House Ways and Means Health Subcommittee Holds Hearing Examining Stark Law Burden

July 24, 2018

On July 17, the House Ways and Means Health Subcommittee held a hearing on the physician self-referral law, more commonly referred to as the Stark Law. A recent Valued Voice article covered how the Centers for Medicare and Medicaid Services (CMS) has issued a request for information asking for feedback on how to address any undue regulatory impact or burden health care providers have in complying with the law.

During the hearing, Committee members asked Health and Human Services (HHS) Deputy Secretary Eric Hargan for his ideas on improving the law, which in general prohibits physicians from referring Medicare patients to an entity in which they or their immediate family members have a financial interest. Hargan noted the past few administrations have had similar goals of reforming Medicare’s payment system by encouraging value-based payments, but the law appears to have had a detrimental impact on achieving those goals. He also said that early commenters on the Request for Information have made it clear the law has also hindered efforts to better coordinate care. Wisconsin Congressman Ron Kind, a member of the subcommittee, requested an update from the Secretary on the administration’s progress in implementing legislation he authored with Rep. Kenny Marchant (RTX) that was included in the 2018 Bipartisan Budget Act which sought to clarify certain technical violations under the law.

The panel of witnesses also included Advocate Aurora Health’s Chief Integration Office, Michael Lappin, who noted how difficult the law has made it for Aurora’s efforts to accelerate value-based payment arrangements. Lappin recommended Congress change the law by making four key reforms:

1. Create clearer exemptions from the law for value-based payment arrangements.
2. Make penalties lower for unintentional violations of the law than for clear intentional violations.
3. Clarify key definitions, such as “fair market value,” that are currently vague and confusing when it comes to compliance.
4. Streamline how Stark Law intersects with other similar statutes such as the anti-kickback statute, and false claims act, which are currently regulated by different federal entities.

The Committee also heard testimony from Claire Sylvia, who belongs to a law firm that represents whistleblowers under the False Claims Act. Sylvia maintained that Stark Law provides key protections for patients and taxpayers against abuses from bad actors who might otherwise make care decisions based on financial self-interest, rather than the patient’s interest. Subcommittee chair Peter Roskam (R-IL) responded by saying the Committee’s goal is not to sweep away these protections but improve and modernize the law.

WHA will continue to advocate for reforming the Stark Law and monitor any agency and Congressional developments at the federal level.

This story originally appeared in the July 24, 2018 edition of WHA Newsletter