The CAP urged the Centers for Medicare & Medicaid Services (CMS) to adjust several proposed changes to the Medicare physician self-referral law, commonly referred to as the Stark law. The CAP is concerned that attempts to modernize the law may further incentivize providers to over-utilize services or create new opportunities for abusive self-referral arrangements that would hurt pathology practices. Additionally, while it is outside the scope of the changes proposed by the CMS, the CAP urged the agency to close the in-office ancillary services (IOAS) exception for anatomic pathology (AP) services.

On October 9, 2019, the CMS issued a proposed rule that would clarify regulations in the Stark law. While many of the changes reflect the CMS’s intent to allow greater flexibility to address certain value-based compensation arrangements, the CAP asked the CMS to support value-based arrangement exceptions with further safeguards. In the letter, the CAP supported “the CMS’s decision to exclude laboratories from the proposed value-based arrangement exceptions, and...is best accomplished through including such a requirement in the individual exceptions at §411.357(aa).”

Further, the CMS suggested changes to the electronic health record (EHR) exception and a new cybersecurity exception. The CAP supported the continued exclusion of laboratories from these exceptions because of abusive practices and improper inducements reported by our members.

Finally, while not addressed by the CMS in the proposed rule, the CAP warned the Agency to close loopholes to deter abusive referral practices. “Even as the CMS has taken steps to close ambiguities to deter pod laboratories, and other abusive referral practices, physician groups are creating new arrangements to take advantage of the IOAS exception and profit from pathology services,” the CAP stated in its letter. “Our members report specialty groups building large ‘physician office’ AP laboratories serving broad geographic areas using contracted or part-time pathologists in a central location who are reimbursed at a fraction of the billed professional amount.” The CAP asked the CMS to exclude AP services from the IOAS exception, as it is the most effective means of preventing program abuses and protecting quality care for patients.

The CAP expressed similar concerns even before the proposed regulation’s release, and strongly encouraged the CMS to close the IOAS exception for AP services.

The CAP will provide updates on the final Stark law regulation.