The law against physician self-referral needs to be updated, but there was disagreement on how much reform needs to occur.
This article first appeared July 18, 2018 on Medpage Today.
By Joyce Frieden
WASHINGTON -- Members of a House committee generally seemed to agree that the Stark law against physician self-referral needs to be updated, but there was disagreement on how much reform needs to occur.
"For rural districts like mine, these laws do present a disproportionately heavy regulatory burden for our hospitals," said Rep. Lynn Jenkins (R-Kan.), a member of the House Ways & Means Health Subcommittee, at a hearing Tuesday on modernizing the Stark law. Because there are fewer employees living in rural areas, it "increases the probability that a physician or family member may work with an employer" that triggers the law, she noted.
Rep. Sander Levin (D-Mich.), the committee's ranking member, was more cautious. "On this issue we should proceed with care," he said. "The Stark law is an important tool, which for many years has protected beneficiaries from inappropriate referrals and overutilization of care ... Evidence continues to documents that these self-referrals have a detrimental impact on care." He cited a Government Accountability Office report finding that an exception to the law for in-office referrals has increased Medicare's costs by millions of dollars.
Related: CMS Seeks Input on Potential Stark Law Revisions
The Obama administration "has provided leeway through the regulatory process to facilitate new payment models" that wouldn't violate the Stark law, Levin said.
The 1989 law was named for former congressman Fortney H. "Pete" Stark (D-Calif.), and it "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," 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.
Made Sense at the Time
The Stark law made sense as a way to protect the public and the Medicare program from abuse at the time it was enacted, Eric Hargan, deputy secretary of the Department of Health and Human Services (HHS), said in his testimony at the hearing.
"The law did it in two specific ways. First, it banned doctors from referring patients for certain designated health services payable by Medicare to an entity in which the physician, or any immediate family member, holds a financial relationship. Second, it prohibited the entity from filing claims with Medicare, or billing another individual, entity, or third-party payer for those referred services. He noted that "the law grants HHS the authority to carve out exceptions for financial relationships that do not pose a risk of program or patient abuse."
However, "what made sense for the healthcare system of the 1980s does not necessarily translate to the modern healthcare system," he continued. "[The law] does not always work in a system transitioning and moving to value-based payments for healthcare. It may unduly limit ways that physicians and healthcare providers can coordinate patient care by restricting ways physicians can organize and work together and with others."
"In considering changes to the Stark Law, we must be cognizant of the need to preserve competition in the healthcare marketplace where such competition achieves the goal of patient-centered quality care while also controlling costs," Hargan said.
Barriers to Cooperation
Gary Kirsh, MD, a Cincinnati urologist speaking on behalf of the Large Urology Group Practice Association, explained that independent urology practices like his that want to participate in an alternative payment model (APM) are in a "Catch-22" when it comes to both the Stark laws and the federal anti-kickback statute, which "prohibits the knowing and willful payment of 'remuneration' to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients)," according to the HHS Inspector General's website.
"[Independent] practices cannot test an APM in the real world without financial waivers to Stark and anti-kickback laws, yet these waivers cannot be granted unless there is an approved APM," Kirsh said. "Organizations may spend ... years of work, resources, and substantial investments designing an APM, but it remains a theoretical, mathematical model whose actual impact on patient care and healthcare financing is unknown without testing in the clinical environment."
Kirsh's group and 24 other physician groups are supporting H.R. 4206, the Medicare Care Coordination Improvement Act, which would widen the Stark law's exemption for accountable care organizations to include all types of alternative payment models. But as it stands now, the Stark law's restrictions make it too hard to even conceptualize new APMs, said Latha Alaparthi, MD, of the Digestive Health Physicians Association, a gastroenterology organization.
When it comes to inflammatory bowel disease, for example, "there are multiple areas we can partner with [other physicians on] in terms of radiology, patient care, and drug costs, if we can get into discussion with people in terms of how we can coordinate care," Alaparthi, who was not present at the hearing, said in a phone call. "But we can't conceptualize [doing that through APMs] because we know those things are not allowed."
More Certainty Needed
But Brian DeBusk, PhD, CEO and president of DeRoyal, a medical device manufacturer, took a more nuanced view. "I would like to emphasize the need for caution when considering ways to make changes to the Stark law," he said. Although there are many waivers to the Stark law that are already available to APMs, "the waivers are not apparently used to their fullest."
One reason for that is that the waivers are granted only on a case-by-case basis, DeBusk said. "Codifying them into law would support a transition to value-based care ... More needs to be done to provider certainty and encourage physicians to become active participants in these models."
Levin expressed disappointment that the subcommittee was discussing the issue so late in the legislative year. "It's really sad that the focus of this Congress is to dismantle the Affordable Care Act," he said. "We should really be discussing issues like this ... instead of [trying to dismantle a law] that has provided healthcare coverage for the first time to millions of people. That's a sad commentary on what has been the focus of the majority [party] here."
Subcommittee chairman Pete Roskam (R-Ill.) was more optimistic. "I think there's very good work we could do here," he said. For example, making sure that the anti-kickback statute and the Stark law are in harmony with one another -- rather than each having conflicting and confusing terminology -- is one area all committee members can work on, he said.