Providers, legal experts urge changes to Stark Law

Screenshot of Dr. Paulus testifying

Providers and legal experts continue to urge legislators to repeal the Stark Law--or at least initiate significant changes--arguing the legislation has become too cumbersome and impedes the transition to value-based care.

Hospital executives and healthcare attorneys criticized the law’s rigid inability to adapt to the changing healthcare environment during a hearing Tuesday before the Senate Committee on Finance. Sen. Orrin Hatch (R-Utah) called the law “the embodiment of good intentions muddled with complex execution.”

Originally intended to prevent financial relationships between providers from influencing patient care, the Stark Law prohibits doctors from referring patients to other providers with whom they have a financial relationship. During opening remarks at the hearing, Sen. Ron Wyden (D-Ore.) said clear guidelines regarding patient referrals must strike a balance between new payment models and the original intent of the law.

“In certain ways, it could be as simple as revisiting the rules that are already on the books,” he said.

But experts testified that a full repeal of the Stark Law is necessary. Calling the law a “tortured web of confusing standards,” Troy Barsky, a partner with Crowell & Moring LLP, and the former director of the division of technical payment policy at the Centers for Medicare & Medicaid Services, urged Congress to at least consider significant reforms, such as “bright line rules” that would eliminate confusion and reduce penalties for technical violations. He added that eliminating rules against compensation arrangements--while maintaining regulations prohibiting ownership relationships--would allow for more innovative payment models, while maintaining fraud protections under the Anti-Kickback Statute.

Ronald Paulus, M.D., president and CEO of Mission Health in Asheville, North Carolina, testified that a full repeal of the law would give providers the leeway to engage independent physicians in value-based payment models. Peter Mancino, deputy general counsel at Johns Hopkins Health System, added that he receives questions about physician gainsharing programs “literally every week” and said the recent implementation of the Medicare Access and CHIP Reauthorization Act of 2015 offers an ideal opportunity to eliminate confusion over the basic Stark requirements.

The hearing followed the committee’s previously released report evaluating potential changes to the Stark Law, as well as a report from the American Hospital Association outlining seven ways Stark and Anti-Kickback laws impede care coordination. Providers have expressed confusion regarding Stark Law requirements as several hospital systems have entered into multi-million dollar settlements to resolve alleged physician compensation violations.

- watch the hearing
- read Hatch’s opening statement
- here’s Wyden’s opening statement
- read testimony from Barsky
- here’s testimony from Paulus

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