Does the Stark Law Leave Doctors “Stark Naked” in the ACO Dressing Room?

It sometimes seems as if the Federal Government is its own worst enemy. In 2012 under the Affordable Care Act (ACA), Accountable Care Organizations started with the primary focus of increasing cooperation between providers to bring better care at lower cost to a more satisfied patient-customer (the Triple Aim). Part of the health care equation often includes doctors and hospitals cooperating more closely.

On the other hand, the “Stark 1” law, passed in 1989, specifically prohibits doctors from referring Medicare patients to hospitals, labs, or other colleagues with whom they have any financial arrangements except for very narrowly defined circumstances. In fact any violation is a “per se” violation, where players can be found liable even if they did not intend to violate the Stark law. Moreover, the law prevents hospitals from paying more to doctors who work harder and deliver better care, like reducing readmissions, than what it pays to those providers who do not fully cooperate with the quality measures. The problem is that this is the central theme of value-based care–changing the incentives and moving health care toward the Triple Aim.

Each separate governmental section seems to be uniformly obligated to its own agenda without regard or interest in what another department is trying to accomplish. In this case the Department of Justice and the Federal Trade Commission push forward with enforcement of the Stark law provisions or the Anti-Kickback Statue regardless of what the Department of Health and Human Services (DHHS) is trying to accomplish through ACOs and health care reform.

Initially physician-only ACOs had less concern about the Stark law because the hospital was almost incidental to their success. Although anti-trust concerns always loom over the horizon, the ACO is clearly a quality, cost-reducing, federally-sponsored health care organization.  As hospitals have formed their own ACOs and have reached out to community primary care physicians for help in reducing re-admissions and emergency room over utilization, there is increasing concern for an accidental trespass of the Stark regulations. Modern Healthcare reports that “existing Stark and abuse laws are one of the principal barriers to the development of alternative pay models and the advancement of value-based care.

In the meantime DHHS Deputy Secretary Eric Hargan agreed that “the Stark law may unduly limit ways that physicians and healthcare providers can coordinate patient care by restricting ways physicians can organize and work together with others.

ACOs are a good example of the private-public partnership to improve health outcomes and reduce costs. Nonetheless, ACOs were first organized in 2012 and only now, six years later, this serious matter is getting attention. Let’s at least throw the doctors a towel while Congress begins to resolve this issue between calling each other names. Can you imagine what a totally government-led single payer would look like? “Aha,” you say. “Only the wise can see!”

Craigan Gray

About the Author

Craigan Gray, MD, MBA, JD

Dr. Craigan Gray, Salient Healthcare’s Chief Medical Officer, brings rich experience from private practice, hospital leadership, and governmental health-benefit programs. Prior to joining Salient, Dr. Gray was director of North Carolina’s $12 billion Medicaid program. His time as VPMA at Bon Secours Our Lady of Bellefonte Hospital in Kentucky was distinguished by moving the facility into the top-quality performance tier for Health Grades and CMS health quality indicators. Dr. Gray is a Stanford University trained Obstetrician/Gynecologist. In addition to an MD degree, Dr. Gray holds an MBA degree and a JD degree. He is a Certified Physician Executive and is published in various medical journals.

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