STARK LAW

CMS Mulls Stark Law Relief: This Time It May Be for Real

After decades of complaining about the Stark Law, the lab industry may now have an actual opportunity to secure meaningful relief. On June 20, CMS issued a Request for Information (RFI) seeking input on ways to alleviate the law’s “undue regulatory impact and burden.”

What’s at Stake
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, the law has drawn criticism for being overly strict and stifling business innovation and critical lab-physician collaboration, particularly regarding new integrated care models.  

The new RFI signals a sympathy for those views. “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.

What’s on the Table
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.

Deadline to comment: Aug. 24, 2018.

Takeaway: It Might Really Happen
“Fool me once, shame on you; fool me twice, shame on me.”

Skeptics among you can be forgiven—especially if you’ve been around this industry long enough. After all, this is hardly the first time that the government has dangled vague promises of Stark relief. 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 out of this initiative.

But this time things appear to be different. First, consider the broader context of a new administration dedicated to liberating private business from the burden of government regulation. More significantly, while ostensibly focused on new coordinated care and payment models, the RFI signals the 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.

Keep Your Fingers Crossed & Stay Tuned
The last thing we want to do is get your hopes up. But if—and 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.


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