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

Policy & Regulation News

Will CMS Proposed Stark Law Revisions Bring Doctors Relief?

By Jacqueline DiChiara

- The Centers for Medicare and Medicaid Services (CMS) recently published proposed revisions to the Stark Law – a key piece of healthcare regulation involving physician self-referral regulations. As penalties and sanctions involving a lack of Stark Law compliance threaten hospitals' ability to remain open, what’s next on the healthcare horizon?

CMS revisions to Stark Law

The Stark Law – a strict liability statute prohibiting physicians from making referrals for designated health services payable by Medicare if a financial relationship exists, without a matched exception – has been a recent focus within the healthcare spectrum.

Kristen A. Larremore, a Stark Law expert at Waller Lansden Dortch & Davis, LLP, recently chatted with RevCycleIntelligence.com about CMS’s recently proposed Stark Law changes and the technical violation relief such revisions are expected to bring physicians and healthcare providers.

Healthcare providers face financial penalities

Larremore says there has been a proliferation of private whistleblower suits alleging Stark Law violations and of self-reporting of Stark Law violations, especially related to technical compliance violations as a result of the implementation of the Stark Law self-referral disclosure protocol under the Affordable Care Act (ACA).

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“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,” says Larremore. “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,” she adds. 

Healthcare providers face a variety of challenges related to issues of non-compliance, says Larremore. “The best way to address challenges is the self-disclosure protocol, required under the Affordable Care Act (ACA) where if alleged potential Stark Law violations are identified, they can be voluntarily reported and they'll be considered for a lower imposed penalty based upon voluntary disclosure of potential issues,” she states.

Regulatory changes stretch CMS too thinly

Nonetheless, CMS is experiencing a hearty backlog while attempting to process technical violations under the law. “As of mid-January 2015, there were 529 disclosures that had been recorded, only 128 of which had been resolved,” says Larremore regarding the quantifiable extent of CMS’s backlog.

The backlog and its aftermath pose significant challenges. “Backlog processing issues often come up in a context of a transaction where the provider is wanting to sell to another entity. They'd like to get those things resolved,” Larremore says. “Because of the backlog, that's generally not possible. Even if you self-disclose, it's generally going to be quite a few years before things are resolved and finalized through CMS.”

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Although CMS’s proposed changes to the Stark Law address some of these issues, Larremore says that the technical nuances of Stark Law compliance and the need to self-report technical violations that pose little threat of program abuse are a heavy drain upon CMS’s and healthcare providers’ time, energy, and resources. CMS’s resources continue to be stretched thinly as a variety of regulatory changes and reporting and disclosure changes are implemented, maintains Larremore.

Physicians also face a variety of financial implications under the Stark Law, regardless of whether all of CMS’s proposed changes go into effect. Alleged Stark Law violations and compliance issues have the potential to put hospitals and other healthcare providers out of business, says Larremore.

“The implications can be very significant for providers when they don't have compliance across the board. There are a lot of instances where there can be non-compliance that are not even identified for some period of time,” says Larremore. “Because penalties are assessed on a per-claim basis, that can lead to significant damages going along with the non-compliance,” she adds, noting that under the False Claims Act, healthcare providers can be liable for up to triple the amount of fraud claimed against the government. This liability excludes a substantial civil penalty for each individual claim submitted in violation of the law. 

“Because it's per claim, if the contract has been going on for some period of time, that can really build up to a large amount of claims submitted under the same arrangement, which if determined to be non-Stark compliant, can be extremely significant,” Larremore states.

Physicians reconsidering billing matters

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Larremore predicts the proposal contained in the draft update to the Medicare Physician Fee Schedule for 2016 regarding “incident to” billing changes, if implemented, means physicians will face hiccups related to efficiency, billing and scheduling issues. Under the proposal, the treating physician must directly supervise all “incident to” services billed for his or her patients. This could dramatically change the way physicians are currently seeing and treating their patients under a patient’s care plan.

For example, if an oncologist/treating physician sees patients at two different locations, while another oncologist in the same group practice supervises the treating physician’s patients, sometimes at one location or the other when the treating physician’s patient receives treatment under a plan of care – but the treating physician is not physically present – this would no longer be permitted under the proposed “incident to” changes.

Physicians will not be able to see as many patients as a result, nor will they be able to serve as many locations, she says. This may result in significant monetary implications if physicians are required to restructure the manner in which they see and treat patients and if the physician must be personally present each time a patient is receiving services under the patient’s plan of care in order to continue to bill at the “incident to” billing rate of the physician, she states.

Larremore confirms there are two newly proposed exceptions under Stark Law proposals for time shares and physician extender recruitment. “Both intend to expand access to needed healthcare services, particularly in rural areas, and ease some of the regulatory burdens to allow for arrangements that particularly benefit providers in areas where there's a lack of manpower,” she says.

The physician extender recruitment allows primary care physicians to receive subsidies from hospitals, rural health clinics, and federally qualified health centers to recruit non-physician practitioners to provide primary care services, states Larremore.

“That could definitely have a positive impact on financial and healthcare access aspects in rural areas. The only downside of that is it's still only proposed to be permitted for a two-year period so at that point in time, the money still has to come from somewhere to pay for the practitioner,” she confirms, adding the steps being taken are indeed steps in the right direction.

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