Federal Trade Commission (FTC) Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS)

elected exceptions within 42 CFR §§ 411.355 and 411.357 that allow ownership-based physician self-referral in vertically integrated healthcare entities, including provisions related to whole-hospital investment, group practice referrals, and value-based enterprise exemptions. Additionally, rescind permissive structural allowances within 42 CFR §§ 422.400–422.410 that enable Medicare Advantage organizations to own or control provider networks without market share thresholds or conflict-of-interest restrictions.

—OPTIONAL--

Notice of Proposed Rulemaking

Stark Law Exceptions and Organizational Flexibilities for Medicare Advantage Plans

Allowing hospitals, physician groups, and insurers to share ownership under current Stark Law exceptions and Medicare Advantage flexibilities creates vertically integrated monopolies that limit patient choice and drive up healthcare costs. Rescinding these exceptions restores competition and realigns incentives toward transparent, patient-centered care.

Centers for Medicare & Medicaid Services 7500 Security Boulevard Baltimore, MD 21244

(410) 786-4561

Stark Law (42 CFR Part 411) generally prohibits physicians from referring Medicare patients to entities with which they have a financial relationship—but contains broad exceptions that enable joint ventures and ownership within vertically integrated systems. Separately, 42 CFR Part 422 grants Medicare Advantage (MA) plans wide latitude in structuring payer-provider networks, including allowing cross-ownership without antitrust triggers. These provisions were intended to encourage care coordination, but now enable vertically integrated healthcare giants to dominate regional markets with limited transparency or competition.

Restores the original purpose of Stark Law by eliminating self-referral and ownership carveouts Prevents payer-provider consolidation that undermines price competition and market choice Protects patients from being locked into closed networks controlled by a single corporate entity Aligns regulatory enforcement with growing concerns about healthcare monopolies and vertically integrated health plans Rescission ensures that anti-competitive arrangements no longer benefit from regulatory shelter

The following exceptions shall be rescinded: All text within 42 CFR § 411.355 and § 411.357 that permits ownership-based exceptions to the physician self-referral prohibition, including but not limited to group practice referrals, whole-hospital ownership, and value-based enterprise exemptions. All language in 42 CFR §§ 422.400–422.410 that allows Medicare Advantage organizations to maintain ownership or control over healthcare provider networks without regulatory thresholds or competition safeguards. Upon rescission, these exceptions shall no longer apply, and affected entities shall be subject to full conflict-of-interest restrictions and competition enforcement under Stark Law and relevant CMS rules.

Dr. Mehmet Oz

Administrator for Medicare & Medicaid Services