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Will CMS update Stark Law? 3 things to know about new proposal.

The Centers for Medicare and Medicaid Services (CMS) recently released a proposal to change the Stark Law. The proposal is not current law, but the agency has stopped taking public comments.

#1: Volume to value.

The federal agency claims that it supports a shift from a focus on volume in health care to a focus on value. In order to effectuate this shift, physicians need the flexibility to collaborate with other medical professionals. The current Stark Law regulation can act as a hurdle to this goal. Physicians may fear collaboration could be interpreted as a violation of the Stark law or Anti-Kickback Statute.

#2: A bright line test.

The agency has also proposed a test to help better answer the volume or value question. The test has two parts. First, if CMS receives an allegation about a violation it would review whether or not the physician’s use of a facility was a variable used to determine the physician’s compensation. Essentially, if the physician’s compensation is directly impacted by use of certain facilities, a violation would likely exist.

Second, based on the current proposed language it appears a violation would also exist of the physician’s future rate of compensation was determined based on prior referrals.

#3: New exceptions.

CMS also proposed the addition of a value-based care exception. According to the government, this exception is a recognition that “incentives are different in a healthcare system that pays for value, rather than the volume, of services provided.” As such, the government claims the exceptions will encourage these relationships while still providing protection against “overutilization and other harms.” The agency has also proposed an exception for arrangements when the compensation is below $3,500 annually.

As noted above, this proposal is not yet official. We will provide updates on the progression of this proposal as they become available.