Physician Compensation Models and Stark Law Proposals
On October 9, 2019, the Centers for Medicare and Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) proposed sweeping changes to the federal Physician Self-Referral Law, commonly referred to as the Stark Law. While many of the changes reflect CMS’ intent to allow greater flexibility to address certain value-based compensation arrangements, a somewhat overlooked proposal could have a material effect on how physician group practices allocate profits from Stark Law designated health services (“DHS”). Currently, many physician group practices, especially large or multi-specialty practices, allocate DHS profits to its physicians based on DHS categories. The result is that profits from one DHS category (e.g., imaging services) may be allocated to certain physicians in the group practice while profits from a second DHS category (e.g., physical therapy) may be allocated to a different (or possibly overlapping) subset of physicians in the group practice. Under the proposed rule, CMS would eliminate this approach and require that profits from all DHS be aggregated and distributed to either all physicians in the group practice or a component of at least five physicians in the group practice.
During the ensuing months, various comments were submitted from interested parties and now the period for public comment has closed. The American Medical Group Association noted that they are “ … supportive of these exceptions, which would allow providers to take more innovative approaches in their financial arrangement while encouraging and removing barriers to value-based care.”
At this point it is not clear which of the proposals will be included in the final rules, however the proposed rules demonstrate that the Trump Administration is serious about reforming and evolving the Stark Law, which was passed three decades ago and includes many provisions that are not consistent with many of the quality-based treatment models in existence today.
