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The Impact of the Bipartisan Budget Act of 2018 on Telehealth, Stark Law, Anti-Kickback Statute and Civil Monetary Penalties

On Behalf of | Mar 16, 2018 | Articles, Blog, Business Law, Healthcare Law, Publications

Weiss Zarett Brofman Sonnenklar & Levy, PC

On February 9, 2018, President Trump signed into law the Bipartisan Budget Act of 2018 (the “Budget Act”). The Budget Act extended and modified numerous health care programs, including Children’s Health Insurance Program (“CHIP”), the CHRONIC Care Act and the Medicare Part B Improvement Act. This Alert highlights certain provisions of the Budget Act impacting telehealth and health care fraud and abuse laws, which we expect will lead to significant changes to the delivery of health care services across the United States.


With the stroke of a pen, the Medicare program fully embraced the 21st Century in terms of leveraging internet connectivity and the latest technologies to improve the health and wellbeing of the country’s 59 million Medicare beneficiaries. Specifically, the Budget Act directs additional funding to Medicare to significantly increase coverage of telehealth services provided for the treatment of chronically ill patients in the following ways:

  • Expanding, beyond just rural geographic areas, the originating sites eligible for Medicare reimbursement for treating stroke patients. Thus, beginning in 2019, Medicare will reimburse providers for services relating to the diagnosis, evaluation, or treatment of symptoms of an acute stroke, when such care is delivered at certain originating sites, including hospitals, critical access hospitals, mobile stroke units, or any other site determined appropriate by the Department of Health and Human Services (“HHS”), irrespective of whether such originating sites are located in a rural geographic area.
  • Giving accountable care organizations (“ACOs”) more flexibility to use telehealth by including a patient’s home as an originating site and removing rural geographic area limitations on originating sites for certain telehealth services beginning in 2020.
  • Enabling Medicare patients receiving dialysis at home or at independent renal dialysis facilities to have greater access to care, by allowing providers to perform monthly clinical assessments via telehealth services. These two new originating sites, along with hospital-based or critical access hospital-based renal dialysis centers, are also exempt from the rural geographic area requirement.
  • Allowing patients to be provided with free at-home telehealth dialysis technology without the provider violating the Civil Monetary Penalties Law (“CMP”), so long as the following three criteria are met: (1) the telehealth technologies are not offered as part of any advertisement or solicitation; (2) the telehealth technologies are provided for the purpose of furnishing telehealth services related to the individual’s end stage renal disease; and (3) the provision of the telehealth technologies meets any other requirements set forth in regulations promulgated by Centers for Medicare & Medicaid Services (“CMS”).
  • Expanding the use of telehealth for Medicare Advantage (“MA”) beneficiaries, by permitting MA plans to offer, as basic plan benefits, coverage for certain telehealth services, including tele-monitoring and medication therapy management.

These statutory changes are universally expected to improve access and quality of care for Medicare beneficiaries, especially those who are chronically ill. Moreover, the increased level of acceptance of telehealth by Medicare is expected to hasten the expansion of commercial-payor coverage of telehealth services.

Stark Law, Anti-Kickback and Civil Monetary Penalties Law

Enacted 30 years ago, at a time when the “fee-for-service” model predominated healthcare payment methodology, the Stark Law prohibits physicians from ordering certain “designated health services” (“DHS”), if the physician would financially benefit from such referrals, unless one of more than three dozen exceptions applies. Often, arrangements are structured to substantively comply with an applicable exception, but fail on technical grounds, such as being written and signed by the parties. Such violations can result in violations under the Stark Law’s strict liability framework.

The Budget Act eases some of these burdens, by codifying certain regulatory changes that went into effect on January 1, 2016 and corresponding clarifications via preamble by CMS in the 2016 Medicare Physician Fee Schedule Final Rule. For example, as a result of the Budget Act, the Stark Law now provides that the “in writing” requirement of certain arrangements will be satisfied by any means established by the Secretary of HSS, including “contemporaneous documents evidencing the course of conduct between the parties involved.” Similarly, a signature requirement shall be satisfied by obtaining the required signatures within 90 consecutive calendar days after the arrangement became noncompliant, as long as other applicable exception criteria are satisfied. This statutory language now aligns with regulatory language in 42 C.F.R. § 411.353(g) regarding temporary noncompliance with signature requirements.

Additionally, the Budget Act addresses expired leases and personal services arrangements, providing that if such arrangements are otherwise compliant with the applicable Stark Law exception, expired arrangements will remain protected as long as the holdover arrangement is on the same terms and conditions as the preceding arrangement. This statutory language now aligns with regulatory language regarding holdovers in the rental of office space, rental of equipment and personal service arrangements exceptions in 42 C.F.R. § 411.357.

With respect to the Anti-Kickback Statute (“AKS”), the Budget Act increased penalties by quadrupling the potential fines under the AKS from $25,000 to $100,000 per violation and doubled potential prison time from 5 to 10 years. The CMP penalty amounts were also doubled (however, due to increases under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the new amounts reflect only an approximately 33% increase).

Notably, these statutory changes in the Stark Law follow the recent announcement in January 2018, by CMS Administrator Seema Verma, of the formation of an intra-agency working group to minimize regulatory constraints created by the Stark Law, which presents challenges for the implementation of value-based payment models that encourage care coordination among providers.  Therefore, we expect additional easing of regulatory burdens impacting the delivery of health care services to continue in the near term under the Trump Administration.