An uncertain era for Stark law: 12 updates in 2024

The healthcare industry is entering a transformative era as major legal and regulatory frameworks, including the Stark Law, face major updates and reinterpretations.

From the Supreme Court’s landmark decision overturning Chevron deference to increased enforcement of the Anti-Kickback Statute, 2024 will be a pivotal year for compliance in the healthcare sector.

Here are 12 Stark law-related developments starting in 2024:

1. The future of Stark law is constantly changing following a district court decision involving Thomas Health System in South Charleston, W.Va. The court delayed resolving a False Claims Act lawsuit to consider the Supreme Court’s recent reversal of Chevron deference. This change forces judges to independently interpret ambiguous regulations rather than relying on the interpretations of federal agencies.

2. The district court’s decision comes after the Supreme Court in July overturned Chevron deference, a 40-year-old precedent that ordered judges to defer to the interpretations of federal agencies in cases involving ambiguous laws when was reasonable. This change will have a significant impact on how courts handle healthcare regulations, including Stark law cases.

3. Ultimately, the district court dismissed the Thomas Health case, citing insufficient details in the plaintiff’s allegations. However, the need for supplemental briefings highlighted the increasing scrutiny of Stark law enforcement.

4. Industry leaders are expressing concern about growing uncertainty. “I think one of the real policy questions will be on the legal side, which is what’s going to happen with the Stark law and the anti-bribery issues associated with the Chevron case,” said Scott Colston, executive director of St. Paul (Minn. ) Eye Clinic, said in becker’s 30th Annual ASC Business and Operations Meeting in Chicago on November 1. “I think the opportunity to challenge agency interpretation and rules is real.”

5. The Department of Justice is moving away from prosecuting fraud related to the COVID-19 pandemic and refocusing on illegal marketing and referral practices, including violations of the Stark Law. Ley.com reported on November 7. Donald Trump’s recent re-election is unlikely to change AKS’s role as a major weapon in the Justice Department’s “health care fraud-fighting arsenal,” according to the report. But for life sciences and other healthcare companies, the application of AKS is entering a new era.

6. The report anticipates that the Department of Justice and the HHS Office of Inspector General will intensify oversight of Stark law compliance, focusing on practices involving medical compensation and marketing agreements that violate federal regulations.

7. In October, Lathrop GPM attorney Kathleen Fisher Enyeart spoke with JDSupra to highlight key regulatory trends in healthcare. She told the publication that she anticipates the regulation will focus more on potential violations of the Stark law. The Stark law poses significant risks for private equity investors who are unfamiliar with the complex legal framework of healthcare: physicians in private equity-owned groups should be vigilant about how these financial arrangements are structured to avoid legal pitfalls.

8. “As private equity investors enter this highly regulated space, the way they would normally try to incentivize referrals is not legal in the healthcare sector,” he said. “As they purchase physician practices, are they doing so in a compliant manner? Is the compensation being offered to physicians or practices compliant with Stark? I think we’re going to continue to see increased scrutiny in that area.”

9. Temporary Stark law waivers implemented during the COVID-19 pandemic, such as delivering prescriptions by mail to Medicare beneficiaries, may become permanent. The Senior Access to Critical Medicines Act of 2024, passed by the U.S. House of Representatives, is now awaiting Senate review.

10. In 2023, CMS resolved $12.56 million in voluntary disclosures related to the Stark law, a staggering 552% increase from 2021. The Department of Justice’s enforcement of the law has also stepped up, with at least 10 multi-million dollar deals reported in the last two years. Financial relationships, particularly those involving medical compensation that exceeds fair market value or varies based on benchmarks, are key areas of concern.

11. The Department of Justice’s recent complaint against Erlanger Health System and Medical Center for violations of the Stark law raises compliance alarms throughout the healthcare industry. The complaint alleges that Erlanger employed physicians and received referrals that did not meet any exceptions to the Stark law, a serious violation. The DOJ’s action emphasizes the importance of strict compliance with the law and highlights the increasing risk of its application.

12. Recent revisions to the Stark law have significantly altered the way doctors conduct their practices, according to Matt Mazurek, MD, assistant professor of anesthesiology at Yale School of Medicine. CMS now uses several formulas to determine overall market value, creating new challenges for physicians in structuring financial relationships.

“Recent rule changes have increased the complexity of financial relationships between physicians and other entities,” Dr. Mazurek said. becker’s. These changes require a deep understanding of both the law and evolving regulations, as non-compliance can result in significant penalties.