Speak Now or Forever Hold Your Peace: CMS Requests Provider Input on Relaxing Stark Law with Focus on Care Coordination

Since its adoption in the 1990s, Stark Law compliance has often been extremely onerous for providers. Because the Stark Law is a strict liability statute, even unknowing violations can lead to serious liabilities for providers, including civil sanctions, costly civil monetary penalties, and exclusion from the Medicare and Medicaid programs. Moreover, because the Stark Law and its implementing regulations are significantly complex and rigid, it is challenging to structure compliant physician compensation arrangements – particularly in the context of alternative payment models and other novel financial arrangements. It can also makes it difficult for physicians outside of a centralized group practice to hold ownership interests in entities providing designated health services.

Both CMS and the Department of Health and Human Services indicated that a key priority of the Trump administration is transitioning toward a health care system that pays for value rather than volume by removing obstacles to coordinated care. In response to a CMS request last year, several stakeholders identified the Stark Law as a major barrier to achieving a fully-functional value-based system due to the Stark Law’s restrictive nature and high regulatory burden on health care providers. CMS issued the new RFI to now seek input from stakeholders on the means by which the Stark Law, in its current form, burdens providers and unnecessarily prevents or inhibits care coordination.

According to CMS Administrator Seema Verma, CMS is “looking for information and bold ideas on how to change the existing regulations to reduce provider burden and put patients in the driver’s seat.” In particular, CMS has solicited comments on several aspects of the Stark Law, including:

• The structure of arrangements between parties that participate in alternative payment models or other novel financial arrangements, regardless of whether the arrangements are sponsored by CMS;
• The need for revisions or additions to exceptions to the Stark Law to protect ownership interests, alternative payment models, and financial arrangements that involve integrating and coordinating care outside of an alternative payment model;
• The situations in which compensation should be considered to “take into account the volume or value of referrals;” and,
• Defining or redefining terminology in the context of the Stark Law, including, but not limited to, “fair market value” and “commercial reasonableness.”

The RFI presents an important and unique opportunity for providers to engage CMS regarding a restructure of key Stark Law regulations. Providers who have struggled to develop successful innovative payment models or coordinated care arrangements due to the regulatory hurdles currently posed by the Stark Law should strongly consider providing comments to CMS in response to the RFI. CMS will accept comments in response to the RFI up to August 24, 2018.

Arent Fox regularly monitors developments with the Stark Law and has extensive experience assisting clients prepare informed and persuasive comments in response to requests for information and proposed regulations. If you would like to learn more about the RFI and how you can share your ideas with CMS, please contact Douglas Grimm, Hillary Stemple, Kate Steffen, Linda Baumann, or David Greenberg in our Washington DC office, Lowell Brown, Tom Jeffry, or Harsh Parikh in our Los Angeles office, or the Arent Fox professional who routinely handles your matters.