Claims Management News

AHA Claims Stark Law Harms Value-based Care Reimbursement

The letter from AHA mentions that the Stark law may actually impede the implementation of new payment models that focus on value-based care reimbursement.

By Vera Gruessner

- The American Hospital Association (AHA) has encouraged Congress, specifically the House Committee on Ways and Means, to put an end to regulatory obstacles standing in the way of value-based care reimbursement. In a letter sent to Chairmen Brady, Tiberi, and Roskam as well as Ranking Members Levin, McDermott, and Lewis, the AHA Executive Vice President Thomas Nickels argues that US laws should assist with aligning payers and providers on value-based care reimbursement goals instead of hindering the efforts.

Healthcare Payment Models

In particular, AHA seeks to provide more input on the physician self-referral law or Stark law. This particular legislation allows doctors to refer their patients to a hospital, clinic, or other medical facility in which the physician has financial stock in. The letter from AHA mentions that the Stark law may actually impede the implementation of new payment models that focus on value-based care reimbursement.

One barrier to new payment structures that Congress has eliminated in the past was the “gainsharing” Civil Monetary Penalty (CMP), the AHA letter mentions. This particular penalty stopped hospitals from incentivizing doctors from a monetary perspective when they had created and adopted evidence-based care frameworks.

The letter details how the Stark law can be changed to better adopt the provisions of the Medicare Access and CHIP Reauthorization Act (MACRA) as well as facilitate the further operation of the Medicare Shared Savings Program and accountable care organizations.

Nickels states that a “legal safe zone” needs to be implemented in order to further incentivize healthcare providers and payers to focus their efforts on adopting value-based care reimbursement models. Additionally, the AHA feels that the Stark law has an overarching theme of keeping “hospitals and physicians apart.”

“Congress should adopt a single, broad exception that cuts across the Stark law, the anti-kickback statute and relevant CMPs for financial relationships designed to foster collaboration in the delivery of health care and incentivize and reward efficiencies and improvements in care. We recommend that the exception be created under the anti-kickback statute and arrangements protected under the exception be deemed compliant with the Stark law and relevant CMPs,” the letter states.

The Stark law was created in a fee-for-service environment and the health payer world has been changing in recent years toward adopting value-based care reimbursement. With more primary care doctors, specialists, hospitals, and health insurers working toward improving the quality of care and reducing costs around the country, it would be beneficial for the federal government to put an end to regulatory barriers standing in the way of value-based care.

Along with a general move away from fee-for-service, health payers are using financial incentives to drive behavior among hospitals and healthcare networks. AHA further clarifies by explaining that “the two ‘hallmarks’ of acceptability under the Stark law – fair market value and commercial reasonableness – are not suited to the collaborative models that reward value and outcomes.”

JDSupra offered more clarification about the latest revisions of the Stark law. One exception added to the legislation is the timeshare arrangement. Essentially, this allows for entities to create timeshare arrangements with regard to supplies, office space, services and personnel.

A secondary exception within the law is providing help in compensating non-physician practitioners, which includes nurse practitioners and physician assistants. This means that hospitals, clinics, and other healthcare centers can offer doctors financial assistance when they are employing or contracting non-physician practitioners to provide medical care to the physician’s patient base.

The recent revisions to the Stark law also “relaxed technical requirements” that were geared toward decreasing the amount of self-disclosures presented to the Centers for Medicare & Medicaid Services (CMS). In particular, the revisions aimed to relax its requirements on violations that did not raise the “risk of federal program abuse.”

Within the healthcare industry, there has been some apprehension with regard to Stark law violations especially due to technical compliance violations. These new revisions of the legislation may lead to less fear of violations among the physician community. Congress would also benefit from reviewing the information about this legislation’s effect on value-based care provided by the American Hospital Association.

“While originally intended to provide a “bright line” standard to assure hospitals and others clear guidance, the self-referral law has evolved into a series of increasingly complex, confusing and continually changing rules. Many involve form and audit-type requirements that carry the same weight as the core requirements of a legitimate arrangement for compliance purposes,” Nickels declared in the letter.

“Fair market value, commercial reasonableness and the volume/value prohibition are imbedded in the exceptions for compensation arrangements. The specter of relators and the relator’s bar taking control of how to interpret the Stark law in service of achieving the financial bounties available under the False Claims Act, will no doubt chill, and could extinguish, the development of new relationships essential to the success of the new reimbursement models.”

As the US Congress continues to seek input on revising and improving the Stark law, it is vital for health payers, providers, and medical organizations to come together and encourage the federal government to strip away regulatory barriers in an effort to strengthen value-based care reimbursement and new payment models.