Introduction

Understanding the 3 R’s of the Stark Law: Rules, Risks, and Our Recommendations

Our current white paper, “Understanding the 3 R’s of the Stark Law: Rules, Risks, and Our Recommendations” by HortySpringer attorney Henry Casale describes everything that you need to know about the Stark Law and its regulations from the Law’s introduction by Rep. Fortney “Pete” Stark to the rules that went into effect on January 19, 2021.  It explains all the Stark rules that are currently in effect in a straightforward manner and where, and how, the rules that were previously in effect have been affected by the January 19, 2021 Rules.  As an added bonus, we’re also providing a “Black-Line” that illustrates the changes that the January 19, 2021 Rules have made to the Stark Rules that were previously in effect.

The regulations that became effective on January 19, 2021 are the most significant changes to the Stark Law since 1995 when the Law was expanded to cover nine “Designated Health Services” in addition to clinical laboratory services.  The January 19, 2021 Rules made significant changes to the definition of “Fair Market Value” and provided several helpful examples of how providers are to determine the fair market value of a physician’s services.   For example, CMS specifically rejected the need for compensation to fall below the 75^th or any other percentile in a salary survey, and even stated that depending on the physician’s skills, $450,000/year compensation for an orthopedic physician may be too low, regardless of where that amount falls in a salary survey.

These rules also significantly changed the “Volume or Value Standard” to be clearer and easier to apply.  For the first time, CMS included a definition of “Commercially Reasonable” that takes an “interest- based” approach to compensation and even recognizes that it may be “commercially reasonable” to lose money on the operation of a physician practice or other transaction.  These rules also added provider-friendly rules that should significantly decrease the need for self-disclosures of technical violations of the Stark rules, recognized that Hospitals may want to donate cybersecurity technology and related services to staff physicians without a physician cost-share, and added relatively straightforward “Value- Based“ rules.  At the same time, several of the rules that were in effect prior to these rules were unaffected by the new rules.  This paper describes the rules that remain as they were, and the changes that have been made by the January 19, 2021 Rules.