Stark Law: Latest Trends and Developments

Joe Wolfe, Attorney, Hall Render Killian Heath & Lyman PC, speaks with Charles Oppenheim, Partner, Hooper Lundy & Bookman PC, about the current landscape surrounding the Physician Self-Referral Law, also known as the Stark Law. They discuss why the Stark Law is so complex and the kinds of issues that attorneys face in this area, how CMS has introduced more flexibility under Stark and ways that health care organizations can incorporate these new flexibilities into their contracting policies, best practices for analyzing arrangements that may overlap with other areas of the law, CMS’ efforts to clarify the “Big 3,” and issues related to value-based exceptions. Charles is the co-author of AHLA’s The Stark Law: Comprehensive Analysis and Practical Guide, Eighth Edition. From AHLA's Fraud and Abuse and Hospitals and Health Systems Practice Groups.

Watch this episode: https://www.youtube.com/watch?v=6O2jbkASdfY

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Learn more about AHLA’s Fraud and Abuse Practice Group: https://www.americanhealthlaw.org/practice-groups/practice-groups/fraud-and-abuse 

Learn more about AHLA’s Hospitals and Health Systems Practice Group: https://www.americanhealthlaw.org/practice-groups/practice-groups/hospitals-and-health-systems 

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Transcript

SPEAKER_00 0:04

This episode of AHLA Speaking of Health Law is brought to you by AHLA members and donors like you. For more information, visit AmericanHealth Law.org.

SPEAKER_01 0:16

Welcome everyone to today's AHLA podcast, where we will be talking about key trends and developments under the physician self-referral law or the STARK Law. I'm Joe Wolf. I'm a shareholder with Hall Render. In my practice, day-to-day, I focus on physician compensation arrangements, STARK and kickback compliance and healthcare value-based care arrangements. And my guest today is Charles Oppenheim, who recently authored the eighth edition of the AHLA's Guide to the Stark Law, titled The Stark Law Comprehensive Analysis and Practical Guide, along with his colleagues Alicia Macklin and Stephanie Gross from Hooper Lundy. In the introduction of Charles' book, he mentions that the Stark Law is infamous among healthcare lawyers and their clients for being complicated, confusing, and counterintuitive for producing results that define cop that defy common sense and for sometimes elevating form over substance. And that's something I hear from my clients often as I work with them is that the Stark Law can be really challenging. And I think we many of us have heard the uh comments from the former director of the Division of Technical Payment Policy at CMS who said the Stark Law is a tortured web of confusing standards. So I don't want to set the bar too high here, but I just hope that after leaving today's podcast, you'll have a better working understanding of the Stark Law. And again, my my guest today is Charles Oppenheim. He and I have partnered up on a similar podcast just a couple of years ago, and we presented many years ago through uh trade associations. And so he and I go way back. Uh he's well respected in the fraud and abuse area as a fraud and abuse attorney. And again, he recently authored the most recent version of the HLA Starklaw Guide. And today's podcast is brought to you by the American Health Law Association's fraud and abuse practice group and also the hospital and health system practice group as well. Um I'm currently a vice chair on the hospital and health system practice group, and we're ready to wrap up another strong program here. And again, excited to talk to you about Stark today. Uh, before we get into sort of the QA, uh, Charles, did you want to introduce yourself?

SPEAKER_02 2:35

Um Yeah, I think you did a nice job. Yeah, my name is Charles Oppenheim, and I work on transactions and regulatory issues for healthcare providers and with a special focus on the anti-kickback statute and the Stark Law and related regulatory issues. And I'm a partner in the Los Angeles office of Hooper Lundy and Brooklyn.

