United States: Final Stark Rule Changes Adopt New Exceptions For Hospitals And Significant Clarifications

Last Updated: January 11 2016
Article by Wilson Hayman

In the Medicare Fee Schedule Final Rule with Comment Period for calendar year 2016, the Centers for Medicare & Medicaid Services (CMS) adopted two new exceptions to the Stark physician self-referral law affecting hospitals, effective January 1, 2016, and made certain other significant changes. 80 Fed. Reg. 70885, 71300 (Nov. 16, 2015). A proposed rule including many of these revisions was first published in the Federal Register on July 15, 2015, and was the subject of an article in our September 2015 issue of Corridors. This article will summarize the changes to the Stark law in the final rule and delineate some of CMS's changes from the proposed rule. Most should be welcomed as lessening the risk for North Carolina hospitals and physicians of committing minor, technical violations of the Stark law.

New Exception for Hospital Recruitment of Nonphysician Practitioners Includes Mental Health Practitioners

Changes from Proposed Rule. The final rule changed the proposed recruitment exception permitting hospitals, federally qualified health centers and rural health clinics to provide remuneration to a physician for the recruitment of non-physician practitioners (NPPs), to be codified at 42 CFR § 411.357(x). In recognition of the widespread shortage of mental health professionals, CMS in the final rule broadened the services to include not only primary care but also mental health services. The final rule expands the definition of NPP for the new exception to include clinical social workers and clinical psychologists, besides the physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse midwives covered by the proposed rule. Other changes include that the NPP need not be employed by the physician but may be an independent contractor. For an independent contractor under this exception, the contractual relationship for services must be directly between the physician (or physician organization) and the NPP. Without physician involvement, Stark is not implicated; CMS noted that a hospital's recruitment payments made directly to an NPP triggers the Stark law only if the NPP serves as a conduit for physician referrals or is an immediate family member of a referring physician.

Requirements of Final Rule on Recruitment of NPPs

The exception for assistance to a physician to compensate (as an employee or contractor) an NPP to furnish patient care services requires that (1) the arrangement is set out in writing and signed by the hospital, the physician and the NPP; (2) the arrangement is not conditioned on the physician's or NPP's referrals to the hospital; (3) the remuneration from the hospital does not exceed 50 percent of the actual compensation, signing bonus and benefits paid by the physician to the NPP during a period not to exceed the first two consecutive years of the compensation arrangement and is not determined in a manner that considers the volume or value of any referrals by the physician or the NPP (or any physician or NPP in the physician group practice) or other business generated by the parties; (4) the compensation, signing bonus and benefits paid by the physician do not exceed fair market value for the patient care services furnished by the NPP to the practice; (5) the NPP has not, within one year of commencing the compensation arrangement with the physician, practiced in the geographic area served by the hospital or been employed or engaged to provide patient care services by a physician or physician group with a medical practice site in the hospital's geographic area, whether or not the NPP provided services in that geographic area; (6) substantially all (i.e., 75 percent) of the services provided by the NPP to the physician's patients are primary care or mental health care services; (7) the physician does not impose practice restrictions that unreasonably restrict the NPP's ability to provide patient care services in the hospital's geographic area; and (8) the arrangement does not violate the Anti-Kickback Statute or other federal or state law governing billing or claims submission. This exception may be used by a hospital only once every three years regarding the same referring physician, unless the NPP is replacing an NPP who terminated his or her employment or contract to provide patient care services with the physician, and the remuneration is provided within two consecutive years measured from the commencement of the arrangement with the NPP being replaced. See 42 CFR §411.357(y).

New Exception for Timeshare Arrangements

The current Stark exception for office lease arrangements does not permit timeshare leasing arrangements in which a physician does not receive a possessory interest in property as in a true lease but pays the lessor for the periodic right to use office space exclusively on a turnkey basis, including support personnel, waiting area, furnishings, equipment, and supplies. Such arrangements are common in rural areas where a hospital or physician practice makes space and staff available to a visiting physician. This is often structured as the owner's grant of a license or privilege to the visiting physician for the property at specified times, without conveying dominion or control over the premises as in a true lease. The final rule made several relatively minor changes from the proposed rule. It creates a new exception codified at 42 CFR § 411.357(y) permitting timeshare arrangements that meet these criteria: (1) the arrangement is set out in writing, signed by the parties, and specifies the premises, equipment, personnel, supplies, and services covered; (2) the arrangement is between a physician or physician group as licensee and either a hospital or another physician organization (of which the licensee physician is not an employee, owner or member) as licensor; (3) the licensed premises, equipment, personnel, items, supplies, and services provided are used predominantly for evaluation and management services for patients and on the same schedule; (4) the licensed equipment is in the office suite where the evaluation and management services are furnished, is not used to furnish DHS other than those incidental to the evaluation and management services furnished, and does not include advanced imaging, radiation therapy or clinical or pathology lab equipment; (5) the arrangement is not conditioned on the physician licensee's referral of patients; (6) the compensation is set in advance, consistent with fair market value and neither (a) determined in a manner that considers the volume or value of referrals or other business generated between the parties, nor (b) based on a percentage of revenue or per-unit of service, other than time-based, that reflects the services provided to patients referred by the licensee physician; (7) the arrangement would be commercially reasonable even absent referrals between the parties; (8) the arrangement does not violate the Anti-Kickback Statute or any other federal or state law governing billing or claims submission; and (9) the arrangement does not convey a possessory leasehold interest in the office space that is the subject of the arrangement.

Summary of Other Changes to Stark Rule

The final rule adopted, among others, these additional changes to the Stark rule:

Writing and Signature Requirements. The final rule clarifies that while the terms of compensation arrangements such as leases and personal service arrangements must be sufficiently documented, these exceptions do not require them to be documented by a single, formal contract or any other particular kind of writing. Therefore CMS has replaced the terms agreement and contract in those exceptions with arrangement. See 42 CFR §§ 411.354(d), 411.357(a), (b), (d).

For compensation arrangement exceptions that require the parties' signatures, the final rule gives the parties 90 days from the date the compensation arrangement became noncompliant, whether or not their failure to obtain the signatures was inadvertent. See 42 CFR § 411.353(g).

Term Requirements and Holdover Leases. The final rule provides that an arrangement for the lease of office space or equipment or for personal services, which can be documented to have lasted for at least one year (or which was terminated during the first year and the parties did not enter a new arrangement for the same space, equipment or service), satisfies the requirement of a one-year term. See 42 CFR §§ 411.357(a), (b), (d). The parties need not have an agreement with a term of at least one year.

The final rule provides that holdover leases for an unlimited period comply with the Stark rule if the arrangements meet the applicable exception when the arrangement expired and continue to meet requirements, and the holdover is on the same terms and conditions as the prior arrangement. See 42 CFR §§ 411.354(d), 411.357(a), (b), (d).

Definition of Stand in the Shoes. CMS has revised 42 CFR § 411.354(c)(3)(i) to clarify that while only physicians who "stand in the shoes" of their physician organization are parties to the arrangement for signature, all physicians in the physician organization are parties to the arrangement for all other purposes, including whether the compensation with the hospital considers the volume or value of referrals or other business generated by the physicians.

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
Wilson Hayman
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