Stark Law and its revisions benefit patients

While the Stark Law may be keeping legal, compliance and risk professionals up at night, few patients are aware that it even exists. This is ironic, because one primary driver behind Stark was protecting patients from unnecessary tests, especially when those questionable tests benefitted the provider financially! 

Stark in patient terms 

The Stark Law was intended to protect patients from having their provider order unnecessary tests. It prohibits physicians from referring patients for designated health services (DHS) to entities or facilities where the physician or physician’s immediate family member has a financial interest. DHS referrals include such services as laboratory, therapy, radiology, and home health services as well as durable medical equipment, nutrient and prosthetic devices or supplies. While there are a few exceptions to the Stark Law, if the patient has Medicare or Medicaid insurance, DHS referrals of this type are generally prohibited.  

If, for example, a provider orders unnecessary X-rays from an imaging center owned by her spouse, that would violate the Stark Law. Penalties for such violations can include fines and exclusion from participation in federal health care insurance programs such as Medicare. 

Overtesting or unnecessarily testing patients can even result in harm. BMC Health Services Research from November 2020 showed harmful patient effects such as: 

  • Unnecessary worry or psychological harm to the patient from repeated testing 
  • Potential misdiagnosis or overdiagnosis and false positive or negative test results 
  • Potential for unnecessary treatment based on the incorrect diagnosis or false positive and negative tests
  • Financial harm due to the cost of testing and over testing.   

Overt and unnecessary testing can also waste limited, valuable resources. For instance, trained staff and available patient appointments are being used multiple times for one patient. There is also potential for fraud, particularly for CMS patients, when the same or similar tests are ordered, billed, and paid in a short timeframe for the same patient. And it wastes the patient’s valuable time, too.  

Patients over paperwork 

The Stark Law was enacted in 1989, and CMS has worked to modernize and clarify the rules related to it ever since, the most recent of which became final this year. These changes aim to increase coordination of care between providers and the patients they serve. The rule modernization also supports the CMS “Patients over Paperwork” initiative. This reduces regulatory burdens on physicians and other healthcare providers, while reinforcing the substance of the law.  

Related: More about value-based care exceptions to the Stark Law 

Patient-focused changes to Stark

Many of the revised rules and the new exceptions to the Stark Law are patient focused changes. Here are some examples:  

Value-Based Arrangements: The final rule permits exceptions for patient focused and value-based care depending on the level of financial risk to the provider. Why is this a patient focused change? These arrangements, or models, promote value-driven payments instead of volume-driven payments. The goal of the value-based model is to manage patient care while improving the quality of that care at a reduced cost. Under this model, providers are incentivized for better patient outcomes or valuable care, instead of the volume of visits or referrals.  

Limited Monetary Benefit: There is now a general exception to the rule if the monetary benefit does not exceed $5,000 per calendar year. How is this change patient focused? Because it will allow limited referrals to an entity in which the provider or provider’s family member has a financial interest. For example, maybe the best radiation therapy services in town are performed at a facility in which the provider is a part owner. This change, or exception, will now allow the provider to refer the patient to that local facility to receive care and services – even if the provider is a part owner.  

Technology: Donation of technology and related services may now be permissible if the technology is necessary to start, maintain, or reestablish cybersecurity for the information stored in the electronic health record (EHR). Additional cybersecurity technology services enable providers to increase protection of patient health information, a change that benefits patients. 

Practice tip: reread of the self-referral rules 

I found it helpful to go back and read the new exceptions to Stark Law from a patient perspective. Doing this helped me remember how this challenging law and the rules that come with it ultimately benefit patients. (The changes and model language for policy updates are available to YouCompli subscribers.) It also helped me think about how to communicate with and train providers, as we update them on newly permissible referrals. (Related: Tips to train and engage providers in Stark compliance

Do you have the tools you need to recognize and manage regulatory change across your organization? Find out how YouCompli can help you manage and coordinate your response to regulatory change or schedule a demo. 

Denise Atwood, RN, JD, CPHRM has over 30 years of healthcare experience in compliance, risk management, quality, and clinical areas. She is also a published author and educator on risk, compliance, medical-legal and ethics issues. She is currently the Chief Risk Officer and Associate General Counsel at a nonprofit, multispecialty provider group in Phoenix, Arizona and Vice President of the company’s self-insurance captive.  

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Denise Atwood, RN, JD, CPHRM
District Medical Group (DMG), Inc., Chief Risk Officer and Denise Atwood, PLLC
Disclaimer: The opinions expressed in this article or blog are the author’s and do not represent the opinions of DMG.