Industry publication BVWire quoted a statement from the Centers for Medicare & Medicaid Services (CMS) that gives healthcare providers more certainty to rely on the much heralded final rule modernizing the physician self-referral law (the Stark Law). The CMS statement stated, “The regulations finalized in [the final rule discussed in this post] are effective.”

The CMS final rule joined one issued by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) revising safe harbors to the anti-kickback statute (AKS) to be effective Jan. 19, 2021. Despite the published effective dates, prior to this CMS statement, ambiguity existed on whether either of these final rules were effective.

Specifically, both the CMS and OIG final rules had technical deficiencies that threatened to lead to retraction, revision or modification. Essentially, HHS announced the final rules would be effective Jan. 19, 2021, as part of the Trump administration’s efforts to remove barriers from care coordination before the end of their term. HHS announced the rules 61 days before the presidential inaugural on Nov. 20, 2020, but did not publish the rules in the Federal Register until Dec. 2, 2020 (publication: Stark Law | AKS). As both are “major rules,” statute requires a 60-day delay before the regulations are effective, which the Government Accountability Office (GAO) concluded that these final rules (GAO decisions: Stark Law | AKS) did not meet.

Ordinarily such a technical deficiency would not be noteworthy and could be fixed, but in the intervening period, President Joseph Biden was inaugurated. That same day, Biden’s chief of staff, Ron Klain published a memo (within 60 days from publication) essentially requested agencies postpone pending regulations and take other actions to allow the new Biden administration to review subsequent rulemaking. Therefore, industry commentators worried that the final rules may not be effective and could be retracted. That said, with respect to rules “published in the Federal Register . . . but have not taken effect,” such as the fraud and abuse rules, Klain merely asked agencies to “consider postponing the rules’ effective dates for 60 days.” With CMS’ statement, it does not appear the agency has determined that is necessary with respect to its Stark Law modernization rule.

[T]he vast majority of healthcare providers did not need to act or address these final rules at this time

With this clarification, healthcare providers will likely begin to proceed in utilizing some of the new Stark Law flexibilities, including the new value-based enterprise provisions. Some healthcare providers have waited before relying on these final rules out of an abundance of caution due to the uncertainty. Of course, the vast majority of healthcare providers did not need to act or address these final rules at this time to maintain compliance with either the Stark Law or AKS final rules. In addition, we never viewed these fraud and abuse rule changes to be particularly partisan and were generally intended to clarify current law such that this clarification from CMS that the implementation will not be delayed is not altogether unexpected.

Even with this additional CMS statement, we should share three notes of caution. First, Biden’s nominees for HHS and CMS, respectively, California Attorney General Xavier Becerra and Chiquita Brooks-LaSure, have not had Senate confirmation hearings. With new leadership at HHS and CMS, it is possible that further regulatory changes to the Stark Law could be proposed (albeit, they would require the notice-and-comment rulemaking process). Second, we are unaware of a similar statement from OIG or HHS with respect to the AKS rule, although CMS and OIG have coordinated closely on these fraud and abuse rules and we would not suspect different treatment. Last, while CMS staffers would be unlikely to provide such a statement without approval, CMS has not provided this through a more formal channel such as formal published guidance.

*   *   *   *   *

McGuireWoods has been providing additional analysis and summaries about this CMS final rule, as well as the OIG’s final rule. To review additional guidance on the fraud and abuse final rules, see the following McGuireWoods legal alerts: