Trump administration seeks new Stark Law exceptions

October 9, 2019

New rule would carve out exceptions in the Stark Law for value-based care arrangements

The Trump Administration seeks to exempt value-based arrangements from the Medicare physician self-referral law, or Stark Law, and the Anti-Kickback Statute, the first major change to these laws in years. 

The Stark Law prohibits physicians from making referrals for certain healthcare services payable by Medicare if the physician or an immediate family member holds a financial stake and stops any entity from billing Medicare for services that derive from a prohibited referral, according to a fact sheet distributed by CMS.

While the law was implemented at a time when healthcare was almost exclusively based around the fee-for-service model, both Medicare and private payers are increasingly moving toward a value-based pay model, for which the Stark Law has been unable to keep up, according to HHS officials.

Our proposed rules would be an unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve," said HHS Secretary Alex Azar in a news release.

The proposed rule is a package of reforms which seek to modernize the regulations which interpret Stark Law while still protecting Medicare from bad actors while also supporting the necessary evolution of the American healthcare delivery and payment systems.

“Through the Patients over Paperwork initiative, the proposed rule opens additional avenues for physicians and other healthcare providers to coordinate the care of the patients they serve – allowing providers across different healthcare settings to work together to ensure patients receive the highest quality of care,” the fact sheet says.

CMS says the new rule would create permanent exceptions in the law for value-based arrangements, citing a 2018 request for information which showed industry stakeholders felt the steep consequences of not complying with the Stark Law are so dire, doctors and other providers are discouraged from entering into arrangements that improve quality, increase efficiency, and lower costs.

The rule, according to HHS, would “unleash innovation” by allowing doctors and other providers to design and take part in value-based arrangements without fear their actions would violate the Stark Law.

The new exception would also include a series of safeguards aimed at ensuring the Stark Law continues to protect against over-utilization.

The new rule would also provide much-needed guidance on several key requirements that must be met so that physicians and providers can comply with the Stark Law.

It would also create new exceptions to protect non-abusive, beneficial arrangements between physicians and other healthcare providers which would provide new flexibility for arrangements such as donation of cybersecurity technology that safeguards the integrity of the healthcare system in both fee-for-service and value-based arrangements.

CMS is also seeking input on the role of price transparency in the context of the Stark Law and whether to include a cost-for-service at the time of a referral, as part of their belief that this transparency is key to switching the country to a more value-based system.

Examples of areas protected from Stark Law violation

HHS provided examples of scenarios where providers could be protected under the proposal:

  • In an effort to coordinate care and better manage the care of their shared patients, a specialty physician practice could share data analytics services with a primary care physician practice.

  • Hospitals and physicians could work together in new ways to coordinate care for patients being discharged from the hospital. The hospital might provide the discharged patients’ physicians with care coordinators to ensure patients receive appropriate follow up care, data analytics systems to help physicians ensure that their patients are achieving better health outcomes, and remote monitoring technology to alert physicians or caregivers when a patient needs healthcare intervention to prevent unnecessary ER visits and readmissions.

  • A physician practice could provide smart pillboxes to patients without charge to help them remember to take their medications on time.  The practice could also provide a home health aide to teach the patient and the patient’s caregiver how to use the pillbox. The pillbox could automatically alert the physician practice and caregiver when a patient misses a dose so they could follow up promptly with the patient. 

  • A local hospital could improve its cybersecurity and the cybersecurity of nearby providers that it works with frequently. To do so, it could donate, for free, cybersecurity software to each physician that refers patients to its hospital. The hospital and the physicians often share information about their patients, so it is important that there are no weak links that might compromise everyone else. The software would help ensure that hackers cannot attack the physician’s computers. Improving each physician’s cybersecurity would help prevent hackers from spreading the attack to other physicians and the hospital.

  • To improve health outcomes for patients with end-stage kidney disease, a nephrologist, dialysis facility, or other provider could furnish the patients with technology that is capable of monitoring the patient’s health and two-way, real-time interactive communication between the patient, facility, and physician. In addition, the facility could equip the physicians with data analytics software to help them monitor patients’ health outcomes.

Reaction from the healthcare community

Patrice A. Harris, MD, MA, the president of the AMA said:

“The American Medical Association (AMA) greatly appreciates that the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) at the Department of Health and Human Services are proposing to modernize and clarify the regulations that interpret the Stark Law and anti-kickback statute. While the AMA is assessing the full scope of today’s proposals, we are pleased to see that the administration has acknowledged a need for policy revisions in response to potential barriers that impede the delivery of patient-centric care.

“The AMA has previously called on the administration to modify the regulations in order to facilitate the move to value-based care. Currently, the Stark Law and anti-kickback statute can have a negative impact on the ability of physicians to assist with coordination because they inhibit collaborative partnerships, care continuity, and the engagement of patients in their care. These obstacles can hinder the health care system’s movement to value-based care.

“Continuity of care requires smooth transitions to prepare for patients’ changing clinical and social needs. In certain circumstances, physicians are prohibited from employing care coordination strategies on behalf of our patients. Instead, patients, in addition to dealing with the physical and emotional aspects of a disease or condition, often find themselves having to coordinate their own care in a fragmented and siloed system.

“Placing the obligation on the patient to know how to properly manage follow-up care without the assistance of their physician or care coordinator negatively impacts patient care, the physician-patient relationship, and a physician’s ability to perform. This barrier can be overcome through creating an anti-kickback safe harbor and Stark exception to facilitate coordinated care. The AMA looks forward to working with CMS and the OIG and will continue to support efforts to update and modernize the fraud and abuse laws and regulations to address changes in the health care delivery and payment systems.”

Anders Gilberg, the senior vice president of Government Affairs for the Medical Group Management Association, said:

"For those fortunate medical groups that can utilize the new value-based exceptions, this proposal is a step in the right direction. For medical groups that have been waiting years for relief from the complexity of the Stark law, this isn’t it.

"Existing Stark regulations are fundamentally hyper-technical from beginning to end. This rule adds layers upon layers to a regulatory scheme that was originally intended to provide bright-line guidance for medical practices, but never has. The new proposal fails to clarify fundamental issues related to group practices and confirms our longstanding position that Congress needs to change the law.

"If CMS doesn’t believe it has the authority to provide meaningful Stark reform, then it should join the provider community in working with Congress to fix these fatally flawed regulations and outdated statute."