original statutory framework work, you know, particularly in Stark so that we are preventing fraud and abuse, is there anything in particular that you'd also like to, to kind of highlight as a sort of a key safeguard in any of those areas?
Speaker 3:Well, you know, first of all, you have to look at, you know, where, what was, what was kept in place. I mean, not, you know, the inspector general is still there, they're still<laugh>, they're, they're still in business and we do have, you know, an orientation towards those value-based goals. Those are things that, you know, that idea of coordinating, uh, and managing care, improving the quality of care. Those kind of things are kind of fundamental to how the, i g has always seen their business. That's, you know, those are the goals that they have really oriented themselves on. So those kind of, those kind of, um, guardrails are still there. The things that I mentioned about documentation, having to kind of, you know, we've, we've managed to kind of keep the requirements in the statute, but still open up a way for in both sets of laws. In other words, at this point, hopefully we won't have a situation where, you know, people try to move forward and stark hits on one side, you sort of fix the stark problem, you hit the kickback problem, you keep moving down the track as people have to do today on these, on these issues. It was just seeing that a lot of times what what was inadvertent was, was not in, was inadvertently not expressed, uh, that people felt uncomfortable moving into this, um, into this paradigm. They might have been able to propose things like this in the past to the agencies. It just would've never been worth their while because it would've been a single entity trying to solve this problem that we were able to solve through sponsoring the agencies to go through this and provide this clarity over the past two plus years, uh, to bring these, bring these things. But the law still are there in place. They are still there, and the fundamentals of nothing has changed from a statutory point of view. Those same kinds of things that are there are still there. Um, but we're hopeful that with the 1700 pages or so<laugh> of, of, uh, that, uh, that have been produced by both C M s and the ig, that there is clarity there now that will allow people to be more comfortable moving forward. You know, that the definitional clarifications that are in here, the spelling out of exactly how you need to document things, but without saying here are the 10 or so care coordination pathways, it's, it's not that kind of thing that you might have seen. And, and we'll continue to see in things like advisory opinions and other types of safe harbors that are more narrowly drawn.
Speaker 2:Well, this is definitely a, you know, a major step in, in our evolution. And, uh, as you simplify things, I know that the department always has a very aggressive regulatory agenda. Um, would you say that there's still more to do as we look at not only the regulatory sprint or coordinated care, but know addressing these issues in the future? Or what would you say that this is the capstone, you've achieved it, the rule is out and there's nothing else to do?
Speaker 3:Oh, no. I mean, this is the interesting thing about something like this that's much more of a, I would call, keep saying a platform for sort of innovation. Most of the work actually has to be done by the providers and the patients.<laugh>. Most of the work here has to be done on building out the value-based enterprise and the value-based arrangements that providers want to enter into with each other to produce value. That's where most of the out is going to be. This was a big lift by the department and by these two agencies, but it is just the beginning of hopefully a number of responsible actors in the healthcare sector starting to put sort of meat on the bones here and moving forward with value-based enterprises and value-based arrangements, and sort of showing that the value can be produced inside the regulatory paradigm that we've built out. So that, that's a big deal. Um, I'm not asking the agencies to get cracking right now on the guidances that will be forthcoming. Um,<laugh>, I know that they'll be doing some, I think they're gonna be, um, working with you all at HLA on, uh, some, um, educational, uh, program.
Speaker 2:Yeah. In fact, yeah, we're,
Speaker 3:They, they don't ask him to get it done like right next week because<laugh> no, they, they just went through a lot right before Thanksgiving to get this done. So, um, I'm not asking them to do anything in the near future. They've just done very thoughtful creative work in getting this done, and I'm so pleased, uh, with, uh, Vicki Robinson, Susan Edwards at the ig, and their whole team, and Kim Brant, Lisa Wilson and their team at cms, just really, uh, great work. Now, what do we have left to do? There's a couple of things in the regulatory sprint itself, things that, you know, are not gonna get done before, uh, the end of the term. Um, the HIPAA part of the regulatory sprint. Um, you'll be seeing some news on that, but that won't happen, um, and be finalized in any time in the near future. So be, it's, uh, hopefully something that'll be well received broadly in the healthcare sector. And, and that action can be taken, uh, to eliminate some of the barriers that I think HIPAA has put in the way of, uh, coordinated care and care management. Um, and then, as you may know, we did this part two, as the first part of the regulatory sprint. We did a, a, um, reform of the 42 CFR part two regulations that actually resulted in, uh, Congress taking action to help reconcile a little bit the HIPAA and part two frameworks. Uh, that's something that we've been needing to happen for a while. Congress tremendously stepped in and gave us the statutory authority to do that. That's also something I see kind of waiting in the future for the department to act on. Um, and that's something that, you know, I'm hopeful that's, those are two parts of kind of the care coordination package at least, uh, that I think are still waiting to get done, uh, that hopefully people will continue, uh, to keep up steam on those fronts, because I think those would be two other welcome parts of addressing this underlying issue of coordinated care. You know, we have a pretty decentralized healthcare system in the United States. It is a, it's got a lot of advantages in terms of, I think, creativity and flexibility of the healthcare sector, but, um, coordination is something that always has to be addressed. And when we find regulatory barriers to it, I think it's good for us to take a thoughtful examination of them and see what we can do.
