NEWS
Ahead of Schedule and Still Catching Up : CMS Finalizes Stark Law Changes
In the waning weeks of the Trump administration , the Centers for Medicare & Medicaid Service ( CMS ) released the final rules for the first major updates of the Physician Self-Referral Law , typically referred to as the Stark Law , since the Stark II rulemaking changes were finalized in the early 2000s . These newest final rules went into effect in January 2021 .
The Stark Law governs physician ethics with the goal of preventing corruption and self-dealing schemes . In essence , the law as originally introduced was to prevent physicians with Medicare or Medicaid patients from referring those patients to receive services in a medical facility in which the physician has a financial interest . This law was enacted in a time when patient care was primarily centered on a volume-based or fee-for-service financial model . However , like many things that changed in 2020 , the healthcare industry is changing and changing fast .
The healthcare industry is now moving toward a value-based purchasing model , 1 and the movement within the sector has not gone unnoticed by CMS . Former CMS Administrator Seema Verma has stated the goal of the new Stark Law is to help modernize the healthcare system through creating less burdens for providers and making the law easier for physicians and providers to ensure compliance with the statutory regime . 2 Some of the revisions to the Stark Law include :
1 . Defined terminology of value-based enterprises
2 . Exceptions to Stark Law liability if certain value-based arrangements criteria are met
3 . A clarified definition of fair market value
In a sector that is rapidly moving toward a value-based system , understanding the definition will be vital to ensure no one runs afoul of the Stark Law . The new rules define a value-based enterprise as one that : ( 1 ) has at least two participants , ( 2 ) has an accountable entity whose purpose is to conduct financial and operational oversight of the value-based enterprise ; and ( 3 ) has governing instruments that define how the enterprise will achieve the stated purposes .
The new exceptions to Stark can only apply once some level of risk has become assumed by the physician or the value-based enterprise . These levels can range from assuming complete financial risk to assuming meaningful downside risk to even , in limited cases , no risk was assumed by the value-based enterprise . The last exception has more stringent regulatory guardrails to prevent abuse — keeping in the spirit of the anti-fraud and abuse law .
In order for physicians and healthcare organizations to feel confident to take advantage of the exception in the Stark Law , they must know how to meet the threshold criteria . To fall into the Stark Law exceptions , a fair market value and commercial reasonableness test must be met . CMS has made it easier to determine fair
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