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HAP Calls for Modernizing Stark Law to Promote Care Coordination

August 23, 2018

In a comment letter issued today, HAP endorsed efforts to modernize Stark Law to enable hospitals and physicians to coordinate care and improve patient outcomes.

The 1989 physician self-referral law or “Stark Law”—which was designed to address overutilization in a fee-for-service environment—is antiquated and must be modernized to 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.

Public and private payors are holding hospitals accountable for reducing costs and improving quality in ways that can be accomplished only through teamwork with physicians and other health care professionals within and across sites of care, including the alignment of financial incentives. 

Both the Administration and Congress are actively working to identify ways to modernize the Stark Law. Earlier this summer, consistent with the Administration’s pledge to reduce regulatory burdens, the Centers for Medicare & Medicaid Services (CMS) issued a request for feedback about the undue impact and burden of the Stark Law and ways to remove barriers to value-based care transformation.

In a blog post, CMS Administrator Seema Verma noted compliance with the Stark Law and accompanying regulations has been one of the top areas of regulatory burden identified by the provider community.

The Administration has acknowledged, “In its current form, the physician self-referral law may prohibit some relationships that are designed to enhance care coordination, improve quality, and reduce waste.” Through this request for information, Administrator Verma and Department of Health & Human Services Deputy Secretary Eric Hargan are calling for bold ideas on changes to Medicare’s regulations that will support close collaboration between doctors and other providers to promote a true value-based, patient-centered health care system.

July hearing before the U.S. House Ways & Means Committee—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.

HAPs letter is in response to the Administration’s call for feedback. In the letter, HAP:

  • Endorses a comment letter submitted by the American Hospital Association during early August that calls for exceptions to the law
  • Offers general feedback about the Stark Law from HAP members who must navigate the complex and burdensome law as they attempt to implement innovative payment arrangements
  • Provides Pennsylvania-specific reflections, including a concept paper HAP developed in collaboration with Pennsylvania hospitals to offer insights to Congressional committees as they evaluated Stark Law policy changes during 2016

HAP has consistently called for Stark Law reforms in response to CMS’ requests for input on avenues to provide meaningful regulatory relief, and in working with Congressional leaders on legislative regulatory reform efforts.

Please contact Jeff Bechtel, HAP’s senior vice president, health economics and policy, or Laura Stevens Kent, HAP’s vice president, federal advocacy, if you have questions regarding HAP’s work on Stark Law reforms as an avenue to advance value-based care.

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