Docs concerned about financial risk in Stark reform while hospitals push for clarity

Doctor groups believe proposed major reform to the Stark Law could add more administrative work and create new obstacles to setting up value-based enterprises.

Hospitals, on the other hand, are largely pleased with the overhaul released by the Centers for Medicare & Medicaid Services (CMS) last year. Groups do want clarity, however, on key parts of the regulation.

The proposed rule, the comment period for which closed Dec. 31, outlines new definitions and exceptions to ensure that value-based arrangements between doctors and hospitals don’t run afoul of the Stark Law, which prohibits physician self-referrals.

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In comments to the proposed rule, major doctor groups are opposed to key parts of the regulation.

For instance, the American Medical Association (AMA) opposes a requirement that a value-based enterprise, which is a deal between two individuals or entities to provide value-based care, have a compliance program.

“Most clinicians are not looking to defraud the federal government; therefore, more paperwork requirements are not going to decrease the risk of harm,” the AMA said in comments to the rule. “This additional layering of more burden will lead to further physician burnout and potentially decrease desire in participation in value-based arrangements.”

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The proposed rule offers new exceptions that value-based arrangements can claim to avoid Stark Law penalties. One exception focuses on physicians that agree to take on “meaningful downside financial risk,” where the physician must reimburse the payer in the arrangement for not meeting spending targets.

The rule defines “meaningful downside financial risk” as the physician must pay back 25% of the value of the incentive payments.

That figure is much too large, the AMA argues. The group says that other payment models have financial risk of 8% or 9% as opposed to 25%.

“Based off of our interpretation, this definition is too high of a risk-percentage to enable any physician to participate in a value-based arrangement and receive protection under this proposed value-based exception/safe harbor,” the AMA said.

Another exception would refer to an organization that takes on “full financial risk” as opposed to only meaningful risk.

Both risk exceptions could exacerbate the consolidation of hospital and physician practices, said the Community Oncology Alliance, which represents stand-alone oncology practices, in comments.

“Given the competing practice needs and unique nature of community practices, community oncologists are often hesitant or unable to take on even greater financial risk on top of the uncertainties associated with staying financially viable in order to keep the practice doors open,” the group said.

Meanwhile, hospital groups were largely in favor of the regulations outlined in the proposed rule, albeit with some suggestions.

The American Hospital Association wants CMS to give more clarity on any monitoring requirements in the final regulation.

“Depending on the scope and required frequency of any monitoring obligations, the burdens on participants could be tremendous,” the group said. “In arrangements where physicians are measured against hundreds of care protocols or quality metrics, continuous monitoring of the clinical evidence with respect to each metric simply is unrealistic. It also would call into question whether the attention to paperwork has overtaken attention to patient care.”

The Federation of American Hospitals also wants CMS to adopt a waiver for any CMS-sponsored value-based care models to be exempt from the new requirements.

“Because the CMS-sponsored models have already been approved and include safeguards, an exception for these models is appropriate,” the federation said in comments. “A lack of such an exception for the Physician Self-Referral Law may impact future voluntary participation in these models.”