July 14, 2016
Congress has acknowledged that the Stark law is standing in the way of the health care industry’s transition to alternative, value-based payment models, and in turn, meaningful reform may soon be on the horizon.

Last December, the Majority Staff of the Senate Finance Committee invited a select group of experts to participate in discussions regarding the need for reforms to the Stark law, which prohibits physicians and their immediate family members from referring patients to any entity in which the physician has a financial relationship, subject to certain exceptions. Financial relationships include both ownership and investment interests, as well as compensation arrangements. Billing Medicare for services provided pursuant to a financial arrangement that violates Stark is also prohibited and can subject providers to mammoth penalties under the False Claims Act. Over recent years, the breadth and complexity of the Stark law’s strict liability regime, along with its draconian penalties and myriad ambiguities, has had a decidedly chilling effect on the implementation of innovative payment models.

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