United States: Proposed Rule Aims To Refine Stark Regulations And Clarify "Incident To"

On July 15, 2015, the Centers for Medicare and Medicaid Services (CMS) published the calendar year (CY) 2016 Physician Fee Schedule Proposed Rule. In addition to updating several traditional Part B payment policies, the proposed rule contains significant changes to the physician self-referral regulations (Stark regulations) and the Medicare "incident to" coverage rule. The comment deadline is September 8, 2015.

Proposed Changes to the Stark Regulations

CMS cited several justifications for its changes to the Stark regulations, including the need to accommodate delivery and payment system reform and reduce burden on providers. Accordingly, the proposed rule provides for two new exceptions and many changes and clarifications to existing exceptions and definitions. Additionally, CMS solicited comments regarding the impact of the Stark regulations on healthcare delivery and payment reform. The proposed refinements come on the heels of a dissenting opinion by a judge in the U.S. Court of Appeals for the Fourth Circuit's judgment in the Tuomey case, highlighting the complexity and importance of the Stark regulatory scheme for providers.

Timeshare Arrangements. The proposed rule would add a new exception for time share leasing arrangements between hospitals or physician organizations (as "licensors") and physicians (as "licensees") for the use of space, equipment located in the office suite, personnel, and items or services used predominately for evaluation and management services (E&M services). Advanced imaging equipment, radiation therapy equipment, and laboratory equipment (other than that used for CLIA-waived tests) are expressly excluded from the new exception. Qualifying arrangements must meet additional safeguards common to most Stark exceptions, including that the license fee be set in advance, consistent with fair market value, and not take into account the volume or value of referrals or other business generated between the parties.

CMS had previously declined to expand the "fair market value" and "payments by a physician" exceptions to apply to leases, but the proposed rule distinguishes timeshare licenses, which confer a privilege to act on another's property, from leases, which transfer dominion and control and a possessory interest in property. The agency has solicited feedback on the new exception with respect to the location of equipment, types of appropriate licensors, and the measure of the use of the space for E&M services.

Assistance to Employ a Nonphysician Practitioner. CMS has changed course on financial support available for employment of nonphysician practitioners (NPPs) (defined to include physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse midwives), proposing a new exception for payments made by a hospital, federally qualified health center (FQHC), or rural health clinic (RHC) to a physician to assist the physician in employing an NPP furnishing primary care services. The exception closely tracks the structure and requirements of the existing exception for physician recruitment, which CMS declined to extend to NPPs in previous rulemaking. CMS proposes two alternative tests for establishing the minimum amount of primary care services required under the exception, requiring that at least 90 percent or "substantially all," defined as at least 75 percent, of patient care services provided by the NPP must be primary care services. The proposed exception limits financial support to two years from the date of employment and caps the amount of assistance provided.

CMS has also provided clarification and policy guidance on several exceptions pertaining to writing and term requirements, and the changes are designed to lessen the burdens of Stark compliance. The agency notes the proposals are promoted in part by its review of disclosures made under the Stark self-disclosure protocol.

  1. Writing Requirement. CMS clarified there is no substantive difference among the writing requirements of the various compensation exceptions, despite the use of different terminology (e.g., written agreement versus written arrangement) and notes there is no requirement that an arrangement be documented in a single formal contract. Rather, depending on the facts and circumstances, a collection of documents may satisfy the writing requirement.
  2. Temporary Noncompliance With Signature Requirements. The agency proposed changing the special rule for arrangements involving temporary noncompliance with signature requirements to extend the deadline for obtaining required signatures from 30 days to 90 days. The proposed changes would also permit the parties to use the special rule whether or not the signature noncompliance was inadvertent.
  3. Term of at Least One Year. CMS clarifies that the written agreement for the rental of office space, rental of equipment, and personal services exceptions does not need to explicitly provide for a one-year term as long as the arrangement is in place for at least one year. The proposed rule would change references in applicable exceptions for consistency to reflect this interpretation.
  4. Holdovers. In light of several self-disclosures related to arrangements that exceeded the current six-month holdover period permitted in several exceptions, CMS has proposed two alternative changes to the holdover provisions. The agency is considering whether to allow indefinite holdovers or holdovers for a defined period greater than six months (e.g., one year, two years, or three years). Holdover arrangements would still need to meet all other requirements of the applicable exception. CMS notes the proposed rule safeguards against rental charges that become inconsistent with fair market value over time by requiring continued satisfaction with the fair market value requirement at the time the agreement expires and on an ongoing basis during the holdover period.

