CMS announces major updates to Stark Law

Last week, the Centers for Medicare & Medicaid Services (CMS) announced historic updates to the the Stark Law, also known as the Physician Self-Referral Law. CMS acknowledged that federal regulations related to physician self-referrals have become outdated as the United States’ healthcare system has transitioned from a fee-for-service to a fee-for-value model.

Previously, physicians faced legal consequences for making referrals for which they benefitted financially, as this often resulted in patient care coming second to financial gain. At times, this caused physicians to reject arrangements that would benefit patients for fear of inducing a self-referral. The new final rule, however, creates specific exceptions for value-based arrangements, recognizing that physicians take on more accountability in value-based arrangements, as reimbursement is directly tied to quality of care. In such arrangements, the risks for self-referral are therefore reduced, so creating these exceptions allows physicians and other providers to coordinate patient care more freely, therefore reducing patient costs and improving quality of care.

Additionally, the final rule creates an exception for donations of cyber security. It also seeks to reduce the administrative and financial burdens associated with Stark Law compliance by redirecting these funds to patient care. These changes are expected to take effect in early 2021.

 Source: Centers for Medicare & Medicaid Services