The House Ways and Means Health Subcommittee, chaired by Rep. Peter Roskam (R-IL), held a hearing this week entitled “Modernizing Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program.”

The Stark Law is a 1980s-era policy which was originally intended to protect Medicare beneficiaries from excessive costs and other potential harms that could result from physician referrals of patients to other providers where existing financial ties may be present. However, the Stark Law has had the unintended consequence of driving up costs for patients and has also created unnecessary complexity and regulatory stress for providers.

Chairman Roskam and the Health Subcommittee hosted a series of roundtables this year — with provider groups, hospitals, post-acute care medical professionals, and physicians — focused on how lawmakers and the Administration can work to cut red tape in the Medicare program to help these groups provide better care to their patients. The burdens of the Stark Law were stressed multiple times at each of these discussions.

Following those roundtables, the Centers for Medicare and Medicaid Services (CMS) recently announced that they issued a Request for Information seeking recommendations and input from the public on how policymakers can reduce the regulatory burdens of Stark Laws.

As noted in Chairman Roskam’s opening remarks:

“In a world where we are now pushing our providers to work closely together to bring down costs, and in many cases share in the savings that they create, we need to update the laws to give providers an easing of burdens and give the Centers for Medicare and Medicaid Services more flexibility to supply waivers to these providers who get into these high value arrangements.

“For the sake of avoiding getting repetitive, I will say it just one more time: The goal here is shared by all. Better care for Medicare patients.”

The Subcommittee heard from health experts from both the public and private sectors, including Deputy Secretary Eric Hargan of the Department of Health and Human Services (HHS); Dr. Gary Kirsch, President of The Urology Group; Mike Lappen, Chief Integration Officer of AdvocateAuroraHealth; Dr. Brian DeBusk, President and CEO of DeRoyal; and Claire Sylvia, Partner at Philips & Cohen LLP.

Deputy Secretary Hargan expressed to the Committee in his opening remarks:

“As shown by the President’s budget request and the range of information sought from the health care community in the Stark Law Request for Information last month, [HHS] is open-minded about the types of changes that may be needed to make the Stark Law more compatible with the push toward integrated care and alternative payment models. HHS looks forward to working with this Subcommittee to find the best path forward…and working with this Subcommittee to find a balanced way that leads to coordinated care and better outcomes for American patients.”

Rep. Sam Johnson (R-TX) addressed the Obamacare ban on physician-owned hospitals, another component from the Democrats’ failed health care experiment that has limited patients’ access to quality care:

“Obamacare effectively bans the expansion of physician-owned hospitals, as well as bans the construction of new ones. This means Obamacare is preventing some of our best hospitals from expanding so that they can better serve our communities. … Would you agree that the Obamacare ban on physician-owned hospitals limits competition?”

Deputy Secretary Hargan agreed, saying:

“Obviously, prohibiting any new entrance into the health care marketplace is going to reduce competition.  It’s going to make sure that there aren’t as many hospitals or as many places for patients to go.”

Rep. Devin Nunes (R-CA) asked Deputy Secretary Hargan:

“As we look for ways to modernize Medicare…and health care continues to shift from fee-for-service to value-based care…could you lay out concepts or ideas in changes to the Stark Law and how that would help Medicare beneficiaries?”

Deputy Secretary Hargan said:

“The transition toward value-based care, the Stark Law has already in many cases, as we hear from our stakeholders, is standing in the way and is creating friction as we move to value-based care. … The Stark Law, in many ways, can prohibit models or discourage models of coordinated care that would enable that care.”

Many Members also stressed to the Deputy Secretary that Stark Law and other excessive regulations in the Medicare program have had devastating effects in rural areas in particular. Rep. Adrian Smith (R-NE) said:

“Representing a very rural constituency, issues can be a little different than more urban areas, and as services are rolled out and fee structures and so forth that might be required under existing regulations, that may not be the best business model to reach folks in more rural areas. We need flexibility. When you look into the delays currently in place that stand in the way of patients receiving timely health care, I would hope that we could work together to address this ultimately.”

Rep. Lynn Jenkins (R-KS) also added:

“The Stark Law does present a particularly heavy regulatory burden for our hospitals. These rural hospitals have limited patient volume that at times may necessitate to share specialists with nonaffiliated hospitals. Additionally, there are fewer employees in rural hospital areas, which increases the probability that a physician or a family member may work with an employer that triggers Stark implication.” 

Rep. Erik Paulsen (R-MN) asked the Deputy Secretary:

“Would you agree that it’s also appropriate to analyze or look at anti-kickback statute as well?”

Deputy Secretary Hargan ensured Rep. Paulsen this is an issue HHS intends to further examine:

“Absolutely. … The anti-kickback is absolutely being looked at.”

Rep. Paulsen went on to say later in the hearing:

“As part of the Committee’s Medicare Red Tape Initiative which has been ongoing…we actually received dozens and dozens and dozens of comment letters from a multitude of all these health care providers complaining about the burdens that were associated with the Stark Law. And that includes burdens that get in the way of coordinated care, burdens that get in the way of these confusing documentation requirements, and the violations that are associated with documentation requirements that can then lead to these severe penalties.”

Rep. Brad Wenstrup (R-OH) talked about his firsthand experiences with the Stark Law in his nearly 26 years in the medical field:

“As a doctor when Stark Laws came about, it was an idea that there are some people that are acting out of greed and that we should probably do something about it. From my standpoint what it ended up doing is that you have some bad actors, but we made everyone stay after school and have to be subject to a lot of things that made it more difficult to take care of patients.”

Chairman Roskam emphasized that Stark Laws need to be updated to help modernize health care as we move toward a truly patient-centered system:

“The big question is how do we move forward and modernize this? How do we update this? And many times this is just sort of the nature of legislation and regulation. Regulation and legislation just tend to lag, it’s just sort of the nature of the system. Now we’ve recognized that with this transition, we have to update this.” 

CLICK HERE to learn more about the hearing.