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Table 3 Curated developments of the Stark Law

From: The Stark law, from inception to COVID-19 blanket waivers: a review

#

Year

From Stark I to Stark II: Evolution over Time

Developments

Details

Function(s)

1

1972

Medicare Fraud and Abuse Statutes were introduced [3]

Regulations regarding fraud and abuse began with this Federal statute. It further contained anti-kickback provisions [3]

To contain knowing and willful compensation from self- referrals

2

1977

Medicare Fraud and Abuse Statutes expand [3]

This expansion includes safe harbors which are certain types of permissible remunerations [3]

To expand the antikickback laws and upgrading violations from misdemeanor to felony offenses [3]

3

1982

Federal Regulation prohibiting referrals to a Medicare certified Home Health Agency

was enacted [3]

This targeted financial interest arising from Medicare Home Health Agency Referrals [3]

To prevent physicians from referring patients to a Medicare certified home health agency if there was a direct or indirect financial interest [3]

4

1987

The Medicare and Medicaid Patient & Program Protection Act was introduced [3]

This targeted financial interest arising from false claims, forbidden business transactions, excessive charges, and remuneration from referrals [3]

To contain prohibitions against false claims for reimbursement, failures to report forbidden business transactions, excessive charges, and remuneration for referrals [3]

5

1988

The Ethics in Patient Referrals Act (H.R. 5198) was first introduced [3]

Democratic Congressman Fortney Pete Stark initiated and introduced this Act [3]

To prohibit physician self-referrals, reduce costs thus incurred by these arrangements to Medicare and its beneficiaries [3]

6

1989

The Ethics in Patient Referrals Act (H.R. 939) was reintroduced [3]

Congressman Stark reintroduced HR 939 [3]

This Act prohibited physicians from referring Medicare patients to healthcare entities in which they have ownership or financial interest [3]

7

1989

The Ethics in Patient Referrals act was passed (December 1989) [3]

The Ethics in Patient Referrals Act passed as part of HR 3299-The Omnibus Budget and Reconciliation Act of 1989 (OBRA 89). Stark I was included in Sect. 6204 of OBRA 89 as Public law 101–239. Section 6204 of OBRA 89, thereafter, added Stark I as Sect. 1877 to the Social Security Act (SSA) [3]

To prohibit physicians from referring Medicare beneficiaries to clinical laboratories in which the former or their immediate family members have financial interests in those laboratories [3]

8

1991

The Subcommittee on Health, the Subcommittee on Oversight and the Subcommittee on Ways and Means heard testimony from researchers on the status of physician ownership of healthcare facilities other than clinical laboratories [3]

This testimony served as a foundation for expanding physician self-referral laws

There was a discussion of physician ownership in healthcare entities other than that of clinical laboratories [3]

9

1992

Stark I becomes effective (January 1992) [3]

Stark I was expanded in 1993 after it became effective [3]

To include the new Stark II provisions as detailed in Sect. 13,562 of COBRA 93 [3]

10

1993

The Comprehensive Physician Ownership and Referral Act of 1993 (HR 345) [3]

Congressman Stark introduces HR 345. HR 345 did not pass [3]

To extend the Medicare ban on physician referrals to providers with whom the former has a financial relationship, include entities other than clinical laboratories, and modify safe harbors/Medicare provisions related to financial arrangements [3]

11

1993

Stark II is included in Sect. 13,562 of OBRA 93 (January 1993) [3]

The language of HR 345 was adopted in a diluted form in Sect. 13,562 of OBRA 93 that was known as Stark II [3]

To revise the provisions of Sect. 1877 of the SSA and include ten additional Designated Health Services (DHS). Self-referral laws were also made applicable to the Medicaid program [3]

12

1993

H.R 2264-OBRA 93 was introduced in the 103rd Congress (May 1993) [3]

Democratic Congressman Martin Olav Sabo introduced this bill. The above bill passed the House with a vote of 219 years to 213 nays. The Senate amended it in June 1993. At the Senate, the vote was equally divided. Upon Democratic Vice President Gore’s leaning yea vote this bill passed [3]

The proposed bill included Physician Ownership and Referral, which is currently referred to as Stark II [3]

13

1993

Stark II becomes Public Law # 103–66 (August 1993) [3]

President Clinton signed bill HR 2264-OBRA 93 to enforce as Stark II Law [3]

