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CMS considers easing some Stark provisions


A recent announcement by CMS for comments may be a welcome reprieve for physicians.

In an effort to coordinate care and continue to transition into a value-based payment system, the U.S. Department of Health and Human Services launched the “Regulatory Sprint to Coordinated Care.” Therefore, “[t]o inform our efforts to assess and address the impact and burden of the physician self-referral law, including whether and, if so, how it may prevent or inhibit care coordination, we welcome public comment on the physician self-referral law and, in particular, comment on the questions presented in this Request for Information (RFI).” The physician self-referral law (section 1877 of the Social Security Act, commonly referred to as Stark Law) was originally enacted in 1989 to mitigate healthcare decisions being unduly influenced by a purely financial motive.

There are two provisions in Stark Law that make it a potential target for a False Claims Act case: (1) the provision that prohibits a physician from making referrals for designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial interest; and (2) prohibits claims that relate to those referred services from being filed with Medicare for payment. These provisions are absolute unless the referral meets one of the exceptions (e.g., safe harbors) found in the Stark Law.

Stark Law violations can be costly, as the $237 Million False Claims Act settlement against Tuomey Healthcare System hospital indicates. In Toumey, the United States Department of Justice indicated that, “[t]his case demonstrates the United States’ commitment to ensuring that doctors who refer Medicare beneficiaries to hospitals for procedures, tests and other health services do so only because they believe the service is in the patient’s best interest, and not because the physician stands to gain financially from the referral.” The ruling underscores that the two provisions listed above are not taken lightly.

This brings us back to the comments that CMS is seeking about the Stark Law. Specifically, the government is interested in how Stark Law is limiting participation in value-based and outcomes-based initiatives such as MIPS and MACRA and Accountable Care Organizations (ACOs). (Note: there is a limited waiver exception for Medicare Shared Savings Program ACOs.) 

Moreover, CMS is requesting specifics in relation to the categories or types of arrangements, the parties that bear the risk, and the direction of the downstream payments. The responses will be balanced against the underlying intent of Stark Law, which remains to make patient care the primary focus.

In conclusion, there are two takeaways for physicians:

  • Physicians and hospitals alike need to appreciate that the inquiry into Stark Law violations or potential changes to the law, which may result from the RFI, does not have an impact on Anti-Kickback Statute violations, which are equally as costly; and
  • Physicians should submit comments by 5 p.m. Aug. 24, 2018, to be considered by CMS through http://www.regulations.gov.


Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel be reached through her website, www.rvrose.com.

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