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AHA: Create Stark Law Exception for Value-Based Reimbursement

CMS should create Stark Law exceptions specifically for value-based reimbursement models and provide timely guidance, the AHA advised.

Stark Law and value-based reimbursement

Source: Thinkstock

By Jacqueline LaPointe

- The American Hospital Association (AHA) recently urged CMS to modify the Stark Law by adding value-based reimbursement exceptions that enable providers to coordinate care and advance patient outcomes.  

“To reach the full potential of a value-based system, the Stark compensation regulations must be reframed to meet the objectives of the new system, through the creation of a new exception designed specifically for value-based payment methodologies, and reforms to the personal services, employment, and risk sharing exceptions,” the industry group wrote to CMS in response to its Request for Information (RFI).

CMS issued the RFI in June 2018 to uncover how the Stark Law hinders care coordination and alternative payment model participation, as well as how to update the law from the late 1980s.

The rule specifically prohibits referrals by a physician of a Medicare or Medicaid patient to an entity performing designated health services if the physician, or his immediate family member, has a financial relationship with that entity.

AHA and others have argued that the law limiting referrals hinders the value-based care transition.

READ MORE: How Providers Can Detect, Prevent Healthcare Fraud and Abuse

“CMS’s current Stark compensation regulations constrain innovation. They discourage the development and adoption of rewards that encourage change on a broad scale, across all patient populations and payer types, and over indefinite periods of time,” the AHA contended in the most recent letter to CMS.

“The regulations also fail to recognize that relationships between payers, providers, physicians, and patients have transformed significantly over time and that those new relationships already address many of the risks the Stark Law was enacted to prevent.”

CMS has attempted to ameliorate the situation by creating waivers for specific alternative payment models, such as the Medicare Shared Savings Program (MSSP) and bundled payment models.

However, providers should not have to rely on a patchwork of waivers to transition to value-based reimbursement, especially since the waivers only protect participation in specific programs, the industry group stated.

Therefore, the AHA is calling on CMS to add a value-based reimbursement exception to the Stark law.

READ MORE: HHS: Physician Self-Referral Law Hinders Value-Based Care

“We urge that compensation exceptions to the Stark Law be created or adapted to enable hospitals and physicians, working together, to coordinate care and improve patient outcomes,” the group wrote. “We urge that no changes be made to the regulations implementing the Stark Law’s ownership ban. That ban is a carefully developed policy that is working as Congress intended.”

According to the AHA, a value-based reimbursement-specific exception would be the most effective Stark Law modification as long as the exception covered arrangements with an explicit objective of achieving at least one of the pillars of coordinated care, which are:

  • Promoting accountability for the care quality, cost, and overall care for patients
  • Managing care for patients across and among other providers
  • Fostering investment in infrastructure and redesigned care process for high-value care delivery

The value-based reimbursement exception should cover incentive payments, shared savings payments based on actual cost savings, infrastructure payments or in-kind assistance, and similar forms of renumeration.

To ensure providers are using the value-based reimbursement exception appropriately, CMS should establish the following basic accountabilities:

  • Transparency: documentation of incentive or other assistance use, which should be available to HHS upon request
  • Recognizable improvement processes: performance standards used should be consisted with accepted medical standards and align with the purpose of improving patient care
  • Monitoring: performance under improvement processes should be internally reviewed to safeguard against adverse effects, and documentation of those reviews should be maintained and available to HHS

Additionally, the AHA called on CMS to modifying existing Stark Law exceptions to continue fostering value-based care and alternative payment model participation. Specifically, the industry group advised CMS to modify the personal services and risk-sharing exceptions.

READ MORE: Best Practices for Value-Based Purchasing Implementation

The personal services arrangement exception allows physician incentive plans, which are compensation arrangements that incentivize providers to reduce or limit care to health plan beneficiaries. However, the exception does not cover Medicare fee-for-service patients.

CMS should extend the personal services arrangement exception to the large Medicare fee-for-service population to encourage value-based care across all patient populations.

The federal agency should also extend the risk-sharing exception to the Medicare fee-for-service population, the AHA added.

The risk-sharing exception applies to providers at financial risk for their services. The AHA called on CMS to ensure that the exception similarly applies to arrangements involving Medicare, Medicare Advantage, and Medicaid.

“The proposed extension would give providers flexibility in meeting the coordinated care goals of the financial risk payments,” the group wrote.

On top of exception modifications, the AHA also recommended that CMS improve the timeliness of publishing Stark Law guidance.

In the past 20 years, CMS has only issued about 15 opinions on compensation issues, the group reported.

However, Stark Law guidance is key for providers looking to engage in value-based arrangements that may violate the physician self-referral law.

“Because Stark is a strict liability statute, getting it exactly right is the difference between being compliant or facing demands for distorted repayments and potentially ruinous false claims exposure,” the AHA stated. “Hospitals are entitled to know, in advance, exactly what is required so they can operate in compliance with the law. We urge the agency to provide clear, authoritative, and timely guidance.”

Healthcare stakeholders can voice their opinions on the Stark Law until Aug. 24, 2018.


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