Hospitals and physicians are ready and willing to start using new methods of getting paid to help transform how health care is delivered. However, outdated fraud and abuse laws — relics from a time when doctors and hospitals worked in separate silos — are keeping them from doing so.

In a report issued to Congress Tuesday, the American Hospital Association asked Congress to lift regulatory barriers that stymie new models of care and payment — those that reward careful coordination and avoid duplication of services. Stark and anti-kickback laws are limiting physicians’ and hospitals’ ability to work with one another, the AHA contends.

Currently, the Centers for Medicare & Medicaid Services has more than 20 new initiatives to reform how care is paid for and delivered, representing some 2.5 million beneficiaries. Regulations now on the books are in “desperate need of modernization” for these payment initiatives to work as envisioned, the AHA states.

“The current fraud and abuse laws were written for another world,” says Maureen Mudron, Washington, D.C., deputy general counsel for the association. “Today, we’re in the world of payment for value and in order to achieve those goals of improving both the delivery of care and the health of patients, we need to think differently about the relationships among providers and with patients.”

In its report, the AHA lays out seven activities required of hospitals and docs in this new value-based world, which are impeded by current fraud and abuse laws:

  1. Sharing electronic health records and analytic tools to coordinate care
  2. Aligning incentives to redesign care and improve outcomes
  3. Providing incentives to employ more efficient and effective treatment options
  4. Rewarding a team-based approach that includes nonphysician practitioners
  5. Creating collaborative arrangements to coordinate care when the patient leaves the hospital
  6. Assisting a patient with discharge planning
  7. Providing assistance to patients to maintain their health when they return home

As of now, anti-kickback laws prohibit hospitals from exchanging anything of value to influence a physician’s ordering of services or the purchase of items that are paid for by a federal health care program. The Stark law controls whether a doctor can make referrals to certain hospitals with which he or she has a financial relationship.

For hospitals and physicians to work together and share financial incentives for quality outcomes and clinical efficiency, common sense "safe harbors" to the
Anti-Kickback statute and reforms to the Stark law are needed. The current process for gaining clearance from HHS to do so currently, the AHA says, is an “arduous, expensive and inefficient process that can take years to complete.”

The AHA proposes changes to the laws that would “foster and protect arrangements designed to achieve the goals of payment-for-value programs.” Congress already remedied one impediment to new payment models as part of last year’s Medicare Access and CHIP Reauthorization Act, or MACRA. It removed a barrier created by the HHS Inspector General's Office interpretation of the Civil Monetary Law that prohibited incentives to reduce or limit services, known as gainsharing. Congress also called for a more complete re-examining of fraud and abuse laws and asked the health care field to propose legislative changes.

Mudron says the Senate Finance Committee has scheduled a hearing on the Stark law for July 12. AHA is asking Congress to move quickly to make such modifications.

"Hospitals are ready to move forward in meeting the goals of better and more efficient care for patients. But the current legal regime is standing in their way," Mudron said. "Congress needs to act quickly in order to bring the fraud and abuse laws into the 21st century."