Brief Your CEO: Real Stark Law Relief Might Actually Happen

Fool me once, shame on you; fool me twice, shame on me.

That may have been your reaction when you first heard about the new CMS Request for Information (RFI) seeking input on ways to alleviate the Stark Law’s “undue regulatory impact and burden.” But while your skepticism is understandable, this time it might actually happen. That’s why we’re suggesting that you let your C-Suite people know what’s going on. Here’s how:

Setting the Stage
When talking to the lab executives, it’s generally advisable to relate your issue to business considerations. So, start your briefing by pointing out that what you are about to discuss is a law that stifles business innovation, not to mention critical lab-physician collaboration, particularly regarding new integrated care models. 

Now lay out the legal fundamentals. Remind the execs that The Stark Law, aka Physician Self-Referral Law, bans physicians from referring Medicare or Medicaid patients to labs in which the physician or a family member has a financial relationship unless the transaction meets a specific exception or “safe harbor.” While nobody disputes the necessity of reining in crooked physician kickback arrangements, explain that the law has drawn decades of industry criticism for being overly strict and not allowing the health care business to breathe and develop the way other sectors do.

Next, explain that on June 20, the CMS issued a new RFI signaling its sympathy for industry views and openness to meaningful changes. “CMS is aware,” the RFI notes of the Stark Law’s effect “on parties participating or considering participation in integrated delivery models, alternative payment models and arrangements to incent improvements in outcomes and reductions in cost.” The RFI invites the public to vent their concerns and suggestions for fixing the problem.

Anticipating the Skepticism
Chance are, that at least some of your lab execs have heard this before, especially if they’ve been around the industry a while. So, acknowledge that this is hardly the first time that the government has dangled vague promises of Stark relief. Point out that two years ago, Congress held hearings to discuss whether Stark should be rolled back to allow for value-based, coordinated health care service business models and arrangements. (See GCA, Aug. 15, 2016.) Until now, little has come from any of this.

But explain why, at least on the surface, things appear to be different this time. First, cite the broader context of a new administration dedicated to liberating private business from the burden of government regulation. More significantly, explain that while the RIF is ostensibly focused on new coordinated care and payment models, it indicates CMS’s willingness to delve into core principles of the Stark Law covering the entire gamut of covered business arrangements, including:

  • The definitions of “commercial reasonableness” and “fair market value”;
  • When compensation is deemed to “take into account” physician referral volume or value and “other business generated” between parties to an arrangement; and
  • Whether requiring greater transparency for business arrangements instead of banning them altogether might allow for achievement of basic Stark Law objectives.

What’s on the Table
If you want to provide a more complete list, here are all of the key issues on which CMS is seeking input:

1. How Stark is affecting commercial alternative payment models and whether additional safe harbors are necessary to protect such arrangements;

2. The effectiveness of the current Stark risk-sharing arrangement exception;

3. Whether CMS should add a “special rule for compensation under a physician incentive plan” within the current Stark personal services arrangements exception;

4. The barriers physicians face in qualifying as a “group practice” under the current Stark Law; and

5. How CMS could interpret the current DHS safe harbor, i.e., exception for remuneration unrelated to designated health services more expansively to cover a broader array of arrangements.

Note that the deadline to comment is Aug. 24, 2018.

Conclude by noting to the execs that the last thing you want to do is get their hopes up. But if—and acknowledge that it’s a huge “if”—the agency’s actions are in line with its new tone and approach, real and meaningful Stark Law relief may actually come to fruition. Promise to keep the C-Suite in the loop.

Last but not least, stay tuned to GCA for further developments that you’ll need to cover in your follow-up briefing(s).


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