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Deloitte Health Care Current
Weekly US health care industry series
Editor’s note: This article was originally published in the July 24, 2018 issue of Deloitte’s
Health Care Current.
House Ways and Means holds hearing on modernizing Stark law, shift from volume to value
On July 17, the House Ways and Means Health Subcommittee held a hearing to discuss modernizing the “Stark law,” an anti-kickback law that prohibits doctors from referring Medicare patients to hospitals, labs, and colleagues with whom they have financial relationships. The law also prevents hospitals from paying clinicians more for meeting certain quality measures and less to those who miss the goals. Clinicians and hospitals can be found liable for violating Stark without intent, and offenses can carry significant financial penalties.
A urologist from Cincinnati told lawmakers that the 30-year-old Stark law was written during the fee-for-service era and is now making it difficult for physicians to participate in alternative payment models (APMs). He said the law does not reflect the vision of coordinated care, noting that only 5 percent of US physicians participate in an APM, and recommended that Congress allow hospitals to use Medicare funds to reward or penalize physicians who are part of value-based care models.
US Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan agreed that the law was not designed for a health care system that is transitioning toward a value-based payment model. While he said the law needs to be updated, he urged lawmakers to ensure that competition in the health care marketplace is preserved.
The chief integration officer of Midwestern health system raised concern that the law can discourage physicians who fear potential financial penalties from entering into value-based arrangements. He also suggested that legislation defining “noncompliance” could help clarify regulatory enforcement and allow government entities to focus on violations that harm patient care.
In the coming months, HHS plans to draft a rule to reduce the burden of the law, which also will reflect responses to its earlier request for information (RFI).
A urologist from Cincinnati told lawmakers that the 30-year-old Stark law was written during the fee-for-service era and is now making it difficult for physicians to participate in alternative payment models (APMs). He said the law does not reflect the vision of coordinated care, noting that only 5 percent of US physicians participate in an APM, and recommended that Congress allow hospitals to use Medicare funds to reward or penalize physicians who are part of value-based care models.
US Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan agreed that the law was not designed for a health care system that is transitioning toward a value-based payment model. While he said the law needs to be updated, he urged lawmakers to ensure that competition in the health care marketplace is preserved.
The chief integration officer of Midwestern health system raised concern that the law can discourage physicians who fear potential financial penalties from entering into value-based arrangements. He also suggested that legislation defining “noncompliance” could help clarify regulatory enforcement and allow government entities to focus on violations that harm patient care.
In the coming months, HHS plans to draft a rule to reduce the burden of the law, which also will reflect responses to its earlier request for information (RFI).
House committee holds hearing on CMS’s efforts to target Medicare fraud
The House Ways and Means Oversight Subcommittee held a hearing on July 17 to discuss strategies for combating Medicare fraud. Committee Chair Lynn Jenkins (R-Kan.) noted that there is no risk-based strategy for combating fraud in Medicare. Lawmakers discussed the US Centers for Medicare and Medicaid Services’ (CMS) antifraud efforts and alignment with the “Fraud Risk Framework,” an initiative developed by the Government Accountability Office (GAO) in 2015 to provide agencies with guidance for targeting fraud.
Alec Alexander, director of CMS’s Center for Program Integrity, told committee members that the agency is taking steps to improve its ability to conduct fraud assessments. He pointed to a recent joint effort between HHS and the Department of Justice that led to 600 defendants being charged with participating in fraud schemes that involved about $2 billion in losses to Medicare and Medicaid.
Other witnesses represented GAO and the HHS Office of Inspector General (OIG). GAO’s perspective is that CMS has not conducted a fraud risk assessment or developed a risk-based antifraud strategy. Gloria Jarmon, deputy inspector general for audit services at HHS’s OIG, focused on the agency’s need to reduce the rate of improper payments and improve antifraud efforts in Medicare. While the error rate for Medicare has fallen from 11 percent in 2016 to 9.5 percent in 2017, she told committee members that the percentage it is still too high.
Alec Alexander, director of CMS’s Center for Program Integrity, told committee members that the agency is taking steps to improve its ability to conduct fraud assessments. He pointed to a recent joint effort between HHS and the Department of Justice that led to 600 defendants being charged with participating in fraud schemes that involved about $2 billion in losses to Medicare and Medicaid.
Other witnesses represented GAO and the HHS Office of Inspector General (OIG). GAO’s perspective is that CMS has not conducted a fraud risk assessment or developed a risk-based antifraud strategy. Gloria Jarmon, deputy inspector general for audit services at HHS’s OIG, focused on the agency’s need to reduce the rate of improper payments and improve antifraud efforts in Medicare. While the error rate for Medicare has fallen from 11 percent in 2016 to 9.5 percent in 2017, she told committee members that the percentage it is still too high.
Senate committee holds hearing on reducing heath care spending
On July 17, the Senate Committee on Health, Education, Labor & Pensions (HELP) held the second in a series of hearings on policies and efforts to reduce health care costs, with a focus on unnecessary spending from waste and lack of preventive care.
Witnesses represented two major teaching hospitals, a business association, and a renowned expert on quality and value-based care. These witnesses spoke to their experiences with reducing costs through programs like accountable care organizations (ACOs). Members and witnesses discussed several ideas, including:
- Paying only for necessary treatments, which could make providers less likely to prescribe unnecessary care or medication.
- Reducing fraud and administrative costs. A 2009 report from the National Academies determined that as much as 30 percent of US total health care funding can be attributed to fraud or excessive administrative costs.
- Addressing social determinants of health for patient populations.
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