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AHA Pushes Stark Law Reform: 4 Recommendations

By John Commins  
   August 06, 2018

The hospital lobby has responded to CMS Administrator Seema Verma's invitation to review the Stark Law and adapt it to value-based care.

The American Hospital Association has made a patient-centered plea for Stark Law reforms.

In a 23-page letter to Centers for Medicare & Medicaid Services Administrator Seema Verma, AHA General Counsel Melinda Reid Hatton offered a detailed proposal that would allow hospitals and physicians to provide coordinated, value-based care and not run afoul of the Stark Law.

"To reach the full potential of a value-based health system, the Stark compensation regulations must be reframed to meet the objectives of the new system, through the creation of a new exception designed specifically for value-based payment methodologies," Hatton's letter said.

To demonstrate how each of the AHA's proposed amendments would directly benefit patients, Hatton used "Wayne," a hypothetical 75-year-old man with multiple chronic illnesses and a limited home care network.

AHA called on CMS to do the following:

  1. Amend undue constraints on how hospitals finance infrastructure improvements, such as multi-site electronic health records. "For Wayne, shared electronic systems across his care team would mean no longer answering the same questions or completing duplicate paperwork every time he has an appointment or contact with someone on his care team."
  2. Remove barriers to incentive programs that reward physicians who "adhere to defined care pathways."  AHA says that current protections for incentive arrangements are "haphazard combinations of exceptions… anchored in 'hours worked' or 'resources expended'" and designed for independent physicians, not collaborators. "For Wayne, care pathways would mean having the most current treatment options available to meet his particular needs."
  3. Enhance incentives for efficient treatment options, and provide specific exemptions that protect cost-saving arrangements. This could include sharing the bottom-line cost savings with collaborating physicians. For example, hospitals and physicians could establish specific cost-savings actions such a using standardized devices or drug formularies. "For Wayne, a formulary would mean he is prescribed a drug that is best suited to his needs and the most cost-effective for him."
  4. Remove barriers that discourage team-based care, and allow for financial rewards to physicians for care coordination, which otherwise could run afoul of the volume/value prohibition that links payment to the volume of potential referrals for hospital services. "For Wayne, having a care team means he can make a call to multiple team members to discuss his concerns and avoid an unnecessary trip to the emergency department or prevent a cascade of difficulties that would land him back in the hospital."

"We believe that value-based arrangements protected by the new exception will not carry the risk of overutilization addressed by the Stark Law," Hatton wrote. "Our proposed exception draws on safeguards included in the Waivers for the MSSP, as well as certain other requirements intended to protect the Medicare and Medicaid programs against abuse in the fee-for-service context."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


Tighten 'haphazard' regulations that don't protect providers from Stark Law violations.

Remove barriers to team-based care.

Allow incentive programs that reward physicians who 'adhere to defined care pathways.'

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