CMS issues request for information on physician self-referral policy

On June 20, 2018, the Centers for Medicare and Medicaid Services (CMS) released a request for information (RFI) seeking public input on any undue regulatory impact or burden stemming from the physician self-referral law, commonly referred to as the Stark Law.

The RFI will be published in the June 25, 2018, Federal Register. Comments are due by August 24, 2018.

Notably, the RFI follows the inclusion of a proposal in the President’s 2019 budget proposal for a broad statutory exception to the physician self-referral law for financial arrangements under alternative payment models (APMs) and a series of industry roundtables on the self-referral law convened by the House Ways and Means Committee.

Background on the Stark Law

When originally enacted in 1989, the Stark Law (named after former House Ways and Means Committee Chairman Pete Stark (D-CA) was intended to address concerns that referrals for health services can create incentives for overutilization, restrict patient choice, and reduce market competition in instances where there is a financial benefit such as profit sharing for the referring practitioner. The Stark Law has two key elements:

  1. A prohibition on physicians making referrals for certain “designated health services” (DHS) payable by Medicare to an entity with which the physician or an immediate family member has a financial relationship
  2. A prohibition on that entity from filing claims with Medicare (or any other billing) for those referred services

The statute includes specific exceptions to the prohibitions and provides for the Secretary of the Department of Health and Human Services (HHS) to create additional regulatory exceptions for financial relationships that do not present a risk of program or patient abuse.

‘Regulatory Sprint to Coordinated Care’

The RFI is part of a larger “regulatory sprint to coordinated care” that HHS is undertaking in an effort aimed at “identifying regulatory requirements or prohibitions that may act as barriers to coordinated care, assessing whether those regulatory provisions are unnecessary obstacles to coordinated care, and issuing guidance or revising regulations to address such obstacles and, as appropriate, encouraging and incentivizing coordinated care.”

Via the RFI, HHS is seeking additional public input on the financial structure of payments between entities in alternative payment models, potential specific revisions to the regulatory exceptions to the physician self-referral law, and issues around terminology discrepancies between alternative payment models and the law. The RFI includes a series of 20 specific questions, including questions seeking:

  • Information on either existing or potential arrangements that involve DHS entities and referring physicians that participate in APMs, and whether such models and financial arrangements are sponsored by CMS
  • Examples of additional regulatory exceptions to the self-referral law that are needed to protect specific types of APMs, including accountable care organizations (ACOs), bundled payment models, and two-sided risk models in a fee-for-service environment
  • Input on potential modifications to the regulatory definitions of “commercial reasonableness” and “fair market value” in the context of the regulatory exceptions to the physician self-referral law
  • Input on when compensation should be considered to “take into account the value or volume of referrals” by a physician or “take into account other business generated” between parties to an arrangement, in the context of both the physician self-referral law and APMs and other novel financial arrangements
  • The costs of regulatory compliance

Authors:

Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Ethan Joselow
Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see http://www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2018 Deloitte Development LLC. All rights reserved.

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