Lawmakers take divergent paths on referral laws

Author(s):

Ross E. Weber

"In recent years, lawmakers in several states considered legislation to conform their laws and exceptions to those outlined in the Stark law," writes the AACU's Ross E. Weber.

Based on a partnership with Urology Times, articles from the American Association of Clinical Urologists (AACU) provide updates on legislative processes and issues affecting urologists. We welcome your comments and suggestions. Contact the AACU government affairs office at 847-517-1050 or info@aacuweb.org for more information.

Alternative payment models. Integrated delivery systems. Provider and payer consolidation. Each of these trends reflect the evolution of our nation’s varied health care delivery and financing systems toward the common goal of better care at lower cost. Laws and regulations in most states, however, have failed to keep up with these practical developments, and some policymakers would further inhibit patient-centered care with proposals to impose new referral restrictions.

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Although physician self-referral is regulated at the federal level through the Stark law, its application is limited to public payers such as Medicaid and Medicare. At least 35 states have their own laws or regulations restricting referral arrangements. The American Medical Association's Advocacy Resource Center identifies three "significant differences" between the Stark law and state statutes:

State laws may apply to more payers.

State laws may apply to more providers.

State laws may encompass a broader range of services.

In recent years, lawmakers in several states considered legislation to conform their laws and exceptions to those outlined in the Stark law. Gov. Andrew Cuomo of New York vetoed legislation in 2012 that would have brought the state's statutes in line with federal law by limiting their application to public payers and adding a few designated health services to the list of exceptions. According to Mintz Levin, a law firm specializing in health care transactions, in vetoing the bill the governor took "the position that a more restrictive statute... outweighs the functional benefits of consistency with its federal counterpart."

Fast forward to January 2018, when Colorado State Sen. Irene Aguilar introduced legislation to extend the state's "mini-Stark law" to services reimbursed by private payers (SB18-115). Faced with opposition from the AACU, Rocky Mountain Urological Society, and Colorado Medical Society, a Senate committee indefinitely postponed consideration of this bill on Feb. 14. Pennsylvania State Rep. Anthony DeLuca, meanwhile, has repeatedly introduced a bill to extend the current prohibition for "self-referrals" that exists for the Commonwealth's workers compensation system to all medical services. His version for the current legislative session has remained stagnant since being referred to the House Health Committee in early 2017 (HB347).

Next: "An attempt to adapt to modern day realities recently achieved a level of success in Maryland"

An attempt to adapt to modern day realities recently achieved a level of success in Maryland. Modifications to the state's strict prohibitions were needed in light of the state's unique all-payer model contract with the federal government. A state commission advised lawmakers that shared savings compensation arrangements between hospitals and physicians approved by the feds could violate state statutes. The legislature passed and Gov. Larry Hogan signed a bill that exempts transactions between providers if the arrangement is funded by or paid under:

a Medicare Shared Savings Program accountable care organization (ACO)

an advance payment ACO model, a pioneer ACO model, or a next generation ACO model, as authorized under federal law

an alternative payment model approved by the federal Centers for Medicare & Medicaid Services (CMS)

or another model approved by CMS that may be applied to health care services provided to both Medicare and non-Medicare beneficiaries (HB403 / SB369).

The federal government itself is taking steps to modernize the law restricting integrated care. The AACU, as a member of the Coalition for Patient-Centered Imaging, expressed strong support for the Medicare Care Coordination Improvement Act of 2017, which in part, provides CMS the same authority to waive Stark and anti-kickback laws as was provided to Accountable Care Organizations in the Affordable Care Act (H.R.4206 / S.2051). What's more, CMS Administrator Seema Verma acknowledged that the Stark law can slow the transition to value-based care, according to a FireceHealthcare article. An interagency group has therefore been formed to examine regulatory barriers posed by federal anti-kickback laws (Patients over Paperwork).

Read: Urologists, lawmakers share experience, expertise at AACU event

The most prevalent health system reforms launched by governments and payers alike are predicated on an integrated delivery model. State laws and regulations often impose strict restrictions on the provision of such patient-centered care. As policymakers examine and adapt statutes to align with practical reality, the AACU will advise urologists on the most effective and efficient ways to make their voice heard.