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Stark Law amendments finalized

January 11, 2021

CMS finalized the Medicare Program: Modernizing and Clarifying the Physician Self-Referral Regulations final rule, also known as the Stark Law, on Nov. 20 to include significant changes to the law with expanded guidance and clarification.

When the Stark Law was enacted in 1989, healthcare was paid for primarily on a fee-for service basis. Medicare and other private health insurers have since implemented value-based healthcare delivery and payment systems to address the increase of cost growth in the volume-based system. The final rule creates permanent exceptions to the Stark Law for value-based arrangements. These exceptions apply regardless of whether an arrangement relates to care provided to Medicare or other patients.

Changes include:

  • Revising the definition of Designated Health Services to exclude inpatient services paid under the prospective payment systems if furnishing the services does not increase the amount of Medicare’s payment to a hospital.
  • Finalizing the definition of “physician” to align with the statutory definition in the Social Security Act. The definition includes a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry and a chiropractor but provides for certain limitations on when such doctors are considered “physicians.” CMS clarifies in the final rule it does not believe the definition of “physician” in the regulations should be more limited or more expansive than the statutory definition and all fall within the Stark Law’s scope.
  • Explaining group practice definition revisions clarify a physician in the group may be paid a share of overall profits that is not directly related to the volume or value of the physician’s referrals based on other specified conditions.
  • Establishing new exceptions for:
    • Arrangements a physician receives a limitation of remuneration for items or services not exceeding a total of $5,000 per calendar year without the need for a “signed writing” and compensation that is set in advance based on specific terms.
    • Value-based compensation arrangements between or among physicians, providers and suppliers that require the physician be responsible to pay or forego no less than 10 percent – rather than paying 25 percent as proposed – of the value of the remuneration the physician receives under the value-based arrangement.
    • Protecting arrangements involving the donation of certain cybersecurity technology and related services, including certain cybersecurity hardware donations.

Besides changes to the definition of “Group Practice” effective Jan. 1, 2022, all other revisions will go into effect Jan. 19. OMS offices should consult with their practice attorney if they have specific questions on how the changes to the new Stark Law affect them.