Stark II prohibits a physician with a prohibited financial relationship from referring a Medicare patient to an entity that provides a DHS. The entity is restricted from furnishing a Medicare reimbursement claim or bill to any individual, third part payer, or any other entity [3]

14

1994

The Social Security Amendments of 1994 were effective [3]

There were amendments to Social Security [3]

To amend the list of DHS, changed reporting requirements, and modified some of the effective dates [3]

15

1998

The CMS publishes a proposed rule to implement Stark II (January 1998) [3]

Public comments to the proposed rule led to a two- phased rule making process, Phase I and Phase II [3]

To apply the provisions of Stark II Law to applicable entities and physicians

16

2001

Stark II Phase I final rules and regulations were issued (January 2001) [3]

Phase I addressed the definitions applicable to the Stark Law, general prohibitions, in-office ancillary exceptions, the impact on physician group practices, and financial relationships between physicians and entities that provide DHS [3]

As the 1st of the two phases to issue and implement Stark II

17

2002

Stark II Phase I final rules and regulations were effective (January 2002) [3]

Phase I regulations may be found in the Federal Register at 42 CFR, parts 411 and 424 [3]

The definitions applicable to the Stark Law, general prohibitions, in-office ancillary exceptions, the impact on physician group practices, and financial relationships between physicians and entities that provide DHS were effective Jan 2002 [3]

18

2004

CMS issued the Phase II interim final rules with a comment period (March 2004) [3]

Stark II Phase II regulations may be found in the Federal Register at 69 FR 16,054 [3]

To address statutory exceptions related to ownership and investment interests, compensation arrangement exceptions, and reporting requirements [3]

19

2004

Stark II regulations and Phase II rules were effective (July 2004) [3]

It also addressed public comments from Phase I and created new regulatory exceptions [3]

To implement Stark II Phase II [3]

20

2005

CMS published a regulatory text inclusive of C.ER.12 §§ 411.357(v) relating to exceptions for arrangements involving donations of electronic prescribing [18]

For ease of reference, CMS republished the entire Stark regulatory text as part of the Phase III final rule but omitted two exceptions of which this is the first [18]

This exception was published and finalized in 2005 [18]

21

2006

CMS published a regulatory text inclusive of C.ER.12 §§ 411.357(w) (2006) relating to exceptions for arrangements involving electronic health records technology [18]

For ease of reference, CMS republished the entire Stark regulatory text as a part of the Phase III final rule but omitted two exceptions of which this is the second [18]

This exception was published and finalized in 2006 [18]

22

2007

CMS issues the Phase III of the new final rule with a comment period (September 2007) [18]

Phase III addressed public comments from Phase II and thus, addressed the entire sent of comments from Phases I, II, and III [18]

To elaborate on previous discussions, not to change the scope or meaning [18]

23

2007

CMS proposed and issued several amendments to the Stark regulations in the 2008 Medicare Proposed Physician Fee Schedule (MPPFS) (July 2007) [19]

It identified certain issues for further studies and potential change in a separate rulemaking process throughout the preamble of the Phase III rulemaking [19]

These MPPFS proposals are separate from, and in addition to, the revisions in the Phase III final rule [19]

24

2008

CMS published final Stark rules (Final Rule) in its 2009 Final Hospital Inpatient Prospective Payment Systems Rule (August 2008) [19]

In the Final Rule, CMS makes various revisions to the Stark regulations. Some of these revisions emanate from proposals contained in the 2008 Medicare Proposed Physician Fee Schedule’ and some of the revisions emanate from proposals contained in the 2009 Inpatient Prospective Payment System Proposed Rule [19]

The Final Rule contains several significant modifications to the Stark regulations, some of which required physicians, hospitals, and other healthcare providers to unwind or restructure their arrangements [19]

25

2009

CMS almost adds an exception to the Stark Law as part of the 2009 Medicare Physician Fee Schedule [1]

This exception included incentive programs for both pay for performance and shared savings/gainsharing arrangements [1]

Adding this exception would have permitted hospitals to have incentive payment programs. However, CMS decided not to finalize this exception [1]

26

2010

The 2010 Affordable Care Act (ACA) makes many important changes to the Stark Law [20]

The ACA eliminates the Whole Hospital Exception, makes physicians subject to notice requirements when referring patients for MRI, CT or PET scans, and enforces a new self-reporting protocol for violations of the Stark Law. The above referral notice to patients must contain disclosures of the physician’s ownership interest, the patient’s option to receive services from other provider, and a list of alternative providers in the area [20]