SPEAKER_01 2:56

That's great. Thanks. Thanks, Charles. Um, you know, and so those uh listening to the podcast that might not be familiar with the Stark Law, I thought just talking first at a very high level, you know, what is it? Um it to those of you maybe newer to the space or those of you who have worked in this area for a while, the Stark Law, if we go back in time, was put in place to address situations where healthcare organizations and let's say hospitals or medical groups uh have an arrangement that provides a financial incentive under Stark, it's called remuneration to a referring physician. And the concern was that providing that incentive to the physician uh might inappropriately influence the physician's medical decision making, maybe that would result in patient steering or overutilization of the Medicare program. And so the STARK law says that if you have a financial arrangement that's present between an entity, um, again, that hospital or medical group is often the best example, and a referring physician, then the physician's not able to make referrals for certain kinds of designated health services, things like inpatient or outpatient hospital services, for example, and the entity can't submit claims associated with those prohibited referrals unless you meet a STARK exception. And so a lot of the work that Charles and I do as fraud and abuse attorneys is determining whether the STARK law is in play, and if it is, what exception or analysis makes the arrangement defensible? And so there's lots of exceptions, there's over 30 of them, there are lots of interpretations and special rules associated with those exceptions. And so what's really critical to any STARK analysis is whether you have some key components uh that um we're we're often drilling down on. You know, do you have a physician? Do you have an entity? Is there a financial relationship? Is there a referral being made by the physician to that entity? Uh do you have a designated health service uh that is payable under Medicare? And of course, in some of the recent interpretations and historical case law, perhaps the Medicaid as well. And so that's the important some important key parts of the analysis. And also what's critically important is the big three uh concepts of fair market value and commercial reasonableness and the prohibition on taking into account referrals. And uh there's so much to unpack with Stark, and that's why uh Charles and his colleagues developed this book uh to discuss some of these areas and key issues that come up. And and now with that background, I thought you know Charles and I would have a discussion um on some of this complexity to give you some some takeaways. And you know, Charles, you know, we're regrouping here, and and as as the kind of introduced before, your practice is focused on Stark for much of your career. Um, how did you learn the Stark law? How do you recommend that attorneys that are new to the area get their arms around uh the law and its complexity? It might seem uh daunting for somebody just uh looking at it for the first time or wanting to uh uh take on this area of the law.

SPEAKER_02 6:09

Yeah, I mean the way I got into it was was organically, and it was really just good timing. So when the when Congress initially passed the expansion of the Stark Law, because it was first covering just referrals for clinical laboratory services, and then expand, and then they passed an expansion that would apply to all the current designated health services, I was a senior associate, and so I was at a kind of a sweet spot in my career where I was experienced enough that the partners trusted me to dig into it and and uh and root around and do an analysis that they would be confident relying on, but I wasn't so senior that I always so busy with my own clients that I couldn't be bothered spending hours and hours reading reading the statute. So I was kind of the right person at the right time, and you know, they kind of threw a couple of stark analyses at me when I was at that point in my career. And then, of course, once I had done them, you know, then like the next one comes along and somebody says, Well, who should who should we give this to? And you know, well, Charles Oppenheim looked at a couple, like, let's have him do it, and then so it just becomes self-reinforcing. And so as those problems came up, people would be like, Well, you know, Charles Oppenheim looks at a lot of those, let's have him do it. And so I was fortunate to be at a firm that had a great robust healthcare law practice, and then so the start problems kept kind of come in my way, and um, and they have been for 30, 30 years, plus years. And I'll tell you one other thing, too. What we're doing in our firm, which may be kind of unique, but I think it's a good idea a couple of times a month for an hour. A few of us get together, including some associates who are trying to get up to speed in this area, and I give them a hypothetical, which is often based on you know real questions from clients, and they analyze it, and then they come to the meeting uh and kind of present their analysis, and then the partners who practice in the area kind of we do a little syncratic, you know, question and answer, and we kind of critique their thinking about it. And I think it's really helpful for them to really dig into these issues and analyze them because um the thing is now it's not always easy to get. I mean, there's available work also, of course, for associates on these projects, but a lot of times clients when they call me, it's because it's like a really complicated problem and they they don't want me to send it to an associate, they want to kind of get my take on it. So there's not as many opportunities perhaps for associates to get their feet wet as they would have been when it was new in the in the um so I I'm curious for you, Jill, like how like that that's some of my thoughts about how like somebody new to the practice could get uh could get up to speed. What what advice would you have for people who are experienced? Um what are the kind of issues you're seeing in, you know, from from people who are really you know deep, deeply enmeshed in the Starkla area?

