Brief Your CEO: Notify Your Lab Execs of Upcoming Stark Law Changes

One of the best ways to score points with your lab’s executives is to warn them about legal changes before they happen and while there’s still time to prepare. And now you have an opportunity to do just that. Making this opportunity even sweeter is that the law involved is one of the biggest nemeses of any lab, namely, the Stark Law, and that the upcoming changes are likely to be very favorable. Here’s what to cover in your briefing.

Explain the Stark Law
Set the stage by reminding the execs that the Stark Law is designed to prevent physician self-referrals and ensure that physicians order services based on patient needs rather than the physician’s own financial interests. Suggest that while this remains a valid objective, the Stark Law provides a Jurassic solution to a 21st century problem. That’s because the Stark Law was designed in and for the fee-for-service context of 1989, a world that no longer exists.

The Winds of Change
Continue by noting that these problems are universally recognized and that there’s been talk of revising the Stark Law for years. Up to now, talk of Stark reform has been just that—talk.

But it appears that the latest efforts aren’t just another false alarm. Note that just last year, CMS solicited feedback on how the law should be changed for modern times and received more than 300 comments from hospitals and providers. Among the suggestions:

• Don’t punish providers for inadvertent violations such as missing a signature or using an incorrect date; and
• Create an exception for providers in value-based arrangements.

Even more encouraging were the remarks of CMS Administrator Seema Verma during her recent speech at the Federation of American Hospitals conference indicating that by the end of the year, the Stark Law will get the biggest makeover it’s ever had since its inception back in 1989.

Today, medical dollars are spent on outcomes, not individual services. “In a system where we’re transitioning and trying to pay for value, where the provider is ideally taking on some risk for outcomes and cost overruns, we don’t have nearly as much of a need to interfere with who’s getting paid for what service,” Verma noted in her speech.

Changes to Expect
Let your execs know that Ms. Verma said that CMS is currently working on regulations designed to ensure Stark’s workability for value-based and other modern conditions without compromising its effectiveness in deterring Medicare referral abuses and protecting program integrity. She suggested that the changes will be unveiled later this year and are expected to include:

• Clarification of the regulatory definitions of volume or value, commercial reasonableness and fair market value;
• New rules addressing lack of signature, incorrect dates and other forms of technical noncompliance; and
• New provisions allowing for arrangements addressing cyber-security, EHR and other digital challenges.

Wrap the briefing by explaining that you’ll be tracking events and will immediately relay any new developments. And, while you don’t need to say this to the execs, keep in mind that when the changes are published, we’ll let you know what they say, what they mean and what to do to comply with them.