Stark Law Revisions: Don’t Abandon FMV Just Yet!

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[co-author: David Gruber]

The Centers for Medicare and Medicaid Services (CMS) released final rules on November 20, 2020 with changes to the Stark Law to facilitate care coordination and value-based care.

The Stark Law, also known as the Physician Self-referral Law, prohibits physicians from referring patients for “designated health services” (“DHS”) payable by Medicare or Medicaid to entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. Financial relationships include both ownership and investment interests, and compensation arrangements. DHS include clinical lab services, PT/OT/SLP services, radiology, DME and supplies, parenteral and enteral nutrients, prosthetics, home health services, outpatient prescription drugs, and inpatient and outpatient hospital services. Typically, exceptions to this referral prohibition related to compensation arrangements contain a Fair Market Value requirement.

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