Among the proposed new rules is one intended to clarify the contentious “Stark Law.”

On Oct. 9, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to modernize and clarify the regulations that interpret the Medicare physician self-referral law (often called the “Stark Law”). The law prohibits physicians from making referrals for certain healthcare services payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity performing the service.

The proposed rule would create new, permanent exceptions to the Stark Law for value-based arrangements. The proposed rule would permit physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve quality of care for patients and to lower costs would violate the Stark Law. The exceptions would apply regardless of whether the arrangement relates to care furnished to people with Medicare, or other patients.

CMS has introduced a direct contracting model. Under this model, there will be three types of direct contracting entities (DCEs) with different characteristics and operational parameters. These three types of DCEs are:

Standard DCEs – DCEs comprised of organizations that generally have experience serving Medicare fee-for-service (FFS) beneficiaries, including Medicare-only and also dually eligible beneficiaries, who are aligned to a DCE through voluntary alignment or claims-based alignment. These organizations may have previously participated in section 1115A models involving shared savings (e.g., the Next Generation Accountable Care Organization (ACO) Model and Pioneer ACO Model) and/or the Shared Savings Program. Alternatively, new organizations, composed of existing Medicare FFS providers and suppliers, may be created in order to participate as this DCE type. In either case, clinicians participating within these organizations would have substantial experience serving Medicare FFS beneficiaries. 

New Entrant DCEs – DCEs comprised of organizations that have not traditionally provided services to a Medicare FFS population and that will primarily rely on voluntary alignment, at least in the first few performance years of the model. The claims-based alignment will also be utilized.

High-Need Population DCEs – DCEs that serve Medicare FFS beneficiaries with complex needs, including dually eligible beneficiaries, who are aligned to the DCE through voluntary alignment or claims-based alignment. These DCEs are expected to use a model of care designed to serve individuals with complex needs, such as the one employed by the Programs of All-Inclusive Care for the Elderly (PACE), to coordinate care for their aligned beneficiaries.

How will DCEs be paid under the model options?

DCEs will be required to have a capitated payment arrangement whereby CMS makes a capitation payment to the DCE, which may be used by the DCE to support population health, for example by allowing the DCE to enter into value-based payment arrangements with its downstream DC participant providers, and if they elect it, preferred providers, or to invest in healthcare management tools, such as healthcare technologies. 

CMS also issued the Home Health Agency Final Rule for CY 2020. In this rule, CMS established a permanent home infusion therapy benefit to be implemented beginning in 2021, as required by the 21st Century Cures Act; this will allow therapist assistants (rather than only therapists) to perform maintenance therapy under the Medicare home health benefit, in accordance with individual state practice requirements (similar to the physician assistant provision of the Physician Fee Schedule Rule). The Final Rule also implements the Patient-Driven Groupings Model (PDGM), a new case-mix payment methodology for home health services, which more accurately pays for home health services and focuses on patient needs by relying heavily on patient characteristics rather than volume of care. 

The rule established a CY 2020 30-day payment amount for those home health agencies (HHAs) that report the required quality data of $1,864.03, which is 4 percent higher than the proposed CY 2020 30-day payment amount of $1,791.73, as a result of a modification to proposed adjustment for the initial year of the PDGM that is associated with behavior change assumptions.


Stanley Nachimson, MS

Stanley Nachimson, MS is principal of Nachimson Advisors, a health IT consulting firm dedicated to finding innovative uses for health information technology and encouraging its adoption. The firm serves a number of clients, including WEDI, EHNAC, the Cooperative Exchange, the Association of American Medical Colleges, and No World Borders. Stanley is focusing on assisting health care providers and plans with their ICD-10 implementation and is the director of the NCHICA-WEDI Timeline Initiative. He serves on the Board of Advisors for QualEDIx Corporation. Stanley served for over 30 years in the US Department of Health and Human Services in a variety of statistical, management, and health technology positions. His last ten years prior to his 2007 retirement were spent in developing HIPAA policy, regulations, and implementation planning and monitoring, beginning CMS’s work on Personal Health Records and serving as the CMS liaison with several industry organizations, including WEDI and HITSP. He brings a wealth of experience and information regarding the use of standards and technology in the health care industry.

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