Stark Law Changes in 2025: What Every Healthcare Provider Needs to Know
By A. Calder Nash, contributing policy and compliance analyst at ClearPath Compliance
What Is the Stark Law?
The Stark Law, also known as the Physician Self-Referral Law, prohibits physicians from referring Medicare patients to entities they have a financial relationship with—unless an exception applies. Its core goal is to prevent conflicts of interest that could drive up healthcare costs or compromise care.
What Changed in 2024?
In April 2024, the Centers for Medicare & Medicaid Services (CMS) implemented key updates to the Stark Law under the CY2024 Medicare Physician Fee Schedule Final Rule. These changes reflect CMS’s continuing efforts to modernize healthcare regulation under value-based care models.
1. Expanded Flexibility for Value-Based Arrangements
CMS has broadened exceptions for:
Shared savings programs
Coordinated care models
Health tech-enabled partnerships
Implication:
Physician practices and clinics entering into care coordination or quality improvement programs now have more legal protection when financial relationships are involved — as long as they’re structured properly.
Tip: If you're participating in an ACO or using digital tools for shared care, this rule may now protect you more than it did in 2023.
2. Clarification on "Commercial Reasonableness"
CMS clarified what counts as commercially reasonable — a core requirement for many Stark Law exceptions. The 2024 definition now explicitly allows arrangements that result in losses, as long as they still make sense from a business and care perspective.
Implication:
Medical groups no longer need to worry that unprofitable arrangements automatically violate Stark Law — as long as they have a logical, documented purpose (e.g., expanding access in rural areas).
Tip: Keep a clear justification in writing for any agreements that don’t look profitable on paper.
3. Tighter Language Around Indirect Compensation
New guidance narrows down the criteria for what qualifies as indirect compensation—meaning more arrangements may now fall under the Stark Law than before.
Implication:
Organizations that work with management companies, staffing agencies, or other third-party vendors must re-evaluate their indirect relationships. Many arrangements that flew under the radar now require a formal review.
Tip: If you contract out billing, staffing, or tech services, revisit those agreements now.
Why This Matters to Small Clinics and Independent Providers
You might think Stark Law is only for hospitals or large systems — but it absolutely affects:
Solo practitioners
Multi-specialty groups
Concierge practices
Clinics participating in Medicare
Failure to comply can mean:
Civil penalties up to $15,000 per service
Exclusion from federal programs
Reputational harm
How to Stay Compliant in 2024
Review your contracts (especially tech, staffing, or shared-revenue agreements)
Document your commercial reasoning
Know your value-based care exceptions
Consult a compliance specialist (like ClearPath Compliance) if you’re unsure
📚 Sources
CMS CY2024 Final Rule (Medicare Physician Fee Schedule)
OIG Stark Law Overview
🧠 Final Thought
Regulations are evolving. So should your compliance strategy.
If you're unsure how these changes impact your practice, ClearPath Compliance is here to help.
Written by A. Calder Nash, contributing policy and compliance analyst at ClearPath Compliance.
