Healthcare Providers Support Proposed Changes to Stark Self-Referral Rules

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As we reported in October, the Centers for Medicare and Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) published two proposed rules intending to provide greater certainty for healthcare providers participating in value-based arrangements, and to increase flexibility for providers who are coordinating care for patients. The comment period has now closed, and healthcare providers are generally supportive of the changes, but are opposed to price transparency initiatives.

Briefly, the first proposed rule pertains to the Stark Law, which prohibits a physician profiting from referrals to fee-for-service Medicare providers that the physician has a financial interest in. However, it is unclear as to whether the law also applies to value-based arrangements, where physicians are unlikely to receive a financial benefit from the referral. Acknowledging that incentives are different in value-based arrangements, the proposed rule would permit providers to enter into value-based arrangements under three safe harbors. The second proposed rule pertains to the Anti-Kickback Statute (“AKS”) and would offer flexibility for innovation and improvements in coordinated care.

Comments on the proposed rules from healthcare providers have been generally positive. Janis Orlowski, MD, Chief Health Officer of the Association of American Medical Colleges noted that they “… commend CMS for its comprehensive efforts in this proposed rulemaking to increase opportunities for hospitals and physicians to engage in innovative arrangements to enhance care coordination, improve quality, and reduce costs. In this rulemaking, CMS takes a major step forward by addressing many of the real-world challenges that hospitals and physicians encounter when trying to structure arrangements that comply with the Stark regulations.” American Academy of Neurology President James Stevens, MD noted that “[t]he [American Academy of Neurology] believes that many of the proposed changes will support physicians as they transition to value-based payment models, while reducing regulatory burdens and compliance costs.”

Other groups voiced similar sentiments, with the American Gastroenterological Association adding that “ … we firmly believe that steps can and should be taken to make allowances for ‘value-based’ payment models while continuing to protect against program and patient abuse. … [and] we believe these proposals have largely succeeded at striking that balance.” While the American Medical Group Association noted that they are “ … supportive of these exceptions, which would allow providers to take more innovative approaches in their financial arrangement while encouraging and removing barriers to value-based care.”

Other groups, however, were concerned about the price transparency initiatives which the administration is considering tying to the Stark Law value-based care exemptions. That proposal would require providers to give patients information about out-of-pocket costs for any such referrals. For instance, Robert Seligson, President of the Physicians Advocacy Institute cautioned that “ … information to be made public [should] first be shared with physicians and others to ensure that it is accurate, and that physicians have appropriate time to review and correct the information … . Furthermore, … it is important to display and present the information with accuracy and in a manner that is helpful and not confusing to patients and others, with explanations for patient cost sharing.”

 

At this point it is not clear which of the proposals will be included in the final rules, however the proposed rules demonstrate that the Trump Administration is serious about reforming and evolving the Stark Law, which was passed three decades ago and includes many provisions that are not consistent with many of the quality-based treatment models in existence today.

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