SPEAKER_01 9:06

Yeah, thanks, Charles, and and thanks for your to your answer there. Um may I'll start with what I'm seeing first. I I am seeing lots of questions um in this area on process and strategy. You know, it the reality, and Charles, I think I hope you would agree here that if you want to avoid an enforcement action, having a good process is key to getting there. And so uh having training for your contracting teams, you know, for your boards, um, and for your executive leaders, so that they take this stuff seriously, um, and and also don't overreact when a potential issue arises. Because, you know, often we find uh that some start cases are initiated because of just some confusion as to what the standard is, and and it's hard to turn that around once the momentum grows. And so that's one process and strategy. Um, I think there are some economic pressures that are driving fraud and abuse analysis, you know, organizations looking to redesign arrangements. Um, you know, they're strategically looking at their hospital-based coverage. Um, maybe they're accelerating their approach to value-based enterprise models. Um, and those are areas that I'm I do a good amount of work in. Um, one other area is uh is defensibility around, I'd say you might call them rock star physicians that are critical to healthcare organizations. And you know, in the the recent START guidance, there was talk about you might have extenuating circumstances where you need to put in place that interventional cardiologist uh to make sure that you can do um and operate your calf, uh you know, be able to respond to emergencies during a catheterization and so on, or maybe where you have a a one, uh a top orthopedic surgeon and you need to recruit and retain them. You know, those those types of arrangements are out there. And some organizations are really making sure that they've uh developed as much of a uh defense around those arrangements as they can. Um but beyond that, it's it's much of the technical issues related to contracting, um, responding to investigations relating to technical issues, um, you know, ensuring that we either have a sufficient record to establish defensibility, or maybe in other situations, unfortunately, having to pursue a self-disclosure. Um there's there's a lot going on in this area, I think, for those different reasons. Um for more experienced practitioners in this area, I would strongly suggest if if they missed the most recent regulatory sprint changes to pick that up and dust it off. It's a good there's so much that happened in that most recent rulemaking around the big three, around signatures. Um if they haven't uh gotten an opportunity to work on value-based enterprise models, I would I would suggest that they brush up on those rules as well because many healthcare organizations are entering into those now. Um, and I think getting to know those rules is is very important. And and anyone who's looked at the regulatory sprint uh Federal Register commentary would see that they often rehash the history of where Stark had been. And so that's why I think it's the best place, other than, of course, your book, uh, to maybe maybe get that comprehensive review because of how CMS went about and thoughtfully took that on uh last time around. So those are some thoughts on what I'm seeing and what some uh experienced Stark practitioners um could could do to you know uh uh prepare for their current their uh current analysis. Um, touching on that, Charles, I have a question for you. You know, in recent years, CMS has given us more flexibility under the STARK regulations. I know you talk about it in your book. Um can you just discuss how some of those changes have impacted how you perform a STARK analysis?

SPEAKER_02 13:09

Yeah, yeah. Thanks, Joe. I mean, so I think this one of the places where there's been a lot of flexibility is in the area of compensation arrangements. So traditionally, a lot of compensation arrangements under the Stark Law had to be set forth in written agreements signed by the parties. And um there were a lot of folks looking at potential STARK violations or actual Stark violations just because something hadn't been formalized in writing, or somebody had forgotten to sign something, or the parties continued to perform after the expiration date, or they made an amendment uh but they didn't formalize it. It was just done through an exchange of emails or something. And so you had a lot of what we sometimes call footfalls. And you know, in the old days in Stark, you would look at the requirements that you had to have a written agreement signed by the parties, etc., term of one year in many cases, and uh we weren't sure that you could satisfy that given what was often um slightly slip shod documentation. So what's changed now is um at least on a retrospective basis, when we look backwards and try to figure out whether there was a start violation because uh a computation arrangement exception wasn't satisfied, we're we are much more often able to bring good news to the client. Because a lot of times the first thing I ask when a client says, We have all this, that, and the other thing going on, I say, Well, okay, maybe you don't have a formal written contract. So what do you have in the form of like time sheets or emails or board minutes or canceled checks or you know, are there is there other documentation that we can find? So a lot of times our retrospective review of potential strike violations and compensation arrangements has gotten um to a much happier place because we have that flexibility. Prospectively, I don't know that I've changed my thinking that much because you you don't want to go forward, you know, with with the emails and you know, educational check. You want you want to have a formal contract that might sets everything out in detail, gets signed by the parties, gets approved by the board. And so that's still the the the way to do it when you're when you have an opportunity to advise somebody on a prospective basis. So that hasn't changed, I'd say, as much. Um talking about you know some of these issues with documentation, um, one of the things that the industry has always struggled with is how to handle situations where, for example, uh a document hasn't been signed or it gets signed, you know, well after the fact. Um what what kind of uh defensible approaches have you seen or have you been able to use in those situations, Joe?

