Stark Law: Flexibility for value-based care

The well-intentioned but complex Stark Law has gotten some updates recently. The changes give healthcare providers greater flexibility, especially with value-based care. 

The Stark Law was introduced in 1989 by United States Congressman Pete Stark (D-CA). It aims to protect Medicare and Medicaid from paying for services that may trigger conflict-of-interest concerns. This includes certain healthcare services for which physicians referred their Medicare/Medicaid patients to an organization with which they have a financial relationship. Referrals like this trigger questions about whether the patient really needed the service and raises concerns of physicians referring for their own financial benefit.  

Take, for example, a physician who refers a Medicare/Medicaid patient for an x-ray to a medical imaging facility. The facility then bills Medicare for that service. This may seem appropriate unless the physician has a financial interest in the medical imaging facility.  

The law faced criticism, however, for being too rigid. According to Henry Casale, partner at Horty Springer, “providers have found that the Stark Law is deceptively simple to summarize, but compliance has proven to be difficult and complex.” 

Casale went on to say that “Stark said that ‘the only way to protect healthcare consumers from unnecessary referrals is to impose a bright line rule.’ The Stark Law prohibits a physician from making referrals for certain Designated Health Services (DHS) payable by Medicare or Medicaid to an entity with which the physician (or an immediate family member) has a direct or indirect financial relationship (ownership or compensation). It also prohibits the entity from filing claims with Medicare or Medicaid for those referred DHS, unless the financial relationship complies with an exception to the Stark Law.”  

New value-based exceptions 

New exceptions under Stark allow for physicians to refer Medicare/Medicaid patients to entities they have a financial relationship with and that are part of a value-based program, in some cases. Additionally, the physician may receive remuneration, such as cost savings payments, so long as the requirements of the new exception are met.  

According to Casale, “The Stark value-based rules cover both cash and in-kind remuneration and do not include the term ‘Fair Market Value’.”  These rules have a number of requirements, but those requirements decrease as the value-based physician participants assume more financial risk.  The greatest flexibility is when the physician participants agree to assume full financial risk. (This includes capitation and global budget payment arrangements.) The requirements increase if the physician participants assume only “meaningful” financial risk. (The physician is responsible to repay or forego no less than 10 percent of the total value of the remuneration the physician receives under the value-based arrangement.) The requirements are greatest where the physicians are not at financial risk. 

“The Stark value-based rules are a significant improvement,” Casale said. “But they do leave a number of questions unanswered.” They also differ markedly from the OIG’s value-based safe harbor regulations that were published the same day, especially where the physicians are not at financial risk.  Here the OIG only provides safe harbor protection for in-kind remuneration while the Stark rules permit both cash and in-kind remuneration.  

“So while the Stark rules provide guidance and significant flexibility,” Casale said, “providers need to also consider the OIG’s much more narrow view of value-based arrangements.”   

RelatedDiscover how CMS is improving patient care while reducing administrative burden for providers. 

Rules related to Stark and anti-kickback legislation have been evolving for decades. These recent changes reflect an effort to add greater flexibility with value-based care and help keep the law responsive to current business practices in healthcare.  

How is your healthcare system adapting to keep up with changes to rules from the Stark Law and other fluid regulations?  Read more about how YouCompli can help you stay on top of regulatory changes or schedule a demo. 

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Differing state regulations make telehealth compliance more complex

The beauty of telehealth is that it connects patients and providers through technology that transcends boundaries. But when that connection crosses state lines, your healthcare organization could find itself responsible for complying with regulations from jurisdictions hundreds, maybe thousands, of miles away.  

Or from states just down the road. 

Many of those are stricter than the federal regulations, and many cover issues that the federal government doesn’t. Here are some of the key issues to look out for. 

Related: Growth in telemedicine could mean trouble if you are not careful   

Differing reimbursement structures and rates 

Reimbursement structure and rates vary by state and form of telehealth. For instance, all states pay Medicaid reimbursement for some form of live telehealth, but in different ways, and all states reimburse for interactive, real-time telehealth. However, only 14 reimburse for sessions where the patient records a call for later physician review (store-and-forward), and only 22 reimburse for remote patient monitoring of recently discharged hospital patients. There are eight states that reimburse for all three telehealth methods. 

There are two opposite views about reimbursement rates. One view is that a service is a service, so being virtual or in person shouldn’t affect reimbursement. 

The other penalizes telehealth for its efficiencies. In face-to-face visits, “there are built-in inefficiencies that isn’t time spending with the person,” says Dr. Katherine Dallow, vice president of Clinical Programs at Blue Shield Blue Cross of Massachusetts. “I probably spend somewhere between two to five minutes per patient moving from one room to another or pausing to document or checking something on their file or handing something off.” With less provider time and less pro rata overhead, some states reason, there should be less reimbursement. 

Forty states have their own private payer telehealth reimbursement policies, and six have private payer parity laws requiring the same reimbursement for in-person and telehealth care. 

Stricter privacy protections 

The Health Insurance Portability and Accountability Act (HIPAA) is the federal umbrella protecting privacy and confidentiality of patient records, but states are allowed to go beyond it. Many do. 

For example, if there’s a breach of privacy, HIPAA requires that the patient be notified within 60 days. Some states shorten that to 30 days, and California shortens it to ten. Some states also require hospitals to notify the state attorney general and the three major credit reporting companies: Equifax, Experian, and TransUnion. If there’s a breach of an out-of-state telehealth patient’s confidentiality, do you know what the originating state requires? 

Multi-state provider licensure 

Almost all states require physician licensure where the patient is (also known as the originating location). Same for nurses, nurse practitioners, physicians’ assistants, clinical psychologists, registered dieticians, and physical therapists. Different states have different licensing procedures, and there’s no federal umbrella. That’s something you’ll need to look out for, not only with faraway states, but also in New York, New York; Chicago/Hammond, Ind.; Texahoma, Texas/Okla.; or any of 84 other communities that straddle state lines. 

(Speaking of licensure, is your hospital licensed to provide telehealth services? In how many states?) 

Can doctors prescribe online? 

State regulations for phone-in prescriptions from the late 1990s adapt pretty well to online prescriptions today. The problem is, they differ from one state to the next. Different states have different regulations on just what a valid prescription is. About whether the doctor can prescribe without seeing the patient first, and whether seeing a patient on a computer screen is really “seeing.” About whether there has to be a previous doctor/patient relationship, and whether that relationship can be remote or has to be face-to-face. 

Related: Interstate regulations aren’t the only telehealth complexity. Check out this blog post for more: Telehealth compliance considerations: looking ahead

Two ways to keep up; one is practical. 

Complying with more than 50 sets of regulations takes a lot of attention to detail and a lot of reading. One way to keep up is with sheer effort: health organizations designate one or more people to read and track all the regulations that affect them.  

A better, more practical way is to rely on expert compliance professionals and nationally respected law firms to keep you up to date on interstate issues in telehealth regulation. YouCompli users select the agencies that matter to their organizations and receive updates and resources to help them know about new regulations, decide their applicability, manage policy changes, and verify compliance.  

Are you looking for ways to track telehealth regulations in all the states your patients receive treatment? Take a look at YouCompli, the only healthcare compliance software combining actionable, regulatory analysis with a simple SaaS workflow.  

Jerry Shafran is the founder of YouCompli.