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CMS to Review Stark Law in Connection with Payment Reform

CMS has recently signaled its intention to review the Stark Law and its impact on providers. During a January, 2018 American Hospital Association webinar, CMS Administrator Seema Verma announced the development of an inter-agency group to review the Stark Law in light of provider complaints that the law acts as a barrier to their ability to improve the quality and efficiency of healthcare. While Administrator Verma presented few details, the initiative will involve representatives from CMS, OIG, and DOJ. The review is in line with CMS’s “Patients Over Paperwork” project which aims to reduce regulatory obstacles in accordance with the current administration’s broad goal of reducing regulation.

The Stark Law generally prohibits physicians from referring certain cases to organizations with which the physician has a financial relationship, unless an exception applies. Because of the Stark Law’s highly technical nature, providers may find it difficult to structure arrangements that can also fit within new payment structures, such as value based payment arrangements. The government itself has recognized this difficulty and, consequently, has offered Stark Law waivers in connection with many of its innovative payment programs. For example, providers participating in the Medicare Shared Savings Program may take advantage of broad waivers of the Stark Law and other regulations if they participate in an MSSP ACO. Administrator Verma seemed to acknowledge the difficulty of reconciling the Stark Law’s restrictions with the current shift to value based payment structures, noting that that the Stark Law “was developed a long time ago”, that current payment systems and operations are different, and “we need to bring along some of those regulations and figure out what we can do.”

While this review may be welcome news to many providers, it is unlikely to result in immediate changes. While sympathetic to the idea that the Stark Law may need to be modernized, Verma acknowledged that significant changes may require action by Congress.

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About this Author

Robert Nauman, Health Care, Lawyer, Squire Patton Boggs

Robert has extensive experience counselling healthcare clients, including hospitals and health systems, physicians, physician groups, ambulatory surgery centers, insurers, health plans and management companies, in a variety of regulatory and transactional matters.

Robert’s areas of expertise include healthcare fraud and abuse laws, Medicare reimbursement issues, provider alignment strategies, provider enrollment, accreditation and licensure, Accountable Care Organizations, provider acquisitions and affiliations, healthcare antitrust matters,...

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