SPEAKER_01 15:52

Yeah, thanks, Charles. And and I mean it dovetails with what you just answered. I mean, what's nice now is that the special rules on compensation under STARK have right in the regulations sort of a path forward around the writing requirement. It says now that the that requirement can be satisfied by a collection of documents, um, contemporaneous documents uh showing the course of conduct between the parties is and that's actually in the statute now as well. And so that's as good as it gets, um, that you can use a collection of documents, and I write in line with what you said: timesheets, emails, board minutes, uh, canceled checks, all of that, you know, sort of I I always hear the phrase cobbled together might be sufficient to, you know, when you're doing that kind of a review to get comfortable that there was uh a writing sufficient. Um also the regs have mention of the signature requirement being satisfied by um electronic or other signatures that are applicable under state law. Um there's a new 90 rule. We've always had um or we've had a 90-day rule, but now it's been expanded in the most recent rulemaking to allow uh the writing and the signature to be obtained within 90 days. So that's very flexible. Um, you know, you do, if you're providing services under that arrangement, I do think it's important that key elements have been uh agreed upon uh prior to those services beginning. If you get into the Federal Register on that, um it gets actually kind of interesting. There's even mention of look, if you have a coverage arrangement, you don't have the signed written agreement in place. Um but under the circumstances you have informal communications like emails or texts or internal notes to the file or maybe records of similar payments uh between the parties from prior arrangements, that might be enough to get you there, as and then you get the signature within the 90 days. So that just shows how creative you can get in some of these situations. Uh there's a new exception on limited remuneration under Stark or newer. It was the most recent rule making that now allows you to pay around$6,200 per year without a signed written agreement. And CMS even talked about coupling that special rule with a follow-on arrangement, and maybe that could be a way you get um uh uh under a comfort with compliance as well. So that shows uh you know some different ways you can approach these situations. I do think that ideally you analyze how you got there from a writing standpoint, and and and ideally would write down, you know, we analyze the the the collection of documents. Here are the documents we found. Um these we believe these establish uh uh a writing. I think that's the ideal scenario is you actually put that in one place so that you can have it in the record down the road as to how you found that you met the standard. But yeah, there's there's lots to work with. Um with respect to what you're seeing, and and I'll probably touch on this a little bit later, just that may not be the best contracting process, but if you run into that situation, it could be how you get comfortable. Um for you, Charles, your book focuses on uh stark compliance, but we know that contracting beyond, you know, it's just much more complicated than that. So when you're doing your analysis, how do you deal with situations where arrangements overlap in other areas? Um it could be state law, it could be kickback, um, licensure or other areas. Uh, do you focus on one regulatory framework or another? Uh, this is like a client, a question I sometimes get from younger Stark attorneys.

