Jan. 22—Legislation to ease some penalties and clarify consequences for unintentional violations of federal financial conflict rules on providers has gained increased backing from healthcare associations, including HFMA.

The Stark Administrative Simplification Act aims to ease the monetary penalties that hospitals often face for unintentional violations of the federal law regulating providers’ financial conflicts of interest. 

The bipartisan measure to amend the Stark rules, which was introduced Dec. 16, 2013, gained the backing of HFMA this week after previously drawing support from healthcare associations such as the American Hospital Association, National Rural Health Association, and the Federation of American Hospitals.

Since its implementation in 1992, the Stark Law—which is actually a collection of statutes—has aimed to prevent physicians from financially benefitting through Medicare patient referrals to treatment or hospitals in which they are invested. The financial conflict rules are intended to prevent referral practices that could undermine patient care and drive up Medicare’s costs. The law required the return of all payments in cases of noncompliant contracts, even if the violations were technical. The Stark law does not target fraud. Intentional acts are usually targeted though more severe false-claims cases.

The bill would formalize some of the administrative leniency allowed under the Affordable Care Act, which authorized the Centers for Medicare & Medicaid Services (CMS) to establish the self-referral disclosure protocol. CMS has been reviewing such disclosures since 2010, but wait times for most cases have extended beyond two years, and the resulting penalties remain uncertain.

The legislation would allow hospitals or physicians to voluntarily disclose technical violations of the Stark Law, such as when a prior arrangement expired and services continued without a new one. It would also establish a single penalty for providers that disclose a technical violation of the law within one year of it occurring. A larger penalty would be established for older self-reported Stark violations. The U.S. Department of Health and Human Services would have limited authority to reject such voluntary disclosures.

Additionally, the measure would retroactively apply to the previously reported voluntary disclosures of technically noncompliant arrangements. A backlog of 300 disclosures remains unresolved at CMS.

Publication Date: Wednesday, January 22, 2014