On July 2, 2007, the Centers for Medicare and Medicaid Services (CMS) released its proposed 2008 Medicare Physician Fee Schedule. In addition to revising the Stark Law's treatment of "under arrangement" transactions, lease agreements, and percentage-based compensation, the proposed rule also addresses the Stark exception for obstetrical malpractice insurance subsidies. The comments requested with respect to obstetrical malpractice insurance subsidies appear to indicate that CMS is looking to broaden the availability of the subsidies.
Currently, the Stark regulations allow hospitals and other entities to provide malpractice insurance subsidies to practitioners who engage in obstetrical practice as a routine part of their medical practice if the arrangement satisfies all of the requirements of the Anti-Kickback Statute Safe Harbor for Obstetrical Malpractice Insurance Subsidies (42 C.F.R. § 1001.952(o)). The most significant requirement of the Safe Harbor is that at least 75 percent of the practitioner's obstetrical patients must either reside in a Health Professional Shortage Area (HPSA) or Medically Underserved Area (MUA) or be part of a Medically Underserved Population (MUP). As a result, very few arrangements meet the requirements of the Stark Law exception or qualify for protection under the Anti-Kickback Statute Safe Harbor.
In the preamble to the proposed fee schedule, CMS stated that despite the implementation of the Stark Law exception for obstetrical malpractice insurance subsidies, it still continues to receive reports of patient difficulty in obtaining obstetrical care in communities where obstetrical malpractice insurance premiums are relatively high. As a result, CMS indicated that it believes that the current exception may be unnecessarily restrictive. While CMS did not propose any specific changes to the current exception, it did solicit comments that describe current difficulties in obtaining affordable obstetrical malpractice insurance and quality obstetrical care. CMS also asked for recommendations as to how the exception could be expanded without increasing the risk of program and patient abuse. With respect to modifications to the current exception, CMS indicated that instead of incorporating the elements of the Safe Harbor it wanted to compile a list of specific requirements for the exception. CMS specifically requested comments about whether the requirement regarding the percentage of patients who reside in a HPSA or MUA or who are part of a MUP should be reduced and whether the exception should include any requirements regarding the location of the entity making the malpractice insurance premium subsidy payment or the medical practice of the practitioner who is receiving the subsidy. If the Stark Law exception for obstetrical malpractice insurance subsidies is modified and made available to a greater number of providers, it could significantly increase the ability of hospitals and other healthcare entities to ensure that obstetrical care is available in their communities.
The proposed 2008 Medicare Physician Fee Schedule can be found on the CMS web site at this link. The section addressing obstetrical malpractice insurance subsidies begins on page 321.
CMS has requested comments on these proposals and will consider comments received by 5 p.m. on Aug. 31, 2007. Waller Lansden is soliciting comments on the proposed rule, and we will provide these comments to CMS.
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