SPEAKER_02 19:56

Yeah, I mean, if so, if I'm looking at a financial relationship that where physicians are involved at all, my starting place is going to be the Stark law on the federal side. And frankly, on the state side, my analysis is probably going to start with the state analog. You know, most states have a physician self-refer law. And the reason for that is because it's more of a strict liability standard, right? If you don't have a stark exception, then the physicians are prohibited from referring for designated health services. So you're you you sort of you can't even really get started. But if you you know separate analyses, and you know, um the fact that you satisfy a stark exception does not automatically mean that you're good under the kickback statute. Because the kickback statute is intent-based, um, and you have to kind of be you know wanting to do bad things. My view is that 99% of the time, if you're satisfying a starch exception and you're working with your lawyer to get into one, you're probably gonna be in pretty good shape under kickback. It's a rare instance where I'm fine, I feel I'm fine on stark, but I'm worried about kickback. I mean, to me, it's you're usually that's you're usually gonna be able to get okay there. So what we were talking about some of these flexibilities and the signatures, the holdovers, um amendments that can be done within informal exchange of emails, et cetera. How do these compliance opportunities typically collide with process? You were mentioning that a lot of your sophisticated clients are focusing more on developing processes to prevent ever having a start problem in the first place. And so, how can healthcare organizations incorporate these approaches into their contracting policies? Or do they just hold them in their back pocket for when when something goes off the rails and then they pull out those kind of emergency uh latitudes?

SPEAKER_01 21:50

Yeah, it's a it's a really good question because I think all of us that have worked and developed policies do worry, you know, often we're developing the policy with the best practice and mind um rather than the regulatory standard. And so you know one thought is I do think training on this is is helpful because a policy with no context on these rules is really challenging. I mean so I think you know consistent um consistent training on this. I do think uh having contracting processes that are a bit more bit strict and don't have these flexibilities built in is is common. You know, many organizations require that there be a signed written agreement before uh services commence and I I think that's a a good process that amendments even to employment agreements are are signed and in writing. So I do think that continuing on with those historical approaches is the best practice. I have uh suggested putting in um language either within the contract that if situations arise that those situations are taken to legal counsel or compliance to be analyzed or approved. I have also put a disclaimer um essentially in the policy that says this policy has been uh crafted with uh contracting best practices in mind um and essentially that failure to follow this policy does not constitute a violation of the Stark law or the kickback statute or something to that effect as a you know a way to just put people on notice that this is not the Stark law. It may be mentioned at the beginning of the policy, but these are not verbatim requirements and and whether there's a violation of the Stark law um you know in often it's going to be determined by a fact finder or uh there could be reasonable differences of opinion as to whether there is a violation law. So that's a a thought on uh you know you could develop some disclaimer language in the policy as well.

SPEAKER_02 23:59

Charles one of the the more challenging areas of the STARK law is the big three um and that's the fair market value standard the commercial reasonableness standard um and the prohibition on on taking into account referrals um you know I uh we know that CMS put a lot of time and effort into clarifying these uh standards and and uh making them more objective uh do you have thoughts on on whether that has been effective is there more work to be done what are your thoughts on the big three I mean I think um the headline would be that they've done a good job I think that they have put a lot of work into it and I think um you know the fair market value you know you know has a little bit more precision to it but also has some flexibility to recognize like the situations you were talking about with a rock star um you know physician and they've and they've made clear that um you know you you you don't have to you know slavishly devote yourself to being at the 50th percentile of some you know industry benchmark that may or may not be right sometimes it's too that might be too much today but sometimes it's not enough so I think that I think that they've generally get a they've done a good job. I wouldn't say that they're perfect. You know over the next few years. But I think they've done a I think they've done a pretty good job. One of the big things that you know that came out of recent rulemaking was all of the value based arrangement exceptions because Stock was always viewed as being a poor fit for more innovative arrangements. And I know you know that's a significant part of your practice chair what what are you what do you see what are some of the big things that you're seeing and doing in the value based arrangement space?

