United States: CMS Proposes Significant Changes To Stark Regulations

As part of its annual proposed Medicare Part B physician fee schedule rulemaking (Proposed Rule), which is expected to be published in the Federal Register on July 15, 2015, the US Centers for Medicare and Medicaid Services (“CMS”) is proposing a substantial number of significant changes to, and clarifications of, the regulations implementing the federal physician self referral law (Stark Law). Among the most notable are the following:

New Exception - Assistance to Employ a Nonphysician Practitioner

In light of "[s]ignificant changes in our health care delivery and payment systems, as well as alarming trends in the primary care workforce shortage projections," CMS proposes a new regulatory exception that would permit hospitals, FQHCs, and RHCs to provide remuneration to a physician or physician group to assist with the employment of certain nonphysician practitioners (specifically, physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse midwives). In order to qualify for the proposed exception, the arrangement must meet a substantial number of requirements, including limits on the amount of remuneration that may be furnished and the length of time for which such remuneration may be provided.

New Exception - Timeshare Arrangements

According to CMS, under so-called "timeshare arrangements," a hospital or practice group will make available to a visiting independent physician the "space, equipment and services necessary to treat patients." Under such arrangements, the physician "does not need to make any improvements to the space or to bring any medical or office supplies in order to begin seeing patients." Often, "a timeshare arrangement does not transfer dominion and control over the premises, equipment, personnel, items, supplies, and services of the licensor to the licensee, but rather confers a privilege (or license) to use (during specified periods of time) the premises, equipment, personnel, items, supplies, and services that are the subject of the license."

Because such arrangements may not qualify for protection under any combination of existing Stark Law exceptions (such as those for space, equipment and personal services) -- and because such arrangements often are " necessary to ensure adequate access to needed specialty care (especially in rural and underserved areas)" -- CMS proposes a new exception to protect such arrangements. Among other things, in order to be protected under the new exception (1) the arrangement would have to be set out in writing, signed by the parties, and specify the premises, equipment, personnel, items, supplies and services covered by the arrangement, (2) the "licensed premises, equipment, personnel, items, supplies, and services [would have to be] used predominantly to furnish evaluation and management services to patients of the licensee," (3) the arrangement could not be "conditioned on the licensee’s referral of patients to the licensor," and (4) the compensation over the term of the arrangement would have to be "set in advance, consistent with fair market value, and not determined in a manner that takes into account (directly or indirectly) the volume or value of referrals or other business generated between the parties."

"Agreement" v. "Writing"

Some Stark Law regulatory exceptions require that the parties have an "agreement" while others simply require that the parties' arrangement be in "writing." In the preamble to the Proposed Rule, CMS states that "[b]roadly speaking…there is no substantive difference among the writing requirements of the various compensation exceptions that require a writing" and, "[t]o emphasize the uniformity of the writing requirement in the compensation exceptions," CMS proposes to remove the term "agreement" from virtually every exception in which it appears. CMS emphasizes that "the revised rules would still require a writing," but not any "particular kind of writing," such as "a formal contract." For example, "[d]epending on the facts and circumstances of the arrangement and the available documentation, a collection of …contemporaneous documents evidencing the course of conduct between the parties, may satisfy the writing requirement of the…exceptions that require that an arrangement be set out in writing."

Holdover Arrangements

Several Stark Law regulatory exceptions permit a “holdover” arrangement for up to six months if (1) an arrangement of at least one year expires, (2) the arrangement satisfies the requirements of the exception when it expires, and (3) the arrangement continues on the same terms and conditions after its stated expiration. These exceptions would be amended (1) "to permit indefinite holdovers under certain conditions," or (2) "[i]n the alternative…to extend the holdover for a definite period (for example, a 1-, 2-, or 3-year holdover period) or for a period of time equivalent to the term of the immediately preceding arrangement (for example, a 2-year lease would be considered renewed for a new 2-year period)."

Temporary Noncompliance with Signature Requirements

Under the current Stark Law regulations, if the failure to comply with the signature requirement of an exception is "inadvertent," the parties must obtain the required signature(s) within 90 days; otherwise, the parties must obtain the required signature(s) within 30 days. Recognizing that "it is not uncommon for parties who are aware of a missing signature to take up to 90 days to obtain all required signatures," CMS is "proposing to modify the current regulation to allow parties 90 days to obtain the required signatures, regardless of whether or not the failure to obtain the signature(s) was inadvertent."

