House Panel OKs Bill Easing Physician Self-Referral Penalties

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By James Swann

Penalties under the physician self-referral law, also know as the Stark law, would be eased under a bill approved by the House Ways and Means Committee Sept. 13.

The Stark Administrative Simplification Act ( H.R. 3726) received unanimous support and was reported to the House with no changes. Rep. Kenny Marchant (R-Texas) said the bill would help alleviate backlogs in physician self-referral disclosures, and his co-sponsor Rep. Ron Kind (D-Wis.) said it was a commonsense measure.

The bill’s changes to the Stark law could be helpful in some cases but are unlikely to fundamentally change the risks associated with the law or how parties will try to comply with Stark, Karl Thallner Jr., a health-care attorney with Reed Smith LLP in Washington, told Bloomberg BNA Sept. 13.

There are also bigger Stark issues than those addressed by the bill, Thallner said, such as the uncertainty of the “volume or value” standard following cases like those involving Tuomey Healthcare System and Bradford Regional Medical Center.

The standard, which was applied differently in the two cases, refers to a contract’s compliance with the Stark law based on whether a physician’s payment reflects the volume and the value of referrals.

For example, South Carolina-based Tuomey Healthcare System reached a $72 million settlement in 2015 resolving False Claims Act liability surrounding contracts that violated the Stark law due to their basis on obtaining referrals.

However, in 2013, a federal district court dismissed government charges that alleged Pennsylvania-based Bradford Regional Medical Center violated the Stark law and anti-kickback law through improper subleasing of medical equipment between the defendants, and improper patient referral.

The bill would establish an alternate set of sanctions for providers who disclose technical violations of the Stark law. Civil monetary penalties under the bill’s protocol for technical violations would be either $5,000 or $10,000, depending on the timeliness of the disclosure, whereas current CMPs can be as much as $15,000 per violation.

Technical violations can range from failing to sign a contract to letting a contract expire.

Technical Issues

The Stark bill is similar to a bill of the same name that was introduced in 2015, Thallner said. At the time, the health-care industry was concerned that the only way to resolve cases of technical Stark noncompliance was through the self-referral disclosure protocol, Thallner said.

The SRDP was both lengthy and costly, Thallner said, and it also presented a risk to providers because the penalty amount that could be assessed was unknown. In late 2015, the Centers for Medicare & Medicaid Services revised the Stark law, giving some relief for technical violations.

The new bill provides an alternate process for self-disclosing some technical violations that weren’t addressed by the CMS in 2015, Thallner said, such as failing to have a signature on a contract.

“CMS couldn’t fully address this problem through its revised regulations in 2015 because the signature requirement is imposed by statute,” Thallner said.

Expanded Telehealth

The committee also unanimously approved H.R. 3727, which would expand telehealth access for Medicare Advantage (Medicare managed care) beneficiaries, and H.R. 3729, which would improve payments for Medicare ground ambulance transport. Both bills were reported to the House.

H.R. 3727 would let Medicare Advantage plans include telehealth as a base benefit, not a supplemental benefit. Rep. Diane Black (R-Tenn.), one of the bill’s sponsors, said advances in technology have boosted the capabilities of telehealth, such as allowing video chat and email transmission of test results and diagnostic imaging.

Rep. Mike Thompson (D-Calif.), who co-sponsored the bill, said it would save Medicare money and give beneficiaries better care. Thompson also urged Congress to make telehealth available to all Medicare beneficiaries.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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