Stark Law updates aim to modernize regulation, support new care models

CMS finalized the long-awaited Stark Law final rule on November 20. The final rule includes significant changes to exceptions to the law as well as expanded guidance and clarification. The changes, proposed in 2019, are the first major update to the law since it was enacted in 1998.

The Stark Law was designed to protect patients and Medicare from costs associated with unnecessary services. Stark Law achieved this through two methods: the physician self-referral law and the Anti-Kickback Statute. In practice, this prohibited physicians from making referrals for certain services, payable by Medicare, to an organization with which the physician or an immediate family member has a financial arrangement.

In addition, the law prohibited organizations from filing claims with Medicare, another payer, or an individual for those services. The law did provide a process for creating exceptions, called safe harbors. However, as value-based care arrangements have emerged as a method to improve quality and control costs, stakeholders pointed out that concerns about violating Stark Law discouraged physicians and organizations from adopting value-based care arrangements.

The final rule establishes permanent exceptions for value-based care arrangements and includes separate, specific definitions and exceptions for the physician self-referral law and the Anti-Kickback Statute. Compensation arrangements may implicate both, so organizations will need to review both aspects to ensure they are in compliance. Exceptions to the physician self-referral law include compensation arrangements based on the level of downside risk taken by the parties or organization.

The final rule includes guidance on how to meet key requirements, including determining fair market value.

In addition, the final rule provides exceptions for certain beneficial arrangements between physicians and other providers, such as donations of cybersecurity technology.

Most provisions of the final rule are effective January 19, 2021. See the fact sheet for more information.