United States: CMS Finalizes Revisions To Stark To Ease Burden On Providers, Refines "Incident To" Requirements

In its calendar year 2016 Physician Fee Schedule Final Rule published in the Federal Register on November 16, 2015 (Final Rule), the Centers for Medicare and Medicaid Services (CMS) finalized amendments to the federal physician self-referral (Stark) regulations proposed in the Physician Fee Schedule proposed rule released in July. Among the significant provisions contained in the Final Rule are (1) amendments and policy clarifications targeting Stark technical violations and compliance burdens, (2) a new recruitment exception and other changes focused on access to care, (3) an exception for timeshare licenses, and (4) amendments affecting physician-owned hospitals.

Key Changes Focused on Stark Technical Violations and Compliance Burdens

Prompted in part by its review of disclosures made under the Stark self-disclosure protocol for technical violations, CMS provides clarification and policy guidance on several exceptions and reduces the burden for providers through amendments to the Stark regulations. While these changes may help parties evaluating potential technical violations and self-disclosures for past conduct, they should not be taken as a signal to providers to abandon their current compliance protocols.

  • Writing Requirement. CMS clarified that there is no substantive difference among the writing requirements of the various compensation exceptions, despite the use of different terminology, and finalized its proposal to substitute the word "arrangement" for "agreement" in the leasing exceptions to better reflect this policy. The agency explains there is no requirement that an arrangement be documented in a single formal contract. Rather, the relevant inquiry is whether the contemporaneous documentation of the arrangement would permit a reasonable person to verify compliance with the exception at the time a referral is made.

Examples of documents that may be aggregated to satisfy the writing requirement include:

  • Board meeting minutes and other documents authorizing payments for specified services
  • Hard copy and electronic communications between the parties
  • Fee schedules for specified services
  • Check requests or invoices identifying items or services provided, relevant dates, and/or rates of compensation
  • Time sheets documenting services performed
  • Call coverage schedules or similar documents with dates of services to be provided
  • Accounts payable or receivable records documenting the date and rate of payment, and reason for payment
  • Checks issued for items, services, or rent

Notably, the Final Rule provides that parties considering conduct predating the proposed rule may rely on this clarification because it reflects current CMS policy. While this clarification is a helpful fallback, the best practice remains for parties to enter into a formal written agreement to evidence compliance with these exceptions.

  • Term of at Least One Year. CMS finalized changes in the proposed rule to clarify that the one-year term requirement of the rental of office space, rental of equipment, and personal services exceptions does not need to be memorialized in a formal agreement. Rather, parties must have contemporaneous writings establishing that the arrangement lasted for at least one year, or be able to demonstrate that the arrangement was terminated during the first year and the parties did not enter into a new arrangement for the same space, equipment, or services during the first year.
  • Temporary Noncompliance with Signature Requirements. The agency amended the special rule for arrangements involving temporary noncompliance with signature requirements to allow the parties 90 days to obtain the required signatures, even if the noncompliance was not inadvertent. However, CMS did not adopt a commenter's suggestion to remove the provision that allows a designated health services (DHS) entity to use this special rule only once every three years. The Final Rule also indicates that what constitutes a "signature" for purposes of meeting an exception is flexible and, depending on the facts and circumstances, could include electronic signatures and typed names.
  • Indefinite Holdovers. The Final Rule liberalized the holdover provisions of the rental of office space, rental of equipment, and personal services exceptions to allow for indefinite holdovers, provided that the arrangement continues to meet all other requirements of the exception. Holdovers must continue on the same terms and conditions of the original arrangement, and must continue to meet all other elements of the applicable exception during the holdover period. For example, if office space rental payments are fair market value when the lease arrangement expires, but the rental amount falls below fair market value at some point during the holdover, the lease arrangement would fail to satisfy the requirement as soon as the fair market value requirement is no longer satisfied. CMS also cautioned that, depending on the facts and circumstances, the failure to apply a holdover premium that is legally required by the original arrangement may constitute a change in the terms and conditions of the original arrangement and therefore not meet the requirement that the arrangement continue on the same terms and conditions of the immediately preceding arrangement.

Other Technical Clarifications and Policy Guidance

CMS finalized a number of technical clarifications and changes to Stark exceptions and definitions aimed at improving clarity and ensuring proper application of CMS policies:

  • Stand in the Shoes. CMS finalized its proposal to remove the reference to "stand in the shoes" in the definition of locum tenens physician to avoid potential confusion with the stand in the shoes concept.
  • Split Billing. The agency affirmed its proposed position that a physician's use of a hospital's resources (e.g., exam room, nursing personnel, and supplies) in split billing arrangements does not constitute remuneration. CMS specifically declined to address whether the grant of an exclusive right to provide services could constitute remuneration in-kind, giving rise to a financial relationship.
  • Takes Into Account. The Final Rule amends certain exceptions to standardize references pertaining to the volume or value of referrals (e.g., takes into account, based on, without regard to) to clarify that there is only one standard.
  • Remuneration. CMS finalized its proposal to revise the regulatory definition of remuneration to clarify that remuneration excluded from the definition includes items, devices, or supplies used solely for one or more of the six enumerated purposes (e.g., the collection of specimens).

