Through its persistent efforts to educate lawmakers about the challenges facing private-practicing physicians across the country, a national organization of women’s healthcare practitioners, the U.S. Women’s Health Alliance (“USWHA”), recently achieved an important victory.
Hospitals often seek to increase their revenues by employing physicians who will refer patients to hospital-affiliated facilities for services that are reimbursed at enhanced Hospital Outpatient Department (“HOPD”) rates. Anticipating the revenues from the employed physicians’ downstream referrals, some hospitals offer compensation packages that do not comply with the Stark Law’s requirements that physician compensation be consistent with the fair market value of the physician’s professional services and otherwise commercially reasonable. Because most private practices cannot afford to offer compensation packages that match hospital offers, the practices are challenged in their ability to recruit and retain physicians. This limits the ability of a private medical practice’s care team to meet the needs of its existing patient base, let alone to grow and accept new patients. Moreover, data indicates that steering patients toward costlier (i.e., HOPD) sites of service increases costs to patients, payers, and employers.
To address this persistent issue, USWHA visited Capitol Hill and prevailed upon lawmakers to ensure that current regulations, including the Stark Law, are consistently enforced. As a result of USWHA’s advocacy, the below language was included in the House of Representatives’ Appropriations Committee’s Report for the Fiscal Year 2025 Labor, Health and Human Services, Education and Related Agencies’ spending bill:
Stark Law Compliance – The Committee encourages the agency to apply the updated definitions of “commercially reasonable” and “fair market value” as established in the CMS Final Rule “Medicare Program: Modernizing and Clarifying the Physician Self-Referral Regulations” (published December 2, 2020, and effective January 19, 2021). The Committee is concerned that these key definitions, which are foundational to compliance with the Federal Physician Self-Referral Law (commonly referred to as the “Stark Law”), are not being applied during the review of certain hiring practices by hospitals. If these definitions are not properly applied, arrangements that violate the Stark Law because they are not commercially reasonable and/or not consistent with fair market value will continue to go unaddressed, increasing costs to patients and the healthcare system.
The inclusion of this language represents an important step toward leveling the playing field between hospitals and independent medical practices. Frier Levitt’s Advocacy & Government Affairs Practice Group is proud to have supported USWHA’s efforts.
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