Stark Laws Will Undergo Inter-Agency Review

The Centers for Medicare and Medicaid Services (CMS) Administrator recently announced plans to convene an inter-agency group to minimize the regulatory burdens of the Stark Laws. Providers raised concerns about the original Stark Law when it was introduced in 1989. When the law saw significant expansion in the 1990s, those concerns grew with it. Over the years, CMS has issued several regulations implementing the physician self-referral prohibitions in the statutes. The agencies involved in the review include CMS, the Department of Health and Human Services (HHS) Office of Inspector General (OIG), the HHS Office of the General Counsel, and the Department of Justice (DOJ).

Stark Law Regulations Under Review

The Stark Laws prohibit doctors from referring Medicare and Medicaid patients to entities with whom they have financial relationships, for certain designated health services, unless they fall under specific exceptions. The laws also prevent hospitals from paying providers more when they meet certain quality measures, such as reducing hospital-acquired infections, while paying less to those who miss the goals. Consequently, the laws are viewed as a barrier to innovative payment arrangements because such payments may not pass the fair market value exception. Essentially, many view these self-referral prohibitions as interfering with key factors related to value-based care. Unlike the Anti-Kickback Statute that is enforced by the OIG, the Stark Laws are considered regulatory and under the jurisdiction of CMS. However, from a regulatory standpoint, there is only so much that CMS can do to make substantive changes. Any real changes in the law will have to come from Congress.

This is not CMS’s first effort to ease the Stark Laws’ regulations. In November 2015, CMS published a Final Rule relaxing aspects of the Stark Law, including the easing of some of the strict liability features and CMS’s burden in dealing with the interpretation of key terms, requirements and other issues. After reviewing a significant amount of self-disclosures, CMS realized that a large part of their docket involved arrangements that may technically violate the statute but do not actually pose significant risks of abuse. Therefore, it appears that CMS sought to reduce the number of self-disclosures reported with its regulatory changes. However, the regulatory update also intended to account for recent changes relating to health care reform and advancements in patient care and payment methodologies. CMS wanted to ensure that the Stark Laws and regulations do not inhibit Affordable Care Act (ACA) reforms and these are the same concerns driving its latest initiative.

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