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CMS finalizes changes to Stark Law that hinder physician referral 

The old federal regulations burdened providers with added administrative costs and fear of financial consequences, CMS says.

Susan Morse, Managing Editor

The Centers for Medicare and Medicaid Services on Friday finalized changes to the Physician Self-Referral Law, also known as the Stark Law, which prohibits a physician from sending a patient for many types of services to a provider that the physician owns, is employed by, or otherwise receives payment from. 


These federal regulations have burdened providers with added administrative costs and impeded the healthcare system's move toward value-based reimbursement, CMS said.
The old federal regulations were designed for a system that reimbursed providers on a fee-for-service basis, in which the financial incentive was to deliver more services. However, the healthcare system is increasingly moving toward financial arrangements for payment tied to value, CMS said.

With providers taking on the accountability for the total cost of care for their patients, the risks regarding self-referral have changed. However, ambiguities in the Stark law have frozen many providers in place, fearful that even beneficial arrangements might violate the law, which can come with dire and costly consequences, CMS said. 

The American Hospital Association applauded the move.

Tom Nickels, executive vice president of the AHA said, "The AHA has long called for the ability to coordinate care among providers to provide comprehensive patient care. Outdated regulations created unnecessary roadblocks to the kind of collaboration and coordination that enables caregivers to meet all of their patients' healthcare needs, whether in the hospital, the doctor's office or their own homes. The changes finalized should help to replace numerous waivers of these same regulations needed to experiment with collaborative and innovative care and remove 'impediments to robust, innovative programs' noted in a 2016 report from the Department to Congress."    


Concerns regarding the Stark rule's bureaucratic barriers to value were one of the top concerns raised by providers when CMS held listening sessions in 2017 as part of its "Patients over Paperwork" initiative. 

This has resulted in healthcare providers spending millions of dollars complying with regulations and has impeded the move toward value, not just in Medicare, but across all payers, including Medicaid and private health plans.

The rule finalizes many of the proposed policies from the notice of proposed rulemaking issued in October 2019.

Unless otherwise specified, all of the provisions in this rule will go into effect 60 days from the rule's display date in the Federal Register.


 "When we kicked off our Patients Over Paperwork initiative in 2017, we heard repeatedly from front-line providers that our outdated Stark regulations saddled them with costly administrative burden and hindered value-based payment arrangements," said CMS Administrator Seema Verma. "That sound you hear is the mingled cheers and exclamations of relief from doctors and other healthcare professionals across the county as we lift the weight of our punishing bureaucracy from their backs."

"The Premier healthcare alliance strongly supports the administration's final rules to modernize the Stark physician self-referral law and anti-kickback statute," said Blair Childs, senior vice president, Public Affairs at Premier. "ACO leaders in Premier's data-driven collaborative and other health system leaders have identified these as critical changes to the Medicare program that create clarity and remove barriers to innovation and quality care." 

Twitter: @SusanJMorse
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