Stark Relief: Change Seems Imminent but Less Dramatic than Industry Wants

CMS is giving serious indications of its willingness to entertain Stark Law relief. Back in June, CMS issued a Request for Information (RFI) seeking public comments and suggestions on changes to relieve the Stark Law’s “undue regulatory impact and burden.” (See GCA, July 16, 2018.) Comments closed on Aug. 24. And if CMS takes those comments to heart, it means changes are on the way. But don’t get too excited just yet. . .

Main Theme: Stark Is Out of Sync with Modern Health Care
One of the noteworthy things about the comments is who did not participate in the process, namely, consumer advocate groups who would likely oppose any significant changes to Stark. In their absence, the vast majority of comments came from industry and other groups determined to change Stark.

So, it’s hardly surprising that comments overwhelmingly skewed in favor of revamping Stark. While the intent of preventing inappropriate physician referrals remains valid, commentators were all but unanimous in saying that Stark needs to change to reflect current medical industry practices. The law was adopted at a time when Medicare services were provided on a fee-for-service basis and health care was provided in distinct silos, several noted. Those conditions no longer pertain today. In addition, modern industry payment policies and reimbursement models currently address the referral risks that Stark was meant to prevent.

3 Things the Commentators Want
Among the notable comments and suggestions:

1. New Value-Based Payment Exception

Create a new Stark exception for value-based payment methodologies that allows hospitals to incentivize physicians for selecting the most efficient and effective care options by sharing a portion of any cost savings when overall costs of care are reduced.

2. Clarify & Expand Current Exceptions

CMS needs to clarify and expand some of the existing exceptions for value-based payment. For example, several commentators suggested expanding the personal services arrangement exception by removing limitations on its applicability to commercially insured patients.

3. Clarify Key Definitions

The comments cite several important Stark definitions that are extremely difficult to decipher—and thus comply with—that CMS needs to clarify or simply redefine, including:

  • “fair market value”;
  • “financial relationship”; and
  • “remuneration”.

What Happens Next?
After comments, the next step after comments in the new rulemaking process is for CMS to propose new rules based on the comments. This is unlikely to happen quickly, notes Nashville health care attorney Bradley J. Sayles. And any new rulemaking that CMS does propose must be submitted for 60 days of public comment. Thus, even if CMS fast tracks the process, it’ll take at least six months for permanent changes to be made. And even that seems overly optimistic. Sayles suggests a best-case scenario of one year.

Takeaway: Don’t Get Too Excited
Sayles also throws cold water on the hopes for sweeping change. Real change can only happen legislatively, he contends. The best CMS can do is revamp definitions to remove ambiguities and create more certainty. It can also pitch new exceptions as it has in the past. But previous recommendations for Stark changes fell on deaf ears and Sayles says there’s no guarantee the outcome would be any better this time around.


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