Technical Clarifications and Policy Guidance. Also proposed are a number of technical clarifications and changes to the Stark regulations that would improve clarity and ensure proper application of CMS policies:

  • Revise the physician recruitment exception to add a new definition of the geographic area served by a FQHC or RHC.
  • Amend certain exceptions to standardize references pertaining to the volume or value of referrals to clarify that there is only one standard.
  • Revise the requirement for retention payments to conform to the policy expressed in the Phase III rulemaking (i.e., consider the physician's income averaged over the entire previous 24-month period).
  • Revise the exception for ownership of publicly traded securities to update obsolete references to systems for trading securities.
  • Clarify that the referrals of all physicians who are part of a physician organization (including physician owners, physicians who voluntarily stand in the shoes of the organization, and other nonowner physicians) are considered in determining whether compensation takes into account the volume or value of referrals or other business generated between the parties to an arrangement when determining whether an arrangement constitutes an indirect compensation arrangement.
  • Remove the reference to "stand in the shoes" in the definition of locum tenens physician.
  • Clarify that the exception to the definition of remuneration for certain items, devices, or supplies applies if the items, devices, or supplies are used solely for one or more of the six enumerated purposes.

In its discussion of remuneration, CMS addressed confusion arising from the decision of the U.S. Court of Appeals for the Third Circuit in United States ex rel. Kosenske v. Carlisle HMA, which found a physician group received remuneration from a hospital consisting of numerous benefits, including the exclusive right to provide all anesthesia and pain management services, as well as the receipt of office space, medical equipment, and personnel. Though CMS did not propose a specific rule change, it noted that a physician's use of a hospital's resources such as exam rooms, nursing personnel, and supplies in split billing arrangements does not constitute remuneration.

Physician-Owned Hospitals. The proposed rule addresses requirements for physician-owned hospitals introduced by the Affordable Care Act, which restricted "grandfathered" hospitals from expanding or increasing the percentage of physician ownership after March 23, 2010.

  • Public Website and Public Advertising Disclosure. CMS proposes to amend the regulation to provide more certainty regarding requirements for physician-owned hospitals to disclose on their websites and in any public advertising that the hospital has physician owners or investors. The proposed rule generally limits the required disclosures. For example, CMS clarified that social media does not qualify as a public website triggering disclosure obligations.
  • Bona Fide Investment Level. The proposed rule would require the calculation of bona fide physician investment level to include direct and indirect ownership and investment interests held by a physician regardless of whether the physician refers patients to the hospital. This proposal is a reversal of the position CMS articulated in the CY 2011 OPPS/ASC final rule, which included only physicians making referrals to the hospital in the calculation. CMS recognizes that some physician-owned hospitals may have relied on its prior position and proposes to delay the effective date of the new regulation to provide time for these hospitals to come into compliance with the new policy.

Revisions to the Medicare "Incident to" Regulation

CMS also proposed changes to the "incident to" regulation that governs Medicare payment for services performed by qualified auxiliary personnel under the supervision of a physician or NPP. Specifically, CMS has proposed changes to the regulation to clarify that the physician or NPP billing for the incident to services must also be the physician or NPP who supervises the auxiliary personnel performing the services. CMS also proposed to remove the last sentence of the regulation, which currently provides that the physician or NPP "supervising the auxiliary personnel need not be the same physician [or NPP] upon whose professional service the incident to service is based." The deletion of this language leads to confusion about whether the ordering physician or NPP must also be the supervising physician or NPP to bill for the incident to services. However, we are aware of communications from CMS after the proposed rule was published indicating that the revisions were intended to clarify that the ordering and supervising physician/NPP do not need to be the same person. Stakeholders are encouraged to submit comments on this issue to ensure that the regulations accurately capture CMS's intended policy.

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
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Reinhart Boerner Van Deuren s.c.
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