AAOS October 3, 2017
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Legislation Introduced to Address EHRs, HIT

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AAOS Supports Stark Reform Efforts


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AAOS Supports Stark Reform Efforts

On September 18, 2017, AAOS sent a letter of support to Rep. Kenny Marchant (R-TX) on introducing H.R. 3726, the Stark Administrative Simplification Act. The Social Security Act includes physician self-referral prohibitions (commonly known as the “Stark law”) that were enacted more than 20 years ago to limit the influence of financial relationships on physician referrals. These prohibitions have not kept pace with the changing health care environment and increasingly pose barriers to care coordination in innovative payment models, including those under the new Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) generally. These kinds of payment models are value-based programs seeking to promote high-quality care and care coordination within individual health care entities and across multiple sites of service.

However, the Stark law prohibits payment arrangements that consider the volume or value of referrals or other business generated by the participating parties. These prohibitions stifle innovative delivery of care because they inhibit hospitals and physician practices from incentivizing physicians to deliver care more effectively to patients. In addition, technical violations can trigger treble damages because of the strict liability standard under Stark. Indeed, this strict liability standard often results in technical violations where the parties are functioning in accordance with the “spirit” of the rule, such as unsigned agreements or expired leases, and the assessment of treble damages is excessive.

“As you note, the penalties for Stark Law violations lack appropriateness and can be extreme. They also stifle innovation,” the letter states. "Furthermore, the time frame for resolution can impede a medical groups ongoing business activity. For example, once a practice has determined internally that a violation under the Stark standard may have occurred, but was unintentional, the filing for a determination to that effect can take many months, and consequently, the business activity in question is essentially in limbo or on hold, causing disruption in the practice’s finances.”

The fixed penalty structure and simplified self-disclosure process in H.R. 3726 would give physician practices more certainty and predictability regarding the outcome of a technical and inadvertent noncompliance disclosure by assessing reasonable fixed penalties. The bill would also help reduce the backlog at the Centers for Medicare and Medicaid Services (CMS) by giving them 180 days to determine whether the technical violation disclosed qualifies for the fixed penalty as set forth in the legislation.

In addition to seeking reforms to the Stark law, AAOS continues advocate for the preservation of the in-office ancillary services (IOAS) exception to the Stark law, which is essential to efficiently diagnosing and treating musculoskeletal conditions by allowing orthopaedic surgeons to provide imaging and physical therapy (PT) services in their offices. AAOS believes that Congress should oppose any effort to remove the in-office ancillary services exception in the Stark law. To read more, visit https://www.aaos.org/Advocacy/ioas/.