CMS to Propose Significant Changes to Stark Law

At the Federation of American Hospitals’ 2019 Public Policy Conference on March 4, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced the agency’s plan to make dramatic changes to the federal physician self-referral prohibition, commonly known as the Stark Law. The changes are designed to support a value-based model of care in which physicians may refer patients for ancillary services in which they may have a financial interest, as opposed to the fee-for-service model that was nearly universal when the Stark Law was enacted in 1989.

Possible liberalization of the Stark Law has been widely discussed for several years, and CMS had requested input from the public last June on the burdens of the law. Verma said that the update will be “the most significant changes to the Stark Law since its inception.” The update is due to be issued later this year.

Some of the expected changes include (1) clarifying the regulatory definitions of “volume or value” of referrals, “commercial reasonableness” and “fair market value,” (2) addressing technical noncompliance, such as lack of signatures or incorrect dates, and (3) updating the law to address cybersecurity and electronic health records requirements.