SPEAKER_01 25:49

Yeah and the the value-based enterprise models I mean I think there when when they emerged there was uh you know there's a I think it was a bit challenging to try to reconcile the way Stark was approaching it in kickback and I think some of that um analysis has worked itself through I mean there there are many situations where um we we don't have alignment between Stark and kickback whether you're talking about a physician practice acquisition or maybe a recruitment situation where organizations um healthcare organizations have to rely um on an intent analysis or getting as close as they can to a a safe harbor under kickback. So I think that there were some challenges there. There also was some were some challenges in just the um the definitional aspect you know the the the new idea of what is a VBE, what is a target patient population, what do these concepts but I think we've we've come a long way and I'm seeing um an a I'm I've seen a lot of development and activity with with VBEs. And I think healthcare organizations now are are looking at um you know traditional coverage arrangements and thinking how they might pivot into a VBE, how they might put dollars towards care coordination and quality and cost containment and transitioning to more team-based and patient-centered care. What I found particularly interesting is the the the the what could the standard be if a VBE is tested and one of the key standards in the VBE rules is um that the VBE's activities essentially need to be reasonably designed to achieve a value-based purpose and so that does uh push organizations to put some rigor into just the development of the model and in some ways uh the VBE model has a bit more infrastructure around care coordination quality cost containment the old exceptions don't get into that and I think it does give the organization something to latch on to if they're trying to develop value-based care models. I think there's a particular opportunity for service arrangements to be structured as VBEs if we can get comfortable that the uh the activities being performed are value-based activities. Um and as as long as you uh put in the work to reasonably design the model to actually achieve those value-based purposes I think the sky's the limit on this um it it would be good to see some uh future reconciling of of of Stark and kickback in this area but I think organizations are are are definitely uh pushing in this direction to create VBEs. So Charles kind of to wrap us up here you know our we've touched on a lot tried to unpack this a bit again it's a it's a I I think this will be kind of an optimistic podcast in that I think there have been some significant step steps forward in flexibility under Stark um there are paths forward rather than just having to take an arrangement to self-disclosure or worrying about um a future uh investigation whistleblower risk but are there other trends you're seeing out there that you think uh our audience should be aware of and and and then also could you provide some final remarks um as as part of your uh answer yeah I mean so what one one thing that I think is is going to be fascinating to keep an eye on going forward is the impact uh of the Lower Bright Supreme Court decision on the whole Stark Law area so um just to you know just to remind people I think a lot of people know but you know Loper Bright essentially was the whole thing that said that courts should no longer defer it should no longer automatically defer to an agency's interpretation of the statutes that it's charged with enforcing to the extent that they're ambiguous.

SPEAKER_02 29:56

And um you know before then we had the Chevron deference and so um the thing about the Star Claw is the statute itself is very skeletal and the regulations are extremely robust and have been developed over many years. So frankly for most of us who've been practicing in the space we've been we we started by looking at the regulations we didn't even really look at the statute that much because there was so much detail in the regulations and in the commentary that's where we did our stock analysis but now um we we need to reconsider that because I think if there's room to argue that the statute um can be interpreted in a certain way even if CMS didn't interpret it that way your argument now is going to be as good as CMS's when you go to court because the court will look at it denoting and if they think your argument about how to interpret the statute is is better than CMS's interpretation they're not going to give CMS the way they're gonna go with you. So I think it'll be very interesting to see how the law evolves in the courtroom as people make arguments that CMS got a wrong and the statute should be interpreted this way, not the way CMS interpreted it. So so that's something I think to keep in mind. Yeah so you know that that's I think there's already some cases out there where the courts have told the parties to brief the impact of the local right decision on their arguments. And so it's kind of going to be I think fun to watch how that plays out.

SPEAKER_01 31:28

Yeah thanks thanks Charles appreciate that and I appreciate everyone for listening uh into this podcast um definitely lots to continue to to watch in the Stark area. Of course Stark is a is a rule or is a regulation that is um tied to the types of arrangements that healthcare organizations are entering into so it's going to continue to evolve even if the regulations uh you know maybe have been largely overhauled already but we've seen all the iterations of Stark over the years I would expect there'll be more tweaking ahead of us uh thanks for listening in um watch for future AHLA podcasts and and please reach out to to me or to Charles if you have any questions about what we talked about today. Take care good seeing you again Charles and and hope you have a great day.

SPEAKER_00 32:13

Thanks for watching if you enjoyed this episode be sure to subscribe to AHLA Speaking of Health Law wherever you get your podcasts. For more information about AHLA and the educational resources available to the health law community visit americanhealth law dot org and stay updated on breaking healthcare industry news from the major media outlets with AHLA's health law daily podcast exclusively for AHLA comprehensive members. To subscribe and add this private podcast feed to your podcast dot com go to americanhealth law dot org slash daily podcast