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CMS Announces Plans to Form Inter-Agency Group to Review Stark Law

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) announced that it was forming an inter-agency group to review potential changes to the federal Stark (or physician self-referral) law. The Stark law generally prohibits a physician from referring certain designated health services to an entity with which the physician (or an immediate family member of the physician) has a financial relationship. First passed into law in 1989 to address Congress’ concern related to physician-owned laboratories and the potential for over-utilization due to the physician-owner’s financial incentive to send more business to the laboratory, the purview of the Stark law has grown tremendously to cover a host of other designated health services beyond laboratory services, including but not limited to inpatient and outpatient hospital services, as well as other non-ownership financial relationships, such as compensation arrangements.

The inter-agency group will include CMS, HHS-OIG, HHS’ Office of General Counsel, as well as the Department of Justice. In announcing the inter-agency review group, CMS Administrator Seema Verma stated that concerns related to the Stark law and the regulatory burden that it places on healthcare providers was one of the leading issues raised in response to various requests for information from stakeholders on how CMS could reduce the regulatory burdens facing healthcare providers. According to Ms. Verma: “I think the Stark law was developed a long time ago, and given where we’re going in terms of modernizing (Medicare) and the payment systems we are operating under now, we need to bring along some of those regulations.” Ms. Verma also stated that CMS is aware that the Stark law can slow the transition to value-based care. Ms. Verma noted that, notwithstanding the inter-agency group and CMS’ commitment to address concerns related to the Stark Law, Congress may ultimately need to intervene to effectuate full relief.

The attorneys at CCLB represent healthcare providers of all types and sizes in connection with a wide variety of regulatory matters, including those involving the Stark Law. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue, please contact us at (404) 262-6505 or sgrubman@cclblaw.com.