To promote fair trade practices, curb over utilization, and provide patients an array of provider choices to receive for healthcare services [20]

27

2015

CMS releases final revisions to the Stark Law (the “Final Rule”) as part of the 2016 Physician Fee Schedule (November 2015) [21]

The Final Rule builds upon, and largely adopts, the similar July 8, 2015 proposed Stark rule (“Proposed Rule”) [21]

To accommodate healthcare delivery/payment system reform, reduce burdens, facilitate compliance, clarify certain applications of the Stark Law, and issue new Stark exceptions [21]

28

2016

CMS’s amendment to the Stark Law becomes effective (January 2016). A new exception called the Timeshare Arrangement is additionally added [22]

Timeshare Arrangements reduce the burden on healthcare providers and facilitate compliance with regulations, improve access to healthcare services, especially in underserved areas, and add flexibility to healthcare providers and ensure that it does not pose any risk to the patients [22]

To add much-needed flexibility for independent physicians who share office space and for hospitals that provide office space, equipment, personnel, supplies, and services to part-time, independent physicians on an “as-needed” basis [22]

29

2017

A bill titled Medicare Care Coordination Improvement Act of 2017 was introduced in both the House and Senate [23]

No further action was taken during this legislative session other than the referral to various committees [23]

To amend provisions (inclusive but not limited to) Title XVIII of the SSA to modernize the physician self-referral prohibitions, promote care coordination in the merit- based incentive payment system, and to facilitate physician-practice participation in alternative payment models under the Medicare program [23]

30

2018

CMS issued a Request for Information (RFI) seeking comments from the public on how to reform the Stark Law in response to the Trump Administration’s push to simplify administrative regulations that are impeding health care delivery (June 2018) [23]

CMS posed 20 requests for information regarding the Stark Law, asked for comments regarding concerns of the applicability of existing Stark exceptions, the ability to enter commercial alternative payment models, and the ability to enter novel financial relationships. CMS sought comment on whether any additional exceptions would be necessary to protect entities and individuals participating in these alternative payment models [23]

The RFI also sought feedback regarding the specific language in the current law, including “fair-market value,” “commercial reasonableness,” and “considers the volume or value of referrals.” CMS requested information as to the positive and negative effects of the Stark Law. The RFI was so far-ranging that CMS effectively invited comments on every aspect of Stark law that a stakeholder believed warranted revision or clarification [23]

31

2019

CMS issued a Modernizing and Clarifying the Physician Self-Referral Regulations Proposed Rule (Oct 2019). The deadline for comments to be considered was December 31, 2019 [24]

The proposed rule includes a comprehensive package of proposed reforms to modernize the regulations that interpret the Stark Law while continuing to protect the Medicare program and patients from bad actors. Under this proposed rule, for the first time, the regulations would support the necessary evolution of the American healthcare delivery and payment system [25]

The proposed rule supports the CMS “Patients over Paperwork” initiative by reducing unnecessary regulatory burden on physicians and other healthcare providers while reinforcing the Stark Law’s goal of protecting patients from unnecessary services and being steered to less convenient, lower quality, or more expensive services because of a physician’s financial self-interest [25]

32

2020

CMS issued blanket waivers of sanctions under the Stark Law, retroactive to March 1, 2020, in response to the COVID-19 pandemic [13]

CMS issued provider-specific guidance on how the Stark Law blanket waiver will impact physicians and other clinicians [26]

To protect only remuneration and referrals that are related COVID-19

33

2020

CMS published the final rule, “Modernizing and clarifying the Physician Self-Referral Regulations” in the Federal Register (December 2020) [27]

CMS finalizes many of proposed policies from the notice of proposed rulemaking issued in October 2019, including finalizing new, permanent exceptions for value-based arrangements, finalizing additional guidance on key requirements of the exceptions to the physician self-referral law, finalizing protection for non-abusive, beneficial arrangements, and reducing administrative burdens that drive up costs [27]

This rule had functions of (inclusive but not limited to) permitting physicians and other health care providers to design, entering 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, to make it easier for physicians and other health care providers to make sure they comply with the law, and to safeguard the integrity of the health care ecosystem by taking money previously spent on administrative compliance and redirecting it to patient care [27]