One-Year Term

Many Stark Law regulatory exceptions require that the arrangement at issue have a term of at least one year. According to CMS, some stakeholders have concluded that "a formal written contract or other document with an explicit provision identifying the term of the arrangement is necessary to satisfy the 1-year term requirement of the exceptions." In the preamble to the Proposed Rule, CMS states that "[a]n arrangement that lasts as a matter of fact for at least 1 year satisfies this requirement" and a "formal contract or other document with an explicit 'term' provision is generally not necessary to satisfy this element of the exception."

Takes into Account

Many Stark Law regulatory exceptions have so-called "volume or value" requirements. In some cases, the requirement is that the compensation at issue cannot "take into account" the volume or value of physician referrals. In other cases, however, the exception provides that the compensation cannot be "based on," or must be "without regard to," the volume or value of physician referrals. "[C]oncerned that the use of different phrases pertaining to the volume or value of referrals…may cause some to conclude incorrectly that there are different volume or value standards in the compensation exceptions," the Proposed Rule would amend the Stark Law regulations to uniformly utilize the "take into account" language.

"Stand in the Shoes"

In the preamble to the Proposed Rule, CMS states that it considers "a physician who is standing in the shoes of his or her physician organization to have satisfied the signature requirement of an applicable exception when the authorized signatory of the physician organization has signed the writing evidencing the arrangement." The agency remains concerned, however, "about the referrals of all physicians who are part of a physician organization that has a compensation arrangement with a DHS entity when we analyze whether the compensation between the DHS entity and the physician organization takes into account the volume or value of referrals or other business generated between the parties." According to CMS, if it "did not consider the referrals of all the physicians in the physician organization, and instead only considered the referrals of those physicians who stand in the shoes of the physician organization, DHS entities would be permitted to establish compensation methodologies that take into account the volume or value of referrals or other business generated by non-owner physicians in a physician organization when entering into a compensation arrangement with the physician organization."

Accordingly, CMS proposes to clarify that "for all purposes other than the signature requirements, all physicians in a physician organization are considered parties to the compensation arrangement between the physician organization and the DHS entity." (Presumably, what the agency means is not that non-physician owners will stand in the shoes of the physician organization at issue, but rather that the referrals of such physicians may be relevant to determining whether the direct compensation arrangement between a physician-owner and DHS entity qualify for protection under a Stark Law regulatory exception.)

Kosenske

In the preamble to the Proposed Rule, CMS notes that in United States ex rel. Kosenske v. Carlisle HMA, 554 F.3d 88 (3d Cir. 2009), "the Third Circuit Court of Appeals held that a physician’s use of a hospital’s resources (for example, examination rooms, nursing personnel, and supplies) when treating hospital patients constitutes remuneration under the physician self-referral law, even when the hospital bills the appropriate payor for the resources and services it provides (including the examination room and other facility services, nursing and other personnel, and supplies) and the physician bills the payor for his or her professional fees only." According to the agency, it does "not believe that such an arrangement involves remuneration between the parties, because the physician and the DHS entity do not provide items, services, or other benefits to one another. Rather, the physician provides services to the patient and bills the payor for his or her services, and the DHS entity provides its resources and services to the patient and bills the payor for the resources and services. There is no remuneration between the parties for purposes of the Stark Law."

Stark Law and Value-Based Purchasing

In the Proposed Rule, CMS solicits comments on a wide range of topics relating to the same basic dilemma: how to implement a 25 year-old law that is built to address abuses arising in a predominantly fee-for-service world when both government and commercial payers are rapidly transitioning to some variation on value-based purchasing. According to the agency, "[s]takeholders have expressed concern that," with a few, narrow exceptions, "the physician self-referral law prohibits financial relationships necessary to achieve the clinical and financial integration required for successful health care delivery and payment reform." In an effort to address this, the Proposed Rule solicits comments "regarding perceived barriers to achieving clinical and financial integration posed by the physician self-referral law generally and, in particular, the 'volume or value' and 'other business generated' standards set out in our regulations."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
30 Jan 2019, Other, Chicago, United States

Please join us on January 30, 2019, for the Fifth Annual Courageous Counsel Leadership Institute. This year's theme is "Risk and reward: Creating a culture that promotes innovation, change and growth.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions