Changes to Physician Self-Referral Regulations Coming in 2021

The Centers for Medicare & Medicaid Services (CMS) has issued final revised rules for the Medicare physician self-referral law (“Stark Law”).

Under the Stark Law, a physician is prohibited from making referrals to an entity for healthcare services if the physician has a financial relationship with the entity. The regulations were intended to protect patients in a health care system that reimbursed providers on a fee-for-service basis. In this type of system, there is a motivation to provide more services.

This system is not where health care is going. In its press release, CMS explained that “the 21st century American health care system is increasingly moving toward financial arrangements that reward providers who are successful at keeping patients healthy and out of the hospital, where payment is tied to value rather than volume.”

With the final rule, CMS intends to modernize the regulations interpreting the Stark Law. Changes include “new, permanent exceptions for value-based arrangements,” “additional guidance on key requirements of the exceptions to the physician self-referral law,” “protection for non-abusive, beneficial arrangements,” and “reducing administrative burdens that drive up costs.”

All changes, except for amendment number three, are effective January 19, 2021. Amendment number three is effective January 1, 2022.

Healthcare Leadership Council President Mary Grealy said, “This should be recognized as one of the most important health policy achievements of recent years. We are moving toward an era in healthcare that recognizes the importance of care coordination and fully integrated care involving primary care providers, specialists, hospitals, pharmacies, drug and device manufacturers and more.”

Grealy continued, “These laws, as written, discouraged innovative patient-focused multi-sector collaborations at a time in which we should be enthusiastically encouraging them. What these new rules recognize is that we can protect patients from fraud and abuse while still allowing the healthcare system to evolve in a way that benefits patients and achieves greater cost-efficiency.”