Please include Stark and Tort in Health Care Reform

Thursday, January 26, 2017 | Larry Sobal

 

Last Friday Donald Trump was sworn in as President and did not waste any time impacting health care. First, he signed an executive order to "minimize the economic burden" of key provisions of the Affordable Care Act pending its repeal, allowing government agencies not to enforce regulations that impose a financial burden on a state, company or individual. 

Second, his administration issued a Regulatory Freeze Order, which, among other things, temporarily postpones the effective dates of all recently published regulations that, as of January 20, 2017, had not become effective. The memorandum postpones the effective dates of such regulations for a period of 60 days from the date of the memorandum, January 20, 2017. As such, it postpones the effective dates for the AMI and CABG Episode Payment Models (EPMs), which were February 18, 2017; the AMI and CABG EPMs are "on hold" until on or about March 21, if not longer. 

That got me thinking. With all the uncertainty around what will happen in health care, it’s time to call out the necessity for two other areas that should also be “reformed” as part of what appears to be a significant reengineering of health care. Specifically, I mean reforming the current Stark legislation and Tort reform.

Let’s start with Stark. In 1989 Congress passed the Ethics in Patient Referrals Act, which was dubbed Stark I after Congressman Pete Stark, who sponsored the initial bill. The original statute was quite simple; it sought to ban physician self-referral for designated services when a patient was covered by Medicare or another government payer. The original statute was expanded in January 1995, when Stark II went into effect.

Like many legislations, Stark eventually became riddled with exceptions followed by addendums to close the loopholes to the exceptions. Over the next decade, CMS published a series of regulations implementing the physician self-referral law. Now the Stark Law exists as three separate provisions and is an overly complex set of regulations and statutes.

Stark has become so complex it is almost uninterpretable, and many aspects were passed in an era of health care that is almost unrecognizable today. Unfortunately, the many unintended-consequences of the law continually get in the way in today’s health care landscape. (The barriers to shared leasing and under-arrangements are two of many examples where the Stark law is no longer helpful.) The uncertainty, confusion and subsequent caution surrounding Stark has caused many organizations to hesitate in moving forward, and is delaying the switch from fee-for-service to value-based payments.

Since we are in a “repeal and replace” mode, I urge Congress to repeal the Stark laws

Since we are in a “repeal and replace” mode, I urge Congress to repeal the Stark laws, regulations and statutes and replace them with whatever is deemed to complement the movement to value and the need for hospitals, physicians, and other providers to creatively innovate and collaborate. 

Moving on to Tort reform. While medical liability premiums have leveled off in the past few years, physicians and hospitals still fear litigation, expect lawsuits, and feel the psychological burden of navigating the complex medico-legal system. Although the costs are tough to quantify, studies suggest that about 3 percent of the nation's $3.2 trillion in health care spending, or nearly $100 billion, is related to malpractice cases and defensive medicine (ordering unnecessary tests and treatments to protect against litigation). 

Some people place the cost much higher; pending HHS Secretary Dr. Tom Price suggested in a 2010 interview that defensive medicine accounted for a quarter of all U.S. health care spending.  Price has called for establishing clinical practice guidelines for physicians to use to defend malpractice claims — an idea that has attracted bipartisan support in the past. "If your doctor does the right thing for a given diagnosis or a given set of symptoms, they ought to be able to use it as an affirmative defense in a court of law," Price said last June.

Yes, there are strong opinions on both sides of the argument of whether Tort reform would be beneficial, and more than 30 states already have some form of cap on damages in malpractice suits. However, I think there is a role for federal guidelines that can at least push toward greater consistency among states. The current lack of consistent and national Tort reform hinders attempts to reduce unnecessary variation and increase compliance with demonstrated best practices, thus being another barrier to the movement toward value.

As Congress works on putting together the pieces of the health care jigsaw puzzle, I hope they will find places for Stark and Tort in health care reform that fit nicely in the overall picture.

 

Illustration: Lee Sauer

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Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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