By DUSTIN WACHLER
Effective November 22, 2020, the Centers for Medicare & Medicaid Services’ (CMS) final rule “Modernizing and Clarifying the Physician-Self Referral Regulations” aims to reduce the regulatory burdens of compliance with the federal self-referral prohibition most commonly known as the Stark law. The final rule eliminates unnecessary requirements within the Stark law that imposed undue regulatory burdens and increased administrative costs on healthcare providers. The final rule also eliminates regulatory barriers to value-based, coordinated healthcare delivery and payments systems at the foundation of integrated care models, alternative payment systems, and other arrangements that improve patient care while reducing costs to governmental healthcare programs. ,
The final rule reflects the shared policy achievements of CMS’ “Patients over Paperwork” initiative and the U.S. Department of Health & Human Services’ (HHS) “Regulatory Sprint to Coordinated Care’. “Patients of Paperwork” is a CMS-wide initiative started in 2017 to reduce unnecessary regulatory burdens on healthcare providers. HHS’ “Regulatory Sprint to Coordinated Care” focuses on identifying and eliminating regulatory requirements and other prohibitions that act as barriers to value-based, coordinated healthcare services and payments.
First enacted in 1989, Stark was intended to combat increased utilization within fee-for-service healthcare payment systems that rewarded volume-based care. Due to Stark’s draconian penalties and strict-liability nature, physicians and other healthcare providers have been discouraged from entering into innovative arrangements that would improve quality outcomes, produce health system efficiencies, and lower costs (or slow their rate of growth). In response, the final rule creates new exceptions under the Stark law for value-based arrangements that will permit physicians and other health care providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark law. Additionally, this supports CMS’ broader push to advance coordinated care and innovative payment models across Medicare, Medicaid, and private plans.
Specifically, the final rule establishes three (3) new exceptions to the Stark law for value-based arrangements: (1) value-based arrangements for participants in a value-based enterprise that is financially responsible for, and assumes the entire prospective financial risk, for the cost of all related patient care items and services for every patient; (2) value-based arrangement remuneration to physicians at meaningful downside financial risk of failing to reach the value-based purpose of the enterprise; and (3) value-based compensation arrangements, no matter the risk undertaken by the enterprise or participants. This exception also allows for monetary and nonmonetary remuneration among the parties.
Pursuant to these exceptions, CMS has transformed federal regulations governing the Stark law to not only allow but in fact facilitate coordinated between healthcare providers that will help modernize the healthcare system. The final rule therefore represents an historic accomplishment by CMS “Patients over Paperwork Initiatives” and HHS’ “Regulatory Sprint” that will pave the way for future regulatory initiatives to align government regulation and policy objectives, resulting in improved care and reduce costs nationwide.