The Stark Proposed Rule: What You Should Know

On October 9, 2019, the Centers for Medicaid and Medicaid Services (“CMS”) announced a proposed rule intended to modernize and clarify certain provisions of the Physician Self-Referral Law, also known as the Stark Law. See 84 Fed. Reg. 55766 (October 17, 2019). The Stark Law, which prohibits certain physician referral patterns, has remained largely unchanged since it was enacted in 1989. The proposed law supports CMS’s “Patients Over Paperwork” initiative by reducing unwarranted regulatory burdens on physicians while continuing to guard against unnecessary utilization of healthcare resources motivated by physician financial incentives.

Congress enacted the Stark Law in 1989. It prohibits physicians from making referrals for designated health services payable by Medicare or Medicaid if the physician (or an immediate family member) has a financial interest with the entity performing the service unless a qualifying exception applies. The proposed rule is designed to ease regulatory burdens and simply compliance and facilitate value-based arrangements through the creation of exceptions for “value-based arrangements.” The new value-based exceptions continue to provide meaningful protection against over-utilization and other harm while incentivizing value, over value, of the healthcare services provided. Key concepts in the proposed rule focus on compensation that is (i) “fair-market value,” (ii) “commercially reasonable,” and (iii) not based on the “value or volume of referrals.”

As a part of the rule-making process, CMS is soliciting comments about the role of price transparency as a way to empower patients to have conversations with their providers at the point-of-care about the cost of care. Comments will be accepted through December 31, 2019.

If you want to learn more about the Stark Law and CMS’s move to modernize this law or if you want to submit comments on the proposed rule, contact Tricia Shackelford at (859) 629-3302 or

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