Recruitment and Access to Care

  • New Exception – Assistance to a Non-Physician Practitioner. The Final Rule contains a new exception for recruitment of non-physician practitioners (NPPs) that closely tracks the structure and requirements of the existing exception for physician recruitment, which CMS declined to extend to NPPs in its Phase III rulemaking. CMS explained its change in position was prompted by changes in the healthcare delivery and payment systems and a projected rise in demand for primary care and mental health services, especially in rural and underserved areas. The Final Rule expands the exception to apply to payments made by a hospital, federally qualified health center (FQHC), or rural health clinic (RHC) for not only primary care services, but also mental health services.

    Additionally, CMS has expanded the definition of NPP to include clinical social workers and clinical psychologists in response to comments on the proposed rule. The Final Rule also applies whether the NPP is recruited as a bona fide employee or an independent contractor. There are a number of requirements and limitations associated with the exception, including a requirement that "substantially all" (defined as at least 75 percent) of the NPP's patient care services be primary care or mental health services and a cap on the amount of assistance that may be provided.
  • Physician Recruitment. The Final Rule amends the physician recruitment exception to add a new definition of the geographic area served by an FQHC or RHC.

Timeshares

  • New Exception – Timeshare Arrangements. CMS finalized a modified version of the proposed new exception for timeshare leasing arrangements between hospitals or physician organizations and physicians for the use of premises, equipment, personnel, items, or services used predominately for evaluation and management (E&M) services. In its rulemaking, CMS recognized the existence of legitimate reasons for physicians to enter timeshare arrangements instead of traditional space leases (especially in rural and underserved areas) and acknowledged the challenges of structuring such arrangements in a compliant manner under Stark, including the exclusive use requirements of the rental of office space and equipment exceptions. CMS reiterated in the Final Rule that the new exception is not available for traditional lease arrangements that establish a possessory leasehold interest in the space – described as a "right against the world" (including the owner or sub-lessor of the space). The Final Rule is more liberal than the proposed rule in that it allows a hospital to be either the grantor or the grantee of the use of the space. This change will allow hospitals to take advantage of the timeshare exception for its employed physicians.

The new timeshare exception includes the following requirements and limitations:

  • The parties must be a physician or a physician organization in whose shoes the physician stands and a hospital or physician organization of which the physician is not an owner, employee, or contractor.
  • The premises, items, and services must be "predominately" used to furnish E&M services.
  • The compensation cannot be based on a percentage of revenues or per unit of services fees to the extent such fees reflect services provided to patients referred by the grantor.
  • Any equipment covered by the timeshare arrangement must be (1) located in the same building where the E&M services are furnished, (2) not used to furnish DHS other than those incidental to the E&M services furnished at the time of the E&M visit, and (3) not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment (other than equipment used to perform CLIA-waived laboratory tests).

CMS provided valuable guidance on the meaning of "predominate use" for E&M services that should be considered when designing an arrangement under this new exception. Additionally, CMS discussed the permissible fee methodologies under the new exception in-depth.

Physician-Owned Hospitals

The Final 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 beyond baseline bona fide physician investment levels existing on March 23, 2010.

  • Bona Fide Investment Level. The Final Rule adopts CMS's reversal of its prior position by requiring the calculation of the physician ownership level to include direct and indirect ownership and investment interests held by a physician regardless of whether the physician refers patients to the hospital. In recognition that some physician-owned hospitals may have relied on the agency's prior position, which included only referring physicians, CMS delayed the effective date of this revision to January 1, 2017. Significantly, some hospitals may be facing divestment of physician ownership in excess of the bona fide investment level.
  • Public Website and Public Advertising Disclosure. CMS finalized, without modification, its proposed amendment to the Stark regulations to provide more certainty regarding public website and public advertising disclosure requirements for physician-owned hospitals. The Final Rule generally limits the required disclosures, for example, clarifying that social media does not qualify as a public website triggering disclosure obligations.

Revisions to the Medicare "Incident to" Regulation

The Final Rule adopted revisions 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 finalized 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 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." In issuing the Final Rule, CMS recognized that its proposed deletion of this sentence introduced confusion about whether the supervising (and, therefore, billing) physician or NPP could be different from the ordering physician or NPP. CMS fixed this error by amending the regulation to state that the supervising physician or NPP need not be the same person who is "treating the patient more broadly."

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.