June 30,2016

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Hatch Releases White Paper Discussing Suggestions to Improve Stark Law

Outdated Law Poised for Modern Reform

WASHINGTON – Senate Finance Committee Chairman Orrin Hatch (R-Utah) today released a white paper examining potential reforms to the law governing Medicare physicians’ referrals aimed at removing barriers that prevent hospitals, doctors, and other health care providers from moving to alternative, more cost-effective, payment models.  Titled, “Why Stark, Why Now?  Suggestions to Improve the Stark Law to Encourage Innovative Payment Models,” the white paper discusses stakeholder perspectives on how the Stark law is working in practice, highlighting the law’s complexity, the severity of its penalties, its significant compliance costs, and its effect on efforts to integrate health care delivery. 

“The health care industry has changed significantly since Stark was first implemented, and while the original goals of the Stark law were appropriate, today it is presenting a real burden for hospitals and doctors trying to find new ways to provide high quality care while reducing costs as they work to implement recent health care reforms,” Hatch said.  “This paper reflects critical feedback from the stakeholder community on the law’s ambiguities, its unintended consequences and the need for reform, and I am hopeful it jumpstarts the discussion on how Congress can modernize the law to make it work for patients, providers, and taxpayers.” 

Congress originally enacted the Stark law to reduce the influence of financial relationships on physician referrals of Medicare patients.  The law was aimed at curbing the provision of unnecessary health care services, or overutilization, at a time when physicians were paid a fee for each service provided.  Although that payment model still exists, the industry is moving to payment models that reward the quality rather than volume of health care.  Congress has encouraged this shift with recent health care reforms.  When payment is not based on volume, the incentives the Stark law was created to address are greatly reduced or eliminated.

The Senate Finance Committee and House Ways and Means Committee held a round table on the Stark law in December 2015 and requested feedback from subject-matter experts.  Following the round table, the Committees issued a more widespread call for comments and received close to 50 responses.  The white paper details key areas of those comments and concerns.

An executive summary can be found here.

The white paper can be found here.