Speaker 2:Yeah. I'm glad you did. Uh, I think it's necessary. And I, um, and I also appreciate the reference to, uh, to the fact that, uh, we are working to, uh, offer to our listening audience some additional help and support and understanding the reg and the reg impact by offering the series of, uh, webinars and podcasts, which we'll be, um, announcing in the future. Uh, so at the end of the day, Eric, as, as, again, we put a pin in this regulatory initiative, what does success look like and and when do you believe that providers and more particularly perhaps the patients will see and feel the full impact of these changes?
Speaker 3:You know, this is a, this is a difficult question to answer because when you do something that sort of opens up what we always call this kind of internally, we call it opening up space for innovation, kind of opening up, rather than directing innovation, but opening up space for it to happen in, it's hard to predict because you don't really know ahead of time what is gonna come of it. Uh, you don't know how it's gonna be embraced and at what time when people start feeling comfortable to kind of go through these things. Part of it is gonna be whether the community, and I know a lot of education is taking place, I I've been hearing from, uh, attorneys who telling me they're, they're sat down over Thanksgiving, uh, to read through<laugh> the, uh, 1700 pages or so, uh, depending on your imagination. But I think success, what will success look like? I think success will look like the embrace of these concepts. The, the fact that providers will embrace these and be able to provide the benefits to patients, and ultimately that the patients hopefully maybe not even knowing why start seeing the benefits of the platform that we've established that allow providers to innovate in this space with each other in a way that they have not been able to or felt comfortable doing for the past few decades. Um, I mean, I think that that's, this is something that perhaps has been waiting, someone was talking to me about this recently, and they said, really, they thought that this had been waiting for something like 30 years, uh, for this kind of, um, reform to take place. And that, you know, hopefully now people will be able to see after grasping the essence of these rules and seeing how they work now, they'll be able to move forward. To me, that will be success. It's not seen one particular thing or even a handful of particular things, but seeing a whole group of providers being able to innovate in this space, in care coordination and being able to provide the benefits to patients of that innovation so that patients, even without knowing it, are getting the benefit of these things, both, whether it's new tools that'll be available to them, or just simply the lack of the problems at hand that have occurred on the movement of patients throughout the healthcare sector, particularly those with multiple chronic conditions and complex care that are the ones I think, that have the, have the worst impact of, uh, fragmentation of care on themselves and their families.
Speaker 2:Great. I, I appreciate that so much, Eric. And, and thank you. And as we close, you know, you've served in two administrations and you've seen from the inside how government works and why a sprint can take three years. So first, I want to thank you for your service to the department. I wanna thank you for the service you've provided to the people who benefit from the programs that you serve and support. And, and as we close, I I give you the last word, if there's, you know, any reflection on your time in the government, uh, that you can share with our audience?
Speaker 3:Well, you know, it is, it has been an honor really to have a second tour of duty here at the department. You know, I start off learning from some of the best, perhaps someone next door to me and officer general counsel<laugh> David, I think we started 17 plus years ago together. I hate saying that. Uh, it's a long time, a long time. Uh, but I think that that's a, that's a long time. Uh, that's not nothing to sneeze at. I think that, you know, it is an honor to be in these positions and to be able to, um, work on issues as important as this. I mean, the, the work of the department is really central to people's lives, families, their health. So to be able to hopefully provide some benefit to people through the, um, positions that we're allowed to fill for some periods of time, I think that's, that's the, that's the thing that you kind of have to take away from it, is kind of sense of both gratitude for the experience and then, uh, and being able to serve. That's, that's what it ultimately comes down to.
Speaker 2:Great. Thank you so much, Eric, and, and I have enjoyed the time that we both spent serving the department and, and, and we've always enjoyed the time that you were spent with us and with the listening audience. Um, so with that, I thank you and I thank our audience for joining us today.
Speaker 3:Thank you.