New Stark Law exceptions and value-based care

Everything you need to know about the new Stark Law exceptions

The final rules released last month by the Medicare & Medicaid Services (CMS) have made sweeping changes to the regulations enforcing the Stark Law.

How would these changes affect physicians? What are the new Stark law exceptions? Would they aid coordinated care, or would they discourage physicians from participating? Let us explore these issues in the blog below.

Everything you need to know about the new Stark Law exceptions

As per some experts, the new rules make it easier for healthcare providers to take part in value-based care. Moreover, they reduce the regulatory burden connected with the Stark Law as well.

First, let’s look at the major changes brought about by the new rules.

  1. New guidance on key Stark Law terms. This includes terms, such as commercially reasonable, fair market value, and volume and value standard.
  2. New definitions for terms, such as designated health service, referral and transaction. These changes aim at narrowing the scope of the law.
  3. Updates to existing Stark law exceptions. These updates would aid coordinated care and value-based arrangements.
  4. New exceptions for value-based care. These exceptions would make it easier for physicians to enter into innovative care arrangements.
  5. New exception to aid the industry to put in place strong cybersecurity measures. The changes would help healthcare providers deploy better technological measures against cyberattacks.

But how would these changes affect the healthcare industry, especially the physicians?

The final rules

The final rule issued by the CMS addresses the changes to the Stark Law.

The guidance was released along with new regulations on the Anti-kickback statute, and the civil monetary penalty rule about beneficiary inducement. The Office of the Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) released these updates as two final rules.

As per the experts, the previous regulations were hindering providers from participating in value-based care arrangements. Being a strict liability statute, the Stark law does not need proof of intent. This means that a physician could get penalized even for violating the law accidentally. Such dire consequences were forcing physicians to shy away from working together. Changes were long due to address this issue.

New Stark Law Exceptions

The final rules aim at redressing this problem. Firstly, they reduce the regulatory burden of the law. Secondly, they provide greater flexibility to physicians who enter into a value-based arrangement.

Equally important is the exception that facilitates the providing of tools and support to patients. Physicians can now provide technology tools, such as a smart tablet or health monitoring devices to their patients.

Another important point is the cybersecurity exception. This exception would allow physicians to accept donations of tools and services from large providers. This would benefit both parties. Physicians would get access to tools that were otherwise unaffordable for them. At the same time, it would enable large health systems to protect all their systems from cyber threats.

Benefits of the new Stark Law Exceptions

The changes to the Stark law regulations, along with the changes to the AKS and the Beneficiary Inducement CMP aim at providing regulatory relief to physicians who had to juggle between two different systems.

Most health plans, including Medicaid have shifted to value-based care. They pay physicians for the quality of care, while the physicians are still working under a fee-for-service system. How did this happen?

This is because the previous regulations were tailored for a system in which physicians were paid for their services. The law kept a check on fraud by penalizing unnecessary referrals. A physician can get penalized for certain referrals, even if the referral violates the law unknowingly or accidentally.

One the other hand, value-based requires physicians to work with other care providers. Under the new system, physicians are paid not for their service but for the quality of care that the patient receives.

To cover for such issues, the final rule has added several exceptions. The first, applies to value-based systems in which the enterprise assumes the full financial risk from the payor.

The second, applies to arrangements under which the physician is at downside monetary risk for failing to achieve the value-based purpose of the enterprise. And the third, applies to any value-based arrangement, if it meets certain conditions. For this exception, CMS has defined some requirements. These conditions would guard patients against fraud under the exception.

In addition, the new exceptions have done away with the typical Stark law requirements. This includes conditions, such as the compensation should be consistent with the fair market value, or that, it should be set in advance. But, they do require that the system should be reasonable.

In conclusion

Back in 1989, when the Stark law was enacted, healthcare payments were primarily on a fee-for-service basis. The law protected patients by preventing physicians from making referrals only for their monetary benefit. The physicians were not allowed to refer patients to entities with whom they had a financial relationship. This protected patients from getting steered to unnecessary, inconvenient, and low quality services.

However, since then federal and private plans have implemented value-based healthcare models. These models are designed to improve the quality of care and reduce waste. And, they reduce costs as well. The incentives are different in such systems. Payments are based on the value of the care delivered rather than the volume of the services provided.

These changes are meant to help physicians to explore value-based models. The new Stark law exceptions would aid the process. Of course, the shift would help lower costs. More importantly, it would promote physicians to coordinate with other providers as well; a practice that would eventually benefit patients across the spectrum.

Jessica Holland

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