Note: Responses have been lightly edited for style and clarity.
Question: What are some historical trends in Stark law enforcement that have shifted with changes in administration? Do you anticipate similar shifts under the new administration?
Rachel Yount: The previous Trump administration took steps to roll back the Stark law, which is often criticized for being overly technical and unduly burdensome on healthcare providers. In particular, under the Trump administration, CMS issued a final rule designed to reduce provider burden and modernize the Stark law as part of joint rulemaking with the Office of the Inspector General on value-based care. Generally, CMS’ new guidance and changes to the Stark law were well received. However, I don’t anticipate the current Trump administration to release major rulemaking this time around given its focus on reducing the federal government workforce and rolling back regulations. In late January, there was an executive order requiring that “whenever an agency promulgates a new rule, regulation or guidance, it must identify at least 10 existing rules, regulations, or guidance documents to be repealed.” So I don’t expect significant changes to the Stark law.
Subsequently, at the end of 2020, CMS updated the Stark law’s voluntary self-referral disclosure protocol in an additional effort to reduce provider burden. The SRDP allows providers that discover a potential Stark law violation to voluntarily self-disclose, and generally CMS resolves violations that are self-disclosed for a fraction of the amount received for the improperly billed Medicare claims as opposed to the full financial penalties it could impose under the Stark law.
However, historically there has been a significant backlog, which has been incredibly frustrating for healthcare providers and organizations, which are typically eager to resolve technical Stark law noncompliance rather than having the issues hanging out there. Fortunately, under the revised SRDP, CMS has resolved a record number of self-disclosures. For example, in 2021, CMS settled just 27 self-disclosures, but in 2022 and 2023 it resolved 103 and 176 self-disclosures, respectively. While I expect CMS to continue to aggressively work through the backlog of self-disclosures, there could be less progress given the Trump administration’s aim to reduce the federal government workforce.
SCOTUS’ dismantling of Chevron in Loper Bright presents an additional challenge for enforcement agencies to enforce the Stark law. Most of the Stark law exceptions are regulatory in nature, and CMS has issued a significant body of subregulatory guidance over the years. We have already seen defendants in Stark law cases raise defenses relying on Loper Bright, in essence arguing that the court should not defer to CMS’ interpretation of the regulations. This could certainly have pretty significant impacts on Stark law enforcement.
Historically, the Department of Justice has brought False Claims Act enforcement based on Stark law violations. In the past, the Department of Justice’s Stark law enforcement focused primarily on allegations that also involved violations of the federal anti-kickback statute. But the AKS is an intent-based statute, meaning that the government would need to demonstrate improper intent. The Stark law, on the other hand, is a strict liability statute and requires less proof. So, in theory, Stark law enforcement could be more attractive for enforcement agencies. Accordingly, in the past two years, we have seen an uptick of Stark law enforcement involving Stark law violations standing alone.
Q: What signals, if any, has the new administration been sending regarding healthcare fraud and abuse enforcement, including Stark law? Are there aspects of Stark law enforcement most likely to be targeted for increased scrutiny or reform under this administration?
RY: In her confirmation hearing, Attorney General Pam Bondi expressed her commitment to support and prosecute False Claims Act cases, which as noted above is typically the vehicle for enforcing Stark law violations. Moreover, she stated that she recognized the importance of the FCA’s whistleblower provisions. The majority of Stark law enforcement actions are initially brought by whistleblowers, and we continue to see an increasingly larger number of whistleblower lawsuits filed each year. Last year, there were 979 whistleblower lawsuits — the highest number in a single year. So we expect Stark law enforcement to continue.
One area of potential reform is that Congress may revise the Stark law by statute to permit physician practices to mail or deliver prescription drugs to their patients. In 2021, CMS issued an FAQ that states that DHS (including outpatient prescription drugs) must be furnished in the physician’s office to satisfy the in-office ancillary services safe harbor, which greatly curtailed the ability of physician practices to mail or deliver prescription drugs to patients. Physician practices, particularly in the oncology space, can generally derive significant revenue from drugs dispensed by the physician office. Patients of course are impacted if they have to travel to their physician office to receive their prescriptions. So there have been significant lobbying efforts to continue to allow physician practices to mail or deliver drugs to patients. In the fall of 2024, the House unanimously passed a bill that would revise the Stark law to allow the in-office ancillary exception to be used for drugs mailed or delivered to patients. So it’s worth keeping an eye on that legislation as it is in the Senate currently.
