Stark law: 10 critical changes in 3 years

CMS has increasingly scrutinized Stark law policy, settling a record $12.56 million in Stark law voluntary self-referral disclosure settlements in 2023.

Here are 10 Stark law updates Becker's has reported on since 2021:

1. In June 2023, CMS added a retroactive Stark law waiver for physician owners of independent freestanding emergency departments that served Medicare patients during the COVID-19 pandemic. 

2. Also in June, Florida passed a law amending the state's Stark law supervision requirements. The new legislation removes the direct supervision requirement, which required the supervising physician to be present in the office while the referred services were being performed or provided. 

3. The Consolidated Appropriations Act of 2023 updated exceptions to Stark law and anti-kickback law that will allow hospitals and healthcare providers to improve mental health services for physicians. The law issues a new exception for physician wellness programs offered by healthcare entities, including ASCs, hospitals and physician practices. 

4. In January 2023, CMS updated its voluntary self-referral disclosure laws including an updated version of the self-referral disclosure protocol form, an updated physician information form and a new group practice information form.  

5. CMS' 2024 Inpatient Prospective Payment System requires physician-owned hospitals to satisfy all Stark law hospital exceptions or rural provider exceptions to qualify for services referred by the physician owner or investor. The rule further specifies that physician-owned hospitals cannot increase the number of operating rooms, procedure rooms and beds above the level it was licensed for as of March 23, 2010, unless granted an exception by CMS. 

6. In 2022, CMS updated Stark law policy regarding physician compensation plans. Physician compensation plans where productivity is above the 75th percentile could trigger review, and compensation should be consistent with the services performed by the practitioner. Additionally, indirect compensation agreements should be reviewed, because certain compensation agreements that consider APP work relative value units as physician compensation might not meet both commercial reasonableness and fair market value tests. 

7. CMS tightened regulations on physician self-referral and indirect compensation arrangements in its 2022 Medicare physician fee schedule final rule. One detail included that indirect compensation arrangements exist if referring physician compensation depends on the volume or value of referrals for an entity providing designated health services, and the compensation unit is not fair market value.

8. In a 2022 proposed payment rule update, CMS refined Stark Law regulations on indirect compensation arrangements for physician referrals to services performed by immediate family members CMS clarified the indirect compensation arrangement definition of compensation units as payment for anything other than services personally performed by the immediate family member. 

9. CMS clarified in a 2021 advisory opinion that physicians are prohibited from referring patients for select designated health services to entities they have financial ownership in, unless the relationship falls under an exception.

10. CMS and HHS made adjustments to the Stark Law on Jan. 19, 2021, that affect calculations of fair market value for physician pay. CMS unveiled three definitions for fair market value in the new rule, focused on general services, equipment rental and office space.


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