Stark Law Update: New Exceptions to the Physician Self-referral Regulations Push Providers to Assume More Financial Risk in Value-based Models

In a final rule issued Nov. 20, the Trump Administration finalized changes to physician self-referral and anti-kickback rules that the Centers for Medicare and Medicaid Services (CMS) heralded as “historic” and as a move that will facilitate the Agency's push toward care coordination and innovative payment models across Medicare, Medicaid, and private plans.
These regulations stem from the Stark law, which was initially enacted to prevent physicians from profiting off referrals to Medicare providers in which they or a family member had a financial stake.

CMS's final rule creates new, permanent exceptions to the physician self-referral law for value-based arrangements and establishes definitions for terminology integral to the exceptions, including value-based activity, value-based arrangement, value-based enterprise (VBE), value based purpose, VBE participant, and target patient population.

CMS has finalized three value-based exceptions effective Jan. 19, 2021. 
  1. A value-based arrangement where a value-based enterprise has, during the entire duration of the arrangement, assumed full financial risk from a payor for patient care services for a target patient population;
  2. A value-based arrangement under which the physician is at meaningful downside financial risk for failure to achieve the value-based purposes of the value-based enterprise during the entire duration of the arrangement; and
  3. Any value-based arrangement, provided that the arrangement satisfies specified requirements.

The exceptions may be accessed only by parties that qualify as VBE participants in the same value-based enterprise and apply only to compensation arrangements.  Exceptions are applicable to arrangements that relate to care furnished to Medicare beneficiaries, non-Medicare patients, or a combination of both.

CMS expects most value-based arrangements will involve activities that coordinate and manage the care of a target patient population, but the agency stopped short of limiting qualified value-based arrangements as those that require care coordination and management.
The exceptions structure is designed to get providers to assume more financial risk in value-based models because the more risk a provider takes, the greater flexibility the new regulatory exceptions provide.
Providers and healthcare organizations will likely need more clarity than the new rules deliver, and the Biden Administration will need to determine how to exercise enforcement. The surprise release of the final rule comes after CMS previously announced it was extending the timeline of publication of the final rule until August 2021 because it was still working through the complexity of the issues raised by comments received on the proposed rule.”
CMS also has finalized additional guidance on key requirements of exceptions to the physician self-referral law to make it easier for physicians and other healthcare providers to ensure they comply with the law.
ASNC is reviewing the new regulations and will make additional information and resources available in the weeks ahead.