Looking for That Modified Stark Rule? Better Cool Your Heels

WASHINGTON — The Trump administration announced on Thursday that reforming “Stark Law” regulations on self-referral will take longer than expected, drawing concern from physicians.

The administration set a new deadline of Aug. 31, 2021, to issue a final rule, a year later than promised in the spring. By then, the political landscape and personnel may have changed.

“Modernizing the Stark Law had been a priority for the Trump administration, so we are deeply troubled by this delay – one that could result in Stark reform not occurring for another year or even longer,” the Digestive Health Physicians Association (DHPA), which represents 96 gastroenterology practices, said in a statement. “The reforms, which would allow independent physicians to participate fully in value-based payment models, were important before the COVID-19 pandemic, but are even more significant now.”

“Even though the administration has extended the timeline for publication until the back half of next year, DHPA urges the Administration to finalize the rule before the end of 2020. Physicians on the front lines of the COVID-19 pandemic need this support from the administration,” the group said.

Changing First Proposed in 2019

The 1989 law, named for the late congressman Fortney H. “Pete” Stark (D-Calif.), “prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies,” the Centers for Medicare & Medicaid Services (CMS) notes on its website. “Designated health services” include clinical lab services, physical therapy, occupational therapy, radiology, durable medical equipment, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services.

When the law was enacted, most of the healthcare system relied on fee-for-service payments. But medicine has since evolved to emphasize “value-based care” with bundled services — e.g., including the imaging that an orthopedic patient may need as part of evaluation and treatment.

Clinicians and hospital groups have argued that the Stark Law hampers value-based payment arrangements and makes coordinating patient care more difficult. In June 2018, the Department of Health and Human Services (HHS) solicited feedback regarding how to amend the rule, and received approximately 375 letters in response.

The Trump administration issued proposed changes to the rule in October 2019. One draft rule was issued by CMS and a second came from HHS’s Office of the Inspector General.

New value-based exceptions to the Stark Law in the proposed rule issued by CMS made clear that incentives in a healthcare system built around value are different from those in one focused on volume (i.e., fee-for-service). HHS offered specific examples of the types of care coordination, patient engagement, and data sharing practices that would be encouraged under the draft proposals.

For instance, the proposed rule would allow specialty physicians to share data analytics services with a primary care physician’s practice; enable hospitals to provide patients with remote monitoring technology to alert physicians and caregivers when he or she needs help; and permit physicians to give patients free “smart pillboxes,” which let the physicians and caregivers know when a patient misses a dose.

Who is Causing the Delay?

Although CMS announced this spring that it intended to publish the final rule in August, “we are still working through the complexity of the issues raised by comments received on the proposed rule and therefore we are not able to meet the announced publication target date,” the agency said. “This notice extends the timeline for publication of the final rule until August 31, 2021.”

But although that notice may have come from CMS, the agency wants you to know the delay isn’t really their fault. “FACT CHECK: @CMSGov is not delaying the Stark rule and is working hard to finalize it,” Seema Verma, the agency’s administrator, tweeted Wednesday.

A CMS spokesperson said the notice “is a procedural step that we had to take because CMS is not publishing the rule by August 2020 as anticipated in the last Unified Agenda.” Verma included a link to the Office of Management and Budget (OMB) website showing that OMB had received the rule from HHS on July 21.

“There’s a lot of speculation about what’s going on,” Mollie Gelburd, associate director of government affairs at the Medical Group Management Association in Englewood, Colorado, said in a phone interview. “We heard a while ago that OMB was delaying releasing the rule,” not HHS. OMB referred an inquiry on the issue back to HHS.

Uncertainty is Causing Problems

Because the final rule hasn’t been issued, it’s hard to know whether it will be helpful for physician practices, but the current uncertainty does make things more difficult, Gelburd added.

“Right now, all of the Medicare alternative payment models operate under waivers, and there are also waivers that apply during COVID that allow you to share resources like PPE [personal protective equipment] between entities. But waivers are temporary, and they don’t offer broader security,” she said. “If you want to pursue an arrangement that’s outside the scope of the waiver or enter into a long-term arrangement, it’s difficult to determine whether or not the waiver will continue to apply … There’s definitely a need for Stark reform; it’s just difficult to say whether the final rule will be the answer.”

Overall, “We prefer a statutory fix rather than a regulatory fix,” Gelburd continued. “Stark needs to be significantly reformed, and there’s only so much you can do within the administration — Congress needs to go back and implement more significant reforms. We are concerned that regulatory action would take the wind out of the sails of any momentum in Congress, if that’s deemed sufficient.”

The American Academy of Family Physicians (AAFP) is hoping for a quick resolution. “Family physicians currently participating in value-based care arrangements and those looking to change their practice and reimbursement model in the wake of COVID would benefit from regulatory clarity,” Shawn Martin, AAFP executive vice president and CEO, said in a statement. “We look forward to the final rule and caution against any regulation that would unduly impact small practices and those in rural areas or interfere with efforts to move toward value-based payment.”

The American Medical Association (AMA) also weighed in. “The AMA has been vocal in requesting that the Administration modify the Stark rule,” AMA president Susan Bailey, MD, said in an email. “In our most recent comments to CMS regarding the proposed revisions to the Stark rule, we identified several areas within the proposal that could disadvantage small, underserved, and rural practices. The AMA hopes CMS will address the concerns we raised in our comment letter and move ahead in finalizing the Stark rule.”

Another physician organization also would like to see a speedy result: “It is our understanding that nothing precludes the president from approving the proposed final rules as submitted from HHS,” Katie Orrico, director of the Washington office of the American Association of Neurological Surgeons (AANS), said in an email. “The AANS and Congress of Neurological Surgeons continue to recommend that the Office of Management and Budget clear the rules for implementation as submitted.”

Orrico noted that several members of Congress are urging HHS and OMB to release the rule quickly.

“While the final rules were an important consideration before the current public health emergency, the emergence of COVID-19 across the nation has further highlighted the urgent need for improved coordination and alignment among health care stakeholders to achieve the best result for patients while restraining cost,” wrote representatives Roger Marshall, MD (R-Kan.), Ami Bera, MD (D-Calif.), and 70 of their colleagues. “Now more than ever, completing the final rules can provide critical support to our health care system.”

A group of senators spearheaded by Bill Cassidy, MD (R-La.) and Mark Warner (D-Va.) is working on a similar letter.