The Stark Law, named after Rep. Pete Stark, a Democrat from California, was originally enacted in 1989 with the basic premise of not allowing physicians to refer Medicare or Medicaid patients to healthcare services from which the physician or a member of the physician’s family would profit financially. Over the years, additional regulations and exceptions were added to the Stark Law and it eventually became a vast collection of regulations and statutes.
The idea behind the original concept was to keep physicians from sending patients for unnecessary tests or healthcare services and driving up healthcare costs. In October 2019, given the current shift to value-based care and away from the fee-for-service model, the Centers for Medicare & Medicaid Services (CMS) proposed a new ruling that would “modernize and clarify the regulations that interpret the Medicare physician self-referral law,” or the Stark Law.
CMS published a Request for Information (RFI) in June 2018, soliciting input on addressing regulatory barriers to a value-based healthcare payment and delivery system under the Stark Law. The responses they received indicated that “regulations have not kept up with the evolution of a healthcare landscape that is focused more on value than volume.” Comments included requests for “additional guidance on fundamental requirements and other changes to help ease burden and make compliance more straightforward.”
As a result, CMS is now proposing a rule that would “create new, permanent exceptions to the Stark Law for value-based arrangements.” With today’s healthcare environment, industry stakeholders are now saying that “because the consequences of noncompliance with the Stark Law are so dire, physicians and other healthcare providers may be discouraged from entering into innovative arrangements that would improve quality outcomes, produce health system efficiencies, and lower costs (or slow their rate of growth).”
CMS states that revisions to the Stark Law that are based on the changing value-based healthcare environment “would unleash innovation by permitting physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law.”