In Stark Contrast: Viewing the Stark Law from a New Lens
Summary: New regulations have been released that will update and clarify the provisions of the Stark Law--the set of measures that address physician self-referral in connection with Medicare and other federal healthcare program services.
In the ancient past, stargazers assumed that the celestial bodies visible at night numbered a little over a thousand. This was due in part to Ptolemy's highly-regarded catalogue of stars, published in the second century. He had meticulously counted the lights in the night sky that he could visualize at his level of latitude, using only his naked eye. Fast forward a couple of millennia and, using the orbiting Hubble telescope, we're now able to view innumerable galaxies—each containing billions of stars.
Sometimes our understanding of seemingly settled matters changes when given a new perspective. That can apply to areas of science, as well as the law. One of the statutory standards that healthcare compliance has accepted for over 30 years now has just undergone a regulatory update and may now be seen in a different light.
Historic Elucidation
In the late 80s, U.S. Congressman Pete Stark sponsored a bill that would require limitations on physician self-referrals relative to Medicare patients. Some of the bill's provisions were ultimately folded into a larger act dealing with the budget that was passed later that year. This self-referral section of the Omnibus Budget Reconciliation Act (OBRA) of 1989 would eventually become known as "Stark I." A corollary to this measure was the additional self-referral language inserted into the 1993 OBRA (known as "Stark II"), which extended much of the original law to Medicaid services.
The overarching purpose of what has collectively become known as "the Stark Law" was to protect patients from being steered toward unnecessary, less convenient, lower quality, or more expensive services due to a physician's financial self-interest. While there are certain exceptions, the Stark provisions essentially preclude a physician from making referrals for certain healthcare services payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity performing the service.
Often, federal laws contain provisions authorizing later rulemaking by an executive branch department or agency that will act to flesh out some of the law's general provisions. Such rulemaking took place with respect to Stark in 2001, 2004 and 2007. In continuance of that pattern, the healthcare industry is now being introduced to yet another set of Stark-based rule changes that will have an impact on certain providers for years to come.
A Clearer View
On November 20, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to update and clarify regulations applicable to the Stark Law. According to CMS, the new regulations create new and permanent exceptions to the self-referral prohibitions, especially as it concerns value-based arrangements. The driver of these changes was the feedback received by the government from Industry stakeholders who, in the words of CMS, "have informed us that, because the consequences of noncompliance with the Stark Law are so dire, physicians and other healthcare providers may be discouraged from entering into innovative arrangements that would improve quality outcomes, produce health system efficiencies, and lower costs (or slow their rate of growth)."
In response to this concern, the final rule will "permit physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law," according to a CMS news release. The agency stated that the exceptions would apply regardless of whether the arrangement relates to care furnished to Medicare or non-Medicare patients.
New Points of Light
A few examples of the new exceptions allowed by the final rule are summarized in the following list provided by CMS:
- ❇︎Compensation provided to a physician by another healthcare provider generally must be at fair market value. The final rule provides guidance on how to determine if compensation meets this requirement.
- ❇︎The final rule also provides clarity and guidance on a wide range of other technical compliance requirements intended to reduce administrative burden that drives up costs.
- ❇︎These finalized exceptions provide new flexibility for certain arrangements, such as donations of cybersecurity technology that safeguard the integrity of the healthcare ecosystem, regardless of whether the parties operate in a fee-for-service or value-based payment system.
Significantly, the Office of Inspector General (OIG) within the Department of Health and Human Services (HHS) also issued new regulations on November 20. The OIG's final rule modified certain aspects of the federal Anti-Kickback Statute (AKS) and the Civil Monetary Penalties (CMP) provisions. As part of these actions, three new safe harbors were added to the AKS, which primarily involve arrangements between those engaged in a value-based enterprise (VBE). New safe harbors were also added to the CMP beneficiary inducement rules. Together, these new regulations should make the burden a bit lighter on providers who simply want to provide better care to their patients while avoiding the risk of running afoul of government restrictions and penalties.
The full text of the 627-page final rule concerning Stark can be downloaded at: https://www.hhs.gov/sites/default/files/cms-medicare-program-physician-self-referral-regulations-final-rule.pdf. The final rule will be effective 60 days after the date of display in the Federal Register, except for amendment number 3, which further amends section 411.352(i), which is effective January 1, 2022. We encourage you to be on the look-out for more details concerning these new regulations should you believe they might have a direct impact on you and your practice. Alternatively, you may want to consult your healthcare attorney. As always, you can contact us at info@anesthesiallc.com