The 80’s are back, but it’s not fashion you should worry about. First enacted in 1989, the Stark Law is getting significant updates from CMS that benefit patient care, according to a proposed rule issued in October 2019.

Comply with these new regulations that open the door to areas previously restricted as conflicts of interest.

The Stark Law has been revised several times in the past, but it’s complicated. And many physicians remain in the dark about exactly what is or isn’t okay under Stark.

Not only that, there are a myriad of exceptions that physicians must navigate to stay in compliance. That’s a problem because the penalties for violating this complex regulation — including heavy fines and exclusion from Medicare/Medicaid — are serious.

Avoid Penalties When Following New Stark Law

The purpose of the Stark Law — that regulates physician self-referral practices — is to prevent physicians’ (and their family members’) financial self-interest from impacting patient care. For example, steering patients to unnecessary or more expensive services or procedures.

The tangled web that is the Stark Law encompasses such diverse arrangements as physician compensation, leasing office space, consulting fees, business opportunities, ancillary services, marketing, and more. In short, the Stark Law aims to prevent conflicts of interest between physicians and patients.

Change: The new proposed rule has goals beyond physician-patient conflicts of interest, including:

• Reducing physicians’ regulatory burden and simplifying compliance
• Supporting CMS’s “Patients Over Paperwork” initiative
• Making care coordination easier
• Supporting the ongoing transition from fee-for-service to value-based care

So what do you need to know about the upcoming changes to Stark? Keep reading to find out.

Note: CMS is accepting comments on this proposed rule until Dec. 31, 2019.

Value-Based Reimbursement: Stark Plays Catch-Up

Currently, the Stark Law is at odds with the transition to value-based care. It prohibits some arrangements that could improve care coordination, reduce waste/cost, and improve quality of care. While Stark already has many safe harbors, the proposed rule creates even more.

On deck are permanent exceptions that promote value-based care. Penalties for violating Stark are so severe — and often coupled with penalties under the False Claims Act.

Due to fear of non-compliance, well-intentioned physicians may avoid entering legitimate value-based arrangements. The new exceptions would remove that fear and encourage the formation of innovative value-based arrangements.

Example: Bundled payments/episodes of care are one example. The current Stark Law prohibits a physician from referring a patient for testing at a lab where the physician has ownership interest. But with a bundled arrangement, that testing may be included in the entire diagnosis/treatment package.

If the physician is forced to refer to an outside lab, he may opt out of the bundled payment arrangement, even though that arrangement would have lowered the cost of care.

New way: The updated Stark Law would create an exception for situations like this.

Another example: The new law would allow physicians to give patients free “smart” pill boxes that electronically alert providers if the patient missed a dose. This would enable better quality care, but under the current Stark law would be considered an incentive for self-referral (the physician would be “rewarding” the patient for using their practice).

New Guidance on Compliance Reduces Monetary Expense

Many physician practices contribute a significant chunk of money to maintain compliance with the Stark Law in its current form. For example, the cost of regular consultation with healthcare attorneys is quite high.

One problem? The current Stark Law is vague. For example, the law requires that physician-to-physician compensation meets “fair market value,” but the law doesn’t clarify what “fair market value” means.

Change: The updates would spell out how to determine if compensation is “fair market value.” The proposed rule adds clarity to several other technical compliance requirements, with the goal of reducing physicians’ administrative and monetary burden.

The New Stark Law: It’s all about the Data

Coordination of care relies in no small part on providers being able to seamlessly share patient data and analytics. The proposed Stark updates create allowances for several different types of arrangements that would promote data-sharing.

Example: Under the new law, a hospital could provide free cybersecurity software to physician practices that refer patients to that hospital. Currently, that would be interpreted as providing the physician practices an incentive to refer patients to that hospital — noncompliant under Stark.

Benefit: Cybersecurity and patient privacy are top government concerns. Since the hospital and practices must share patient data, it’s in everyone’s best interest that the data is well-protected. The security and care coordination benefits outweigh any referral concerns.

Another example is remote patient monitoring technology. Under the new Stark, physicians could provide patients with free remote monitoring tools without fear of running into trouble with Stark. The improvements to the quality and value of the care patients receive (i.e. for those with chronic illnesses) outweigh any concerns that the physician is providing an incentive to the patient.

The bottom line: Providers have long-awaited these and other updates to the Stark Law. Because it was created to suit the fee-for-service market, providers have found that the law in its current form makes the transition to value-based care even more challenging. Only time will tell if the new law in its final form will ease that burden while still protecting patients from unscrupulous providers.

Resource: https://www.hhs.gov/sites/default/files/cms-stark-law-nprm.pdf

Apply Stark Law to Your Practice

You probably have lots of lingering questions about how to implement the Stark Law changes in your practice – and how they will impact your major strategic decisions. Get the advice straight from healthcare attorney Joseph Wolfe, JD, in the online medical training session, Proposed Stark Law Compliance 2020.