As Medicaid cuts, 340B changes and site-neutral payments squeeze hospital margins, existing Stark law exceptions and Anti-Kickback Statute safe harbors could give hospitals more room to align with physicians than many realize, according to a Sept. 21 brief from law firm McDermott Will & Emery.
Here are six things to know:
1. The pressure is coming from several directions. The One Big Beautiful Bill Act is expected to cut federal Medicaid funding substantially over the next decade, and enhanced ACA subsidies remain uncertain. In its 2027 OPPS/ASC proposed rule, CMS proposed changing the payment formula for 340B-acquired drugs. It also proposed paying for certain imaging services without contrast at off-campus hospital outpatient departments at the lower Physician Fee Schedule-equivalent rate.
2. The loss of the inpatient-only list could hit revenue well beyond inpatient payments. CMS’ 2026 final rule phases out the inpatient-only list over three years, starting with 285 procedures. The 2027 proposed rule would remove another 637. Certain commercial payers could deny inpatient status and pay outpatient rates, and more of those cases could move to outside ASCs. Losing inpatient volume can also affect DSH payments, IME/GME payments, 340B eligibility thresholds, Medicare bad debt and state supplemental payment formulas.
3. ASC, clinic and physician strategy should be planned together. The brief recommends treating them as one effort instead of separate projects. Options include ASC joint ventures, revised ASC-physician compensation, and group practice or clinic models that let physicians share in profits. It says recent advisory opinion activity suggests employed physicians may be able to share in an ASC enterprise’s performance without owning the ASC directly. These arrangements depend heavily on the facts of each case.
4. Better contracts may do the job without new capital. Before pursuing an acquisition or joint venture, systems should check whether existing compensation arrangements could do more. Beyond salary and wRVU models, a contract could include a directed-referral bonus tied to an in-network “keepage” threshold. The brief also says these provisions can show systems why patients are leaving the network.
5. CMS has allowed referral-percentage bonuses under Stark. According to the brief, CMS has indicated that a physician can be paid a bonus or withhold tied to a percentage of in-network referrals, but not a number or value of referrals. The payment still has to meet the volume or value standards of a Stark exception, and the AKS and state laws may also apply.
6. Value-based exceptions don’t require taking on risk. Under the Stark value-based exceptions and AKS safe harbors, systems can build their own payment models by contract. Before these rules, that would have required CMS and OIG waivers. No registration or new legal entity is needed, and the arrangements can apply to fee-for-service. If the requirements are met, compensation can take referral volume or value into account, or not match fair market value. The value-based purpose has to be genuine and commercially reasonable. One example is paying physicians for care-coordination work to reduce avoidable readmissions.
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