Jennifer Michael Quoted in “Hospitals Eyeing Efficiency Get Wish List in Fraud Law Proposals”

Bloomberg Law

Jennifer E. Michael, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, was quoted in Bloomberg Law, in “Hospitals Eyeing Efficiency Get Wish List in Fraud Law Proposals,” by Lydia Wheeler and Tony Pugh.

Following is an excerpt:

Hospitals scored an initial win when many of their long-sought exemptions to federal anti-corruption laws showed up in new proposed rules to speed the adoption of patient-centered care.

The proposed changes would carve out new exemptions to the Stark law, which prohibits physician self-referrals, and the federal anti-kickback statute, which bars efforts to reward business referrals in federal health programs. Critics have long complained that both laws hamper efforts to pay doctors based on patient outcomes and cost efficiency rather than a fee for each service they provide. …


The proposed exceptions to the Stark law are designed to offer more flexibility to encourage caregivers to take on financial risk for the cost and quality of patient care. They include value-based arrangements in which one entity in the arrangement assumes the full financial risk of the treatment as well as those that carry a meaningful downside risk to the physician if the care doesn’t work as planned. The broadly written rules allow for other types of collaboration as long as the arrangements meet certain criteria.

The safe harbors proposed under the anti-kickback statute are structurally the same. One difference is that they would not apply to pharmaceutical manufacturers; manufacturers, distributors, or suppliers of durable medical equipment, prosthetics, orthotics or supplies; and laboratories from being part of arrangements that qualify for the safe harbors. The CMS said it could address those groups in the future.

Aside from those exclusions, attorneys say the government has broadly defined value-based arrangements in both proposals.

“The breadth and scope of the proposed new safe harbors to the anti-kickback statute are really remarkable,” said Jennifer Michael, a health-care attorney at Epstein Becker Green, who formerly served as chief of the Industry Guidance Branch at HHS’s Office of Inspector General.

But that doesn’t mean health-care providers will get everything the rule has proposed. The OIG said in the proposal that crafting the safe harbor was challenging, signaling that the protections it proposed are not guaranteed to be in the final rule, Michael said.

“I think the crux of the problem is the challenge of distinguishing between referral arrangements, which would not be protected, and legitimate care coordination arrangements that naturally and inherently involve referrals across provider settings, but also include beneficial activities,” she said.