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AHA Calls for Changes to Stark Law to Ensure Greater Patient Care Coordination and Improved Outcomes

August 06, 2018

The American Hospital Association (AHA) recently sent a letter to the Centers for Medicare & Medicaid Services (CMS) in response to the Administration’s request for feedback about the undue impact and burden of the Stark Law and ways to remove barriers to value-based care transformation. The AHA is calling for exceptions to the law to enable hospitals and physicians to coordinate care and improve patient outcomes.

The 1989 Stark Law bans physicians from referring patients for health services to hospitals, labs, and other entities from which they or an immediate family member financially benefit.

The current Stark law, based on a fee-for-service payment model, does not meet the objectives of the new value-based payment system, which rewards quality over quantity of care. Stark compensation regulations hinder partnerships between physicians and other health care providers, which could result in more coordinated and less costly care.

The Administration’s request for stakeholder input about ways to modernize the law, and attention from Congress, demonstrate momentum for much needed updates. A July hearing before the U.S. House Ways & Means Health Subcommittee—Modernizing Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program—affirmed the commitment of federal policymakers to pursue reforms that will help promote integrated and coordinated care.

The AHA recommended specific changes to remove barriers and drive patient-centered care. The association also asked that no changes be made to the regulations implementing the Stark Law’s ownership ban.

Under the new system, providers need flexible payment terms that reward physicians who help them achieve care coordination and improved patient outcomes. CMS has implemented new payment methodologies that can only be implemented effectively if physicians, hospitals, and other caregivers actively collaborate toward a shared goal of high-quality, low-cost care.

In addition, CMS’ current Stark compensation regulations restrict innovation. They discourage the development and adoption of rewards that encourage broader change across all patient populations and payer types, and over indefinite periods of time.

The AHA’s recommended changes include:

  • Protection for value-based payment methodologies––specifically, a new exception for value-based payment arrangements, and modifications to the personal services and risk sharing exceptions
  • Clear, authoritative, and timely guidance––specifically, define key elements of compensation exceptions and revise the Advisory Opinion process.
  • Refocused regulations that eliminate provisions that do not address overutilization; add an alternative method for demonstrating compliance with documentation requirements; modify the payment-by-physician exception; and decouple compliance with Stark from compliance with the Anti-Kickback Statute

HAP is securing feedback from Pennsylvania hospitals and will be responding to CMS’s request for input. HAP’s comments will follow along the same lines as the priorities for modernization raised by the AHA. Please contact Jeff Bechtel, HAP’s senior vice president, health economics and policy, or Laura Stevens Kent, HAP’s vice president, federal advocacy, for more information about federal Stark law modernization efforts or to provide insight to inform HAP’s response to CMS.

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