CMS’s Stark Law Changes Could Mean More Value-Based Business for Home Health Operators

In an effort to boost value-based care, the U.S. Centers for Medicare & Medicaid Services (CMS) recently announced that it has finalized changes to the Physician Self-Referral Law — often referred to as the Stark Law.

For home health providers, the changes could mean more opportunities for value-based care arrangements moving forward, experts believe.

Broadly, the Stark Law was originally intended to prevent physicians from self-dealing and making compromised medical decisions based on financial incentives.


Under previous rules and regulations, physicians were prohibited from making referrals for “certain designated health services payable by Medicare to an entity with which he or she has a financial relationship.” In some instances, this meant home health providers.

In CMS’s statement announcing the recent change, the agency called the law an “outdated” regulation that “burdened” health care providers during the U.S. health care system’s shift toward quality.

“These reforms under the Stark Law and Anti-Kickback Statutes are historic reforms and come as part of the regulatory sprint to coordinated care that I led over the past few years,” said U.S. Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan. “Too often, ‘sorry, Stark’ or ‘can’t do it, AKS’ have been watchwords in American health care.”

In value-based care arrangements, physicians and other care providers typically form interdisciplinary teams to manage patients as their needs change, sometimes sharing upside and downside risk. Discouraging a physician from referring within that internal team makes little sense.

There has long been an effort to make changes to the law, Matt Wolfe, a partner at law firm Parker Poe, told Home Health Care News.

“Since the enactment of the statute, there have been a whole host of different regulatory efforts to better define and narrow the scope of the law, recognizing that there are a number of times where it would be appropriate for a physician to refer a patient to designated health care services,” Poe said.

Other legal experts echoed those sentiments.

The update to the Stark Law now creates exceptions that make room for innovation and value-based compensation structures, according to Danielle Sloane, a health care attorney at Bass, Berry & Sims.

“For home health agencies that want to participate in value-based arrangements, I think it provides more avenues to work together with hospitals and physician groups — and to share in the savings from any efficiencies,” Sloane said. “[It provides more avenues] to share in the bonuses from a quality perspective.”

Additionally, CMS provided guidance on requirements of the exceptions to the Stark Law and technical compliance requirements.

Still, Sloane warned that despite the flexibility the changes provide, it’s important for home health providers to continue to devote time and energy to compliance. First and foremost, providers must ensure they have appropriate arrangements with physicians.

“There are certainly some flexibilities here for those ‘oops’ scenarios, but I don’t think it changes best practices of making sure you have a contract in place,” she said.

The overall impact of the update will depend on things ranging from existing arrangements with physician practices, health systems and payers, but most providers will be impacted in some way, according to Wolfe.

Similar to Sloane, Wolfe stressed that providers should take inventory of their existing contractual arrangements.

“Even though one of the goals of this regulatory action is to reduce regulatory burdens, I think, in the short run, providers are going to have to put some resources into making sure that their current arrangements comply with the new iteration of the laws and regulations,” he said.