The healthcare industry is entering a transformative era as major legal and regulatory frameworks, including the Stark Law, face significant updates and reinterpretations.
From the Supreme Court’s landmark decision overturning Chevron deference to heightened enforcement of the Anti-Kickback Statute, 2024 is set to be a pivotal year for compliance in healthcare.
Here are 12 developments related to Stark law from 2024:
1. The future of the Stark law is in flux following a district court decision involving Thomas Health System in South Charleston, W.Va. The court delayed resolution of a False Claims Act lawsuit to consider the Supreme Court’s recent reversal of Chevron deference. This shift mandates judges to independently interpret ambiguous regulations instead of relying on federal agency interpretations.
2. The district court decision comes after the Supreme Court overturned Chevron deference, a 40-year-old precedent directing judges to defer to federal agency interpretations in cases involving ambiguous laws when reasonable, in July. This change is poised to significantly impact how courts handle healthcare regulations, including Stark law cases.
3. The district court ultimately dismissed the Thomas Health case, citing insufficient detail in the plaintiff's allegations. However, the need for supplemental briefings highlighted the increasing scrutiny of Stark law's application.
4. Industry leaders are voicing concerns about the increasing uncertainty. "I think one of the real policy questions is going to be on the legal side, which is what is going to happen to the Stark law and anti-kickback issues associated with the Chevron case," Scott Colston, CEO of St. Paul (Minn.) Eye Clinic, said at Becker's 30th Annual Business and Operations of ASCs Meeting in Chicago Nov. 1. "I think the opportunity to challenge the agency's interpretation and the rules is real."
5. The Department of Justice is moving away from prosecuting COVID-19 pandemic-related fraud and refocusing on unlawful marketing and referral practices, including Stark Law violations, Law.com reported Nov. 7. The recent reelection of Donald Trump is unlikely to shift AKS' role as a major weapon in the Department of Justice's "arsenal of healthcare fraud enforcement," the report said. But for life sciences and other health services companies, AKS enforcement is entering a new era.
6. The report anticipates that the Justice Department and HHS' Office of Inspector General will intensify oversight of Stark law compliance, targeting practices involving physician compensation and marketing arrangements that violate federal regulations.
7. In October, Kathleen Fisher Enyeart, counsel at Lathrop GPM, spoke with JDSupra to highlight key healthcare regulatory trends. She told the publication she foresees more regulatory focus is on potential Stark law violations. The Stark law poses significant risks to private equity investors unfamiliar with healthcare’s complex legal framework – physicians in private equity-owned groups must be vigilant about how these financial arrangements are structured to avoid legal pitfalls.
8. "As private equity investors come into this highly regulated space, the way they would normally try to incentivize referrals is not legal in healthcare," she said. "As they’re buying medical practices, are they doing that in a compliant way, and is the compensation being offered to doctors or practices compliant with Stark? I think we’re going to continue to see more scrutiny in that area."
9. Temporary Stark law waivers implemented during the COVID-19 pandemic, such as mail delivery of prescriptions for Medicare beneficiaries, may become permanent. The Seniors’ Access to Critical Medications Act of 2024, passed by the U.S. House, is now awaiting Senate review.
10. In 2023, CMS resolved $12.56 million in Stark law-related voluntary self-disclosures, a staggering 552% increase since 2021. DOJ enforcement has similarly intensified, with at least 10 multimillion-dollar settlements reported over the past two years. Financial relationships, particularly those involving physician compensation that exceeds fair market value or varies based on referrals, are key areas of concern.
11. The DOJ's recent complaint against Erlanger Health System and Medical Center for Stark law violations raises compliance alarms across the healthcare industry. The complaint alleges that Erlanger employed physicians and received referrals that did not meet any Stark law exceptions, a serious violation. The DOJ's action emphasizes the importance of strict compliance with the law and highlights the growing risk of enforcement.
12. Recent revisions to the Stark law has significantly altered how physicians conduct their practices, according to Matt Mazurek, MD, an assistant professor of anesthesiology at Yale School of Medicine. CMS now uses various formulas to determine general market value, creating new challenges for physicians in structuring financial relationships.
"The recent rule changes have increased the complexity of financial relationships between physicians and other entities," Dr. Mazurek told Becker's. These changes necessitate a deep understanding of both the law and the evolving regulations, as non-compliance can lead to significant penalties.