New CMS Rule Allows More Physician Self-Referrals Under “Stark Law”
By David Doolittle

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Physicians who have financial relationships with medical services facilities, such as labs and imaging services, are able to refer more Medicare or Medicaid patients to those facilities under a final rule published this week.

The Centers for Medicare & Medicaid Services (CMS) rule creates permanent exceptions to the Medicare physician self-referral law, or “Stark law,” for value-based arrangements. 

The law prevents physicians from referring patients to facilities with which they have financial relationships except under specific conditions, including rental agreements or certain arrangements with hospitals. Likewise, the entity may not bill Medicare or Medicaid for the referred services.

The final rule permits physicians and other health care professionals “to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law,” CMS said in a press release. The exceptions apply to care provided to both Medicare and non-Medicare patients. 

The changes are part of CMS’ “Patients over Paperwork” initiative and are an attempt to address physicians’ frustrations in determining how to comply with the Stark law, CMS said.

“Ambiguities in the Stark law have frozen many providers in place, fearful that even beneficial arrangements might violate the law, which can come with dire and costly consequences,” CMS said. “This has resulted in healthcare providers spending millions of dollars complying with arcane regulations instead of putting those dollars toward patient care.”

The final rule also provides new flexibility and protection for nonabusive, beneficial arrangements, such as donations of cybersecurity in both fee-for-service or value-based payment arrangements.

It also offers guidance on key requirements, such as how to determine if payments between physicians are at fair market value.

With one exception, the provisions will go into effect Jan. 19, 2021.

See this CMS fact sheet for more information.

Physicians should consult with their attorneys for advice on whether referral or compensation arrangements would comply with these rules, as well as other federal and state laws.

Last Updated On

December 04, 2020

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David Doolittle

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Dave Doolittle is editor of Texas Medicine and Texas Medicine Today. Dave grew up in Austin, where he attended culinary school as well as the University of Texas. He spent years covering Central Texas for the Austin American-Statesman newspaper. He is the father of two girls, a proud Longhorn, and an avid motorsports fan.

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