Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

AHA: Stark Law Exception Advances Alternative Payment Models

The AHA says the Stark Law does not align with new alternative payment models and keeps physicians and hospitals from working together as one.

By Jacqueline DiChiara

- Congress should focus on improving federal fraud and abuse laws, said the American Hospital Association (AHA) to the Senate Finance and House Ways and Means Committee last week. The AHA advocated for an exception to be created under the anti-kickback statute to help advance the efficiency of new alternative payment models.

alternative payment models Stark Law

The Committee requested value-based payment model feedback regarding the Stark Law – a significant facet of healthcare regulation about physician self-referral regulations. The AHA, in turn, offered suggestions for the Committee to consider. Legal impediments, team-based care that helps alternative payment models flourish and thrive, and a focus on the reduction of healthcare fraud and abuse were some of the AHA’s key focal points.

Providers face financial penalties from Stark Law violations

The Stark Law is a strict liability statute banning physicians from making referrals for designated health services. These services are payable by Medicare – if a financial relationship exits, without a matched exception.

Stark Law violations have been a primary recent concern, especially regarding technical compliance violations, private whistleblower suits, and the Affordable Care Act’s (ACA’s) self-referral disclosure protocol.      

READ MORE: MedPAC Targets Post-Acute Care for Healthcare Payment Reform

“Because of its strict liability, regardless of intent, if there's a technical violation of the Stark Law, there can be significant repercussions for providers resulting in financial penalties,” explained Kristen A. Larremore, Partner at Waller Lansden Dortch & Davis, to

 “It also prohibits specifically the entity from filing claims for reimbursement for services provided as a result of the physician's referral. That requirement places compliance with the Stark Law as a precondition to reimbursement of claims submitted to Medicare.”

“Because penalties are assessed on a per-claim basis, that can lead to significant damages going along with the non-compliance.”

Last summer, the Centers for Medicare & Medicaid Services (CMS), published proposed revisions to the Stark Law. Larramore said CMS was being stretched far too thinly for its own good. CMS was experiencing a massive backlog in the midst of processing technical violations under the law, she asserted.

“As of mid-January 2015, there were 529 disclosures that had been recorded, only 128 of which had been resolved."

READ MORE: AHA: Post-Acute Care Medicare Reimbursement Reform Needs Time

AHA to Congress: break free from silos to improve new payment models

“Congress should adopt a single broad exception to federal fraud and abuse laws for financial relationships designed to foster collaboration, efficiencies and improvements in health care,” wrote AHA within a news release.

The Committee specifically requested input about two specific types of changes:

· What changes in the Stark law are needed to implement the MACRA in its current form, as well as accountable care organization (ACO)/shared savings programs; and

· Where to draw the line between technical and more serious violations of the law.

The Stark Law does not align with the needs of new payment models, retorted Tom Nickels, AHA’s Executive Vice President, when the committee asked for specific feedback about Stark Law improvement.

“Hospitals, physicians and other health care providers must break out of the silos of the past and work as teams to achieve the efficiencies and care improvement goals of the new payment models,” Nickels explained.

 “To do that, a legal safe zone for those efforts is needed. In our view, the Stark law is not suited to the new models and should not be the locus of oversight for these new arrangements. The statute and its complex regulatory framework are designed to keep hospitals and physicians apart – the antithesis of the new models.”

The Stark Law approaches compensation arrangements from a fee-for-service perspective, said Nickels, “where physicians were self-employed, hospitals were separate entities, and both billed for services on a piecemeal basis.”

Nickels added the Stark Law’s primary provisions “micro-manage compensation arrangements on a strict liability basis that has proved unworkable.”

“We recommend that [an] exception be created under the anti-kickback statute and arrangements protected under the exception be deemed compliant with the Stark law and relevant [civil monetary penalties].”

Physician payment models are focused on using financial incentives to influence behavior, he added.

“Achieving Congress's goals for the government health care program and beneficiaries can be accomplished only through teamwork among hospitals, physicians and other health care providers across sites of care.”

“An essential component for the success of their efforts is also the use of financial incentives – specifically, arrangements that align incentives.”


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