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But We Were Just Figuring It Out: Possible Changes Ahead for Stark Law?

on Tuesday, 3 July 2018 in Health Law Alert: Erin E. Busch, Editor

On June 25, 2018, the Centers for Medicare and Medicaid posted a request for information seeking public comment on reducing the regulatory burden of the Stark (self-referral) Law. The comment period closes August 24, 2018. Specifically, the request states: “[this request for information seeks input from the public on how to address any undue regulatory impact and burden of the physician self-referral law.” The request includes twenty detailed areas of inquiry about which comments are solicited. See 83 Fed. Reg. 29524- 29527 (June 25, 2018). The questions are largely directed to the application of current Stark Law to various new and evolving payment arrangements, e.g., ACOs, pay for performance/quality, gain and risk-sharing.

First adopted in 1990 to reduce the influence of financial relationships on physician referrals, Stark Law has been expanded two times along with five phases of regulations. For several years, various industry groups and Congressional committees have considered changing Stark Law to be less restrictive and limiting to innovative payment proposals. Among these are “A Convener on Stark Law,” held in 2009 by the Public Interest Committee of the American Health Lawyers Association which published a white paper entitled A Public Policy Discussion: Taking the Measure of the Stark Law; along with several roundtables beginning in December 2015 comprised of subject matter experts convened by the Senate Committee on Finance and the House Committee on Ways and Means to discuss reforms to the Stark Law

In addition to its chilling effect on new payment models, there is deep concern about the strict liability aspect of the Stark Law and its ruinous penalties, treble damages and the possibility of creating a basis for a false claims act case. This concern couples with a parallel, but unsynchronized, connection with the Anti-kickback Statute and its regulatory safe harbors which are not strict liability but include an intent analysis for arrangements falling outside of a safe harbor.

Reform is in the early stages and has so far been mainly directed to educating lawmakers so that meaningful legislation can be proposed. The underlying feeling seems to be that mere tinkering with additional exceptions–for example–will not tame the Stark monster and that more radical changes are required.

Please contact us if you would like assistance in formulating comments.

Julie A. Knutson

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