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Legal Insights and Perspectives for the Healthcare Industry

In Part 2 of a two-part Morgan Lewis series for Bloomberg Law on the proposed Stark Law and anti-kickback statute (AKS) rules, Kathleen McDermott, Matt Hogan, and Jacob Harper examine the safe harbors and exceptions aimed at empowering patients to manage their healthcare. Noting that value-based care can only be achieved when patients no longer sit on the sidelines, the authors ask whether the proposed AKS safe harbors are bold enough, and conclude there may be more that the Office of the Inspector General and the Centers for Medicare & Medicaid Services could do.

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The Office of the Inspector General and the Centers for Medicare and Medicaid Services recently published a pair of proposed rules aimed at encouraging the adoption of value-based payment and care. In Part 1 of a two-part Morgan Lewis series for Bloomberg Law, Al Shay, Donna Clark, and Banee Pachuca unpack the proposed Stark Law exceptions and anti-kickback statute safe harbors that share similarities but differ in design when it comes to protecting physician compensation arrangements that advance value-based care. Potential challenges presented by the proposed rules with respect to obtaining safe harbor protection, encouraging payor participation, and absorbing downside financial risk are also addressed.

In addition, Al and Donna will be joining Jake Harper to talk about the Stark Law changes in more detail during our October 30 Fast Break—make sure to register!

Read the full Bloomberg Law article >>

Emerging as an industry disrupter, the Office of Inspector General for the US Department of Health and Human Services (OIG) has waded knee-deep into health policy and economics in proposing dramatic changes to the anti-kickback discount safe harbor protection. Its latest move targets certain industry sectors, proposing to remove their protection from administrative and criminal prosecution in connection with rebates and price reductions for prescription drugs.

Under the proposed rule issued February 6, the OIG proposes to amend the language of the existing discount safe harbor to no longer protect price reductions from prescription drug manufacturers to sponsors, MA plans, or Medicaid managed care organizations (MCOs), or to pharmacy benefit managers (PBMs) under contract with those entities, in connection with the sale or purchase of prescription drugs (unless the price reduction is otherwise required by law). The proposal is elegant and simply excludes from the definition of a “discount” price reductions or other remuneration paid from a drug manufacturer to sponsors and MA plans, Medicaid MCOs, and PBMs. If a price reduction is not a discount, it is not excepted or protected and can be subject to enforcement. No other health industry sector is apparently targeted for this administrative rule change.