How the Stark Law Could Affect the Locum Tenens Market

How the Stark Law Could Affect the Locum Tenens Market

By: Dr. Robert Moghim

As part of the 1989 Omnibus Budget Reconciliation Act, the Stark I provision barred physicians from making referrals which enriched themselves. Originally pertaining to clinical laboratory services, the Stark Law has been expanded over the years to include many other services. In 1993, Congress formally broadened this law through the Stark II provision of the Omnibus Budget Reconciliation Act. It was through this amendment that the Stark law was linked to Medicare and Medicaid.

Intended to prevent conflicts of interest, the Stark Law has undergone modifications through legislative action and agency policy changes. In its current application, the Stark Law may impose steep penalties including $15,000 fines, removal from Medicare or Medicaid programs, and civil penalties of up to $100,000 for circumvention schemes. There have also been a growing number of exceptions to this law as more of medicine becomes interlinked.

This year the Centers for Medicare and Medicaid Services (CMS) proposed a new set of exceptions to the Stark Law. The first of these new exceptions could significantly alter the locum tenens system. The new rule permits hospitals, Federally Qualified Health Centers, and rural health clinics to offer remuneration to physicians or physician organizations in return for assistance in hiring non-physician practitioners (NPP).

This rule is based on the growing recognition that more hospitals and clinics, especially in rural areas, are having difficulty recruiting primary care physicians and advanced practice providers. By allowing
these organizations to utilize paid recruiters, more of these openings can be filled at an accelerated pace.

There are some strict limitations on the new rule including:

1. NPP must provide primary care or mental health services
2. Remuneration cannot exceed 50 percent of the professional’s compensation
3. NPP cannot have practiced in the geographic area of the employer in the year prior to hiring
4. The referring physician can only make such compensated referrals once every three years

The new changes to the Stark Law reflect not only the reality of limited number of primary care providers, but the Affordable Care Act’s objective of extending services to underserved areas. Among the most profound changes that CMS and ACA are implementing are integrated care models which could be impeded if the Stark Law remained unchanged. These proposed modifications were formulated after consultation with health care leaders and the determination that they were unlikely to create abuses was made.

The locum tenens community will likely welcome the relaxation of the Stark Law. This contentious law has spawned numerous legal cases in recent years as whistleblowers and government agencies have attempted to ferret out noncompliance. Many organizations have also criticized the law as unclear and confusing, leading to enormous and unnecessary expenditures.

Not only will the new exceptions enable greater movement of NPPs into underserved areas, but the easing of other components of the Stark Law will facilitate recruitment. Among these is the “written agreement” requirement no longer must be a formal contract but can be merely a set of documents. CMS has also reduced the number of situations which require self-disclosure under the law.

About the Author: Dr. Robert Moghim is a board certified physician specialist and founder of Onyx Healthcare (D.B.A Onyx M.D.), an award-winning healthcare staffing firm. His extensive medical background, entrepreneurial vision, and business acumen provides a unique perspective on the ever-evolving and dynamic healthcare industry. Dr. Moghim is also an executive director and co-founder of Colorado Pain and the founder of Moghim Medical Consulting, Inc. Aside from his business leadership, physician and consultative duties, he also sits on the Colorado Medical Board, an esteemed position appointed by the Governor of Colorado. Most recently, Dr. Moghim was recognized as a finalist in the Ernst & Young Entrepreneur of the Year Award.

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