CMS Says Big Changes Are in Store for Stark Law by End of Year

The Stark Law is like the weather: Everybody talks about it but nobody does anything about it. But that all may be about to change if CMS Administrator Seema Verma is to be believed. During her recent speech at the Federation of American Hospitals conference, Ms. Verma suggested 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.

A Jurassic Law for a Modern Problem
The objective of preventing physician self-referrals remains and ensuring that physicians order services based on patient needs rather than the physician’s own financial interests remains as valid today as it was nearly three decades ago. The problem is that the Stark Law was designed in and for the fee-for-service context of 1989. And that world no longer exists.

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.

The Move for Stark Reform
Of course, talk of Stark Law reform is nothing new. Last year, the 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.

Changes to Expect
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. The changes will be unveiled later this year, she added, 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.