trending Market Intelligence /marketintelligence/en/news-insights/trending/tBewh4H_xS2q9foOXyoGog2 content esgSubNav
In This List

Federal health agency proposes changes to Stark Law, anti-kickback statute

Blog

A Pharmaceutical Company Capitalizes on M&A Activity with Brokerage Research

Blog

2021 Year in Review: Highlighting Key Investment Banking Trends

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Blog

Global M&A By the Numbers: Q3 2021


Federal health agency proposes changes to Stark Law, anti-kickback statute

Long-awaited updates and reforms to the Stark Law and anti-kickback statute were proposed in two separate rules from the Trump Administration, continuing the administration's efforts to support value-based payment models.

Both rules look to ease self-referral regulations the healthcare industry has said limit providers' and physicians' ability to institute treatment models that coordinate care. The Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services' Office of Inspector General both put forth their separate rules Oct. 9.

Enacted in 1989, the Stark Law is a series of regulations that prevent doctors and physicians from self-referring patients within facilities or health systems in which they have a financial interest. The law was designed to stop doctors from ordering unnecessary tests or treatments that they would then profit from.

CMS Administrator Seema Verma touted the proposed changes in an Oct. 9 statement, saying they update an "antiquated" system.

"We serve patients poorly when government regulations gather dust in the attic: they become ever more stale and liable to wreak havoc throughout the healthcare system," Verma said. "We are updating our antiquated regulations to decrease burden for providers and helping bring down these increasingly escalating costs."

Verma hinted that changes to the Stark Law would be coming in 2019 during a March speech at a national hospital conference.

Verma, HHS Deputy Secretary Eric Hargan and White House Domestic Policy Council Director Joe Grogan are scheduled to discuss the proposed rules with industry members Oct. 9 at an event in Minneapolis, according to a spokesperson for CMS.

While there is still a need to protect against fraudulent practices, CMS said the Stark Law was designed for a fee-for-service based system, which pays providers for how much treatment they give and for how many individual services they charge. The agency added that the law has prevented physicians and providers from adopting a more value-based model, where payments are based on the totality of care and treatments can be coordinated between multiple providers.

The hospital industry has complained about the law for years. And other industry representatives and healthcare experts have recently criticized the Stark Law before Congress multiple times, saying it has even prevented providers from adopting modern treatment methods like telehealth.

Rick Pollack, president and CEO of the American Hospital Association, a national hospital representative, praised the proposed changes in an Oct. 9 statement.

"We applaud the Department of Health and Human Services for putting patients first and taking action to modernize the rules so they support, rather than hinder, the teamwork among health care providers that is so essential to providing the best, most comprehensive patient care," Pollack said in the emailed statement.

CMS' changes to the Stark Law include making permanent exceptions for certain value-based arrangements, which should allow for better care coordination between providers and help lower healthcare costs, according to CMS.

Other revisions include making an exception for providers that want to share their cybersecurity technology with other providers and updating laws that govern how technology for electronic health records is shared.

OIG's rule proposes multiple safe harbors under the anti-kickback statute for providers to make certain coordinated-care or value-based arrangements. The rule would also cover the sharing of cybersecurity and electronic health record technology.

HHS Secretary Alex Azar said in an Oct. 9 statement that changes present an "unprecedented opportunity for providers to work together to deliver the kind of high-value, coordinated care that patients deserve."