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On June 25, 2018,  the Centers for Medicare & Medicaid Services (CMS) published a Request for Information regarding potential modifications to the federal physician self-referral law (Stark Law), outlined in a previous Buchanan healthcare advisory, CMS Requests Input for Stark Law Modifications, Push Value-Based Care. 

In connection with that request, on Tuesday, July 17, the U.S. House Ways and Means Health Subcommittee convened a hearing entitled “Modernizing Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program.” The hearing focused on the compliance difficulties and barriers associated with the Stark Law and how the law might be modified in the future to better address the needs and complexities of today’s health care delivery system. Importantly, the hearing panels contemplated potentially drastic shifts in the law, advocating in some instances for departures from nearly 30 years of legislative and rulemaking orthodoxy.

Eric Hargan, Deputy Secretary, Department of Health and Human Services, who testified before the Committee, emphasized the need to modernize the Stark Law and coordinate enforcement and compliance between it and the federal anti-kickback statute. Of note, Mr. Hargan:

  • Outlined barriers to innovation and quality care imposed by the Stark Law, for example by highlighting problems faced by rural communities that are uniquely affected by the Stark Law’s restrictions on physician recruitment. 
  • Agreed with a Member of the Committee advocating for an easing or removal of the ban on physician-owned hospitals imposed by the Affordable Care Act (ACA), noting that a removal of the ban could result in increased competition among institutional providers. A removal of the ban would be a major shift from the 2010 ACA requirements, one that physician advocacy groups have long sought.  

In addition to Mr. Hargan’s proposals, Mike Lappin, Chief Integration Officer for Advocate Aurora Health, offered a radical proposal to modify the law to become an “intent-based” statute, which would require Congressional action and would completely transform the current structure of the law. This proposition, however, did not receive the immediate endorsement of any elected official. 

In sum, while the Subcommittee panels appeared to favor changes to the Stark law, especially in light of its continued expansion and burden related to compliance, the Subcommittee stopped short of clearly outlining how such changes would be accomplished. Such lack of clarity provides an opportunity for stakeholders, as the Department of Health and Human Services and Congress continue to explore such drastic changes to the Stark Law, providing comments and input to policymakers is critical to ensure your voice is heard to shape the regulatory environment going forward.

Access Hearing information here.

John L. Gayner, Summer Legislative Assistant, contributed to this advisory.