Pathology/Lab Coding Alert

Greet exceptions to foster value-based arrangements.

After putting the brakes on an update to the Physician Self-Referral (Stark) Law during the pandemic, the feds unexpectedly fast-tracked a final rule as 2020 came to a close.

Let our experts glean what you need to know from the final rule for your pathology practice.

Set the Stage for Update

Enacted in 1989 when the primary payment system was fee-for-service, CMS aimed to update the Stark law to address roadblocks in newer payment systems of value-based care, and to facilitate use of newer technology and minimize administrative burdens.

“When we kicked off our Patients Over Paperwork initiative in 2017, we heard repeatedly from front-line providers that our outdated Stark regulations saddled them with costly administrative burden and hindered value-based payment arrangements,” said CMS Administrator Seema Verma in a release.

Look back: CMS proposed Stark updates in October 2019 with a final rule planned for Aug. 2020, but announced that month that the final rule would have to wait until 2021. The law prohibits physicians from referring Medicare patients for health services to an entity with which the physician or a family member has a financial relationship.

Surprise: CMS published the Stark Law final rule in the Federal Register on Dec. 2, 2020.

Pocket These 5 Takeaways

The Stark update follows through on many of CMS’ 2019 proposals, offering a plethora of care coordination goodies that focus on giving patients more control of their healthcare decision-making. Check out five final rule factors to know:

1. Definitions: CMS clarifies guidance on several Stark-related terms and arrangements with either new or revised definitions. Many of the changes fall under the umbrella of “value-based definitions” that address commenters’ requests for more in-depth descriptions of value-based activity, value-based arrangement, value-based enterprise (VBE), value-based participant, and value-based purpose. However, the agency also puts a new spin on terms “such as designated health services, physician, referral, remuneration, and transaction, some importantly narrowing the Stark Law’s scope,” relate attorneys Michael Paddock, Erica Kraus, and Theresa Thompson with Sheppard Mullin in a blog post.

2. Exceptions: The final rule lays out three new Stark Law exceptions for value-based arrangements based on risk level. “The final rule unleashes innovation by permitting physicians and other healthcare providers to design and enter into value-based arrangements without fear that legitimate activities to coordinate and improve the quality of care for patients and lower costs would violate the Stark Law,” according to CMS in a statement.

3. Compliance requirements: CMS outlines the “big three” — fair market value, commercially reasonable, and volume or value standard — in great detail. The final rule clarifies and defines each under the Stark Law while setting parameters for the separate but intertwined requirements related to financial arrangements.

4. EHRs and interoperability: Due to overwhelming public commentary and recent 21st Century Cures Act developments, CMS updated its Stark-related EHR exceptions, expanding on current EHR donation rules and adding new cybersecurity exceptions. “CMS added protections for financial arrangements related to cybersecurity technology, to update and remove interoperability requirements and to remove the electronic health records exception’s sunset date,” note attorneys Gretchen Heinze Townshend and Timothy J. Fry with McGuireWoods in online analysis.

5. Limited remunerations: After reviewing extensive public dialogue on payment limits under Stark, CMS decided to add a limited remuneration to a physician exception. Now, “arrangements where a physician receives remuneration limited to no more than $5,000 per calendar year (up from $3,500 as proposed), adjusted annually for inflation, is a fair market value exchange for items or services actually provided by the physician,” Heinze Townshend and Fry acknowledge.

Timeline: The majority of the final rule changes are effective Jan. 19, 2021. A group practice-related amendment won’t go into effect until Jan. 1, 2022.

Resource: Review the Stark final rule at www.govinfo.gov/content/pkg/FR-2020-12-02/pdf/2020-26140.pdf.