Stark Law Updates to Impact Palliative Care Providers

The Trump administration is seeking extensive revisions to the Stark Law, a law designed to address conflicts of interest in physician referrals, U.S. Centers for Medicare & Medicaid Services Administrator Seema Verma said in a speech to the Federation of American Hospitals.

Currently referrals to hospice are exempt from the Stark Law, but the law does apply to referrals for the palliative care that most hospice companies also provide.

“We are actively working on an update to our Stark regulations to be issued later this year,” Verma said. “This will represent the most significant changes to the Stark law since its inception. It is our hope that these changes will help spur better care coordination and help support our work to remove barriers to innovation while continuing to provide appropriate safeguards for our programs.”

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The Stark Law prohibits physicians from referring patients to providers of designated health services covered by Medicare or Medicaid if the physician or a family member has a financial relationship with the provider of the service. If a provider has a financial relationship with the referring physician, the organization cannot bill Medicaid, Medicare, third-party payers, or individuals for those services.

“For example, such an arrangement might include a physician with a financial relationship to a hospice referring a patient to that organization for non-hospice designated health services that are reimbursed outside of the Medicare hospice rate. In that case, the arrangement would have to meet a Stark exception,” John Kelly, member of the law firm Bass, Barry, and Sims, PLC, told Hospice News.

Examples of designated health services include durable medical equipment, parenteral and enteral nutrition, outpatient prescription drugs, and supplies, among others.

Some of the anticipated changes will include clarification of regulatory definitions for terms such as volume or value, commercial reasonableness, and fair market value. The revisions are also expected to address issues such as lack of physician signatures, incorrect dates, and other aspects of technical noncompliance; and to update the 1989 law to reflect concerns related to cybersecurity, electronic health records, and other technology issues that have become endemic to health care, according to CMS.

“Regulatory changes are needed to support the move to where we want to be on value-based payments, Verma said. “But, of course, there was also recognition—a recognition that we share—that the potential for program integrity vulnerability or other abuses continues to be a significant threat that cannot be ignored.”