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Stark Law Modifications

Senate Finance Committee Chairman, Orrin Hatch (R-Utah), released a white paper last month, which suggests a few modifications in the federal physician self-referral or Stark law. Titled “Why Stark, Why Now? Suggestions to Improve the Stark Law to Encourage Innovative Payment Models,” the white paper aims to remove barriers that restrict doctors, hospitals, and other healthcare providers from changing to payment models that are more cost-effective.

“The health care industry has changed significantly since Stark was first implemented, and while the original goals of the Stark law were appropriate. Today, it is presenting a real burden for hospitals and doctors trying to find new ways to provide high quality care while reducing costs as they work to implement recent health care reforms,” Hatch said in the paper. The report also discuss about the perspectives of stakeholders on the working of the Stark law in practice, highlights the complexity of the law, severe penalties, compliance costs, and its effects on integrating healthcare delivery.

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Innovative Payment Models

The paper summarizes the comments and concerns raised by participants and stakeholders during a discussion on Stark Law held by the Senate Finance Committee and US House Committee. “This paper reflects critical feedback from the stakeholder community on the law’s ambiguities, its unintended consequences and the need for reform, and I am hopeful it jumpstarts the discussion on how Congress can modernize the law to make it work for patients, providers, and taxpayers,” the Senate Finance Committee Chairman added.

The suggestions in the paper to address the move to a value-based model include changes to the MACRA with both APMs and fee-for-service payment systems. It also recommends changes in the Stark law to allow providers to employ new, innovative payment tools, together with potential new waivers or exceptions, increasing existing waivers or exceptions, and broadening the CMS’s regulatory authority. Hatch also suggested making technical violations of Stark law subject to limited liability and separate sanctions.

Stark law was passed to decrease the influence of financial relationships on physician referrals of Medicare patients. The law aimed to reduce over utilization, when physicians were paid on the volume of the service provided. Now the trend has changed to a quality-based payment model rather than being focused on quantity.

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