Medicare requests information about physician self-referral law or ‘Stark law’

The Center for Medicare and Medicaid Services has issued a request for information on the Stark law, also known as physician self-referral law. The RFI in the Federal Register suggests that the intent is to loosen restrictions on this practice.

From the request: “When enacted in 1989, the physician self-referral law (section 1877 of the Social Security Act), also known as the “Stark Law,” addressed the concern that health care decision making can be unduly influenced by a profit motive. When physicians have a financial incentive to refer patients for health care services, this incentive may affect utilization, patient choice, and competition. Overutilization may occur when items and services are ordered that would not have been ordered absent a profit motive. A patient’s choice can be affected when he or she is steered to less convenient, lower quality, or more expensive providers of health care that are sharing profits with, or providing other remuneration to, the referring practitioner. Where referrals are controlled by those sharing profits or receiving other remuneration, the medical marketplace suffers since new competitors may have more difficulty generating business on superior quality, service, or price alone.

“By design, the physician self-referral law is intended to disconnect a physician’s health care decision making from his or her financial interests in other health care providers and suppliers. Specifically, the law: (1) Prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership or compensation), unless an exception applies; and (2) prohibits the entity from filing claims with Medicare (or billing another individual, entity, or third party payer) for those referred services. The prohibitions are absolute unless the physician’s referral is permitted under an enumerated exception. The statute establishes a number of specific exceptions, and grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. For more information, please refer to the CMS physician self-referral website at https://www.cms.gov/​Medicare/​Fraud-and-Abuse/​PhysicianSelfReferral/​index.html?​redirect=​/​PhysicianSelfReferral/​.

“CMS is aware of the effect the physician self-referral law may have on parties participating or considering participation in integrated delivery models, alternative payment models, and arrangements to incent improvements in outcomes and reductions in cost. The President’s Budget for fiscal year (FY) 2019 included a legislative proposal to establish a new exception to the physician self-referral law for arrangements that arise due to participation in alternative payment models. In addition to this legislative proposal, CMS has engaged stakeholders through comment solicitations in several recent rulemakings.

“In 2017, through the annual payment rules, CMS asked for comments on improvements that can be made to the health care delivery system that reduce unnecessary burdens for clinicians, other providers, and patients and their families. In response, commenters shared additional information regarding the barriers to participation in health care delivery and payment reform efforts, both public and private, as well as the burdens of compliance with the physician self-referral law and our regulations as they exist today. As a result of our review of these comments, and with a goal of reducing regulatory burden and dismantling barriers to value-based care transformation, while also protecting the integrity of the Medicare program, we are requesting additional information in this RFI. We are particularly interested in your thoughts on issues that include, but are not limited to, the structure of arrangements between parties that participate in alternative payment models or other novel financial arrangements, the need for revisions or additions to exceptions to the physician self-referral law, and terminology related to alternative payment models and the physician self-referral law. We look forward to receiving your input on this RFI.” “Medicare Program; Request for Information Regarding the Physician Self-Referral Law,” Federal Register.