Two New Exceptions to Stark Law and Modifications to Other Exceptions :: Stark Law Modification Attorney Vezina Law Group

Two New Exceptions to Stark Law and Modifications to Other Exceptions

December 2, 2015

By: Louis C. Szura, Esq.*

On November 16, 2015, CMS’ recent modifications to the Stark Law were published as a final rule in the Federal Register, 80 FR 70885 (the “Final Rule”). The Final Rule adds two new exceptions to the Stark Law’s general prohibition on physician referrals for "designated health services" to entities with which the physician or an immediate family member has a financial relationship, and it also clarifies terms affecting other existing exception requirements. The majority of these changes will go into effect on January 1, 2016. While the Stark Law regulations and exceptions are somewhat complex, the following is a brief summary of some of the substantive changes in the current Final Rule.

Two New Exceptions:

Non-Physician (NPP) Recruitment Exception. The Final Rule creates a new exception which permits hospitals, federally qualified health care centers and rural health care clinics to pay physicians in order to recruit and employ non-physicians practitioners (NPPs) where, in addition to other requirements, “substantially all” of the NPP’s services are primary care services or mental health services and the NPP has not practiced in the geographic area within a year prior to the arrangement. A NPP may include clinical social workers, clinical psychologists, physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse midwives. The Final Rule also imposes limits on the total amount and duration of the payments made to the NPP.
Timeshare Exception (E&M Services). In another new exception, as long as certain criteria are met, the Final Rule permits timeshare arrangements for the use of a premise, equipment, personnel, items, supplies, or services under certain circumstances when the hospital or physician organization is the “licensor.” The timeshare arrangement must be predominantly for the provision of evaluation and management (E&M) services.

Other Significant Changes to Exceptions:

Writing requirement clarified. Many exceptions to the Stark Law require a financial relationship to be “in writing” in order to qualify for the exception. However, there has been some uncertainty as to whether that requirement meant the parties had to have everything written in a single contract. With the Final Rule, CMS has clarified that the “in writing” requirement may be met with various contemporaneous documents that evidence the relationship and the rule clarifies that the exceptions require a written “arrangement” and not necessarily a written agreement or contract. This should help ease compliance concerns in satisfying the exceptions.
Term requirement clarified. Likewise, many exceptions require the financial relationship to last at least one year. CMS clarifies that the arrangement does not have to have a stated term of one year, but that as long as the arrangement establishes a relationship that will last for at least one year and the relationship actually lasts one year, the requirement will be met. This seems to have the same purpose as allowing multiple writings to constitute an arrangement – a desire to alleviate compliance concerns for arrangements that meet the substance of the exceptions.
Indefinite Holdovers. Traditionally, CMS has permitted financial relationships that continue or “holdover” for up to six months after they expire, provided the original arrangement satisfied the other requirements and continues on the same terms. In the Final Rule, CMS clarifies that the holdover can last beyond six months and for an indefinite period of time. However, note that since one of the common requirements is that the arrangement be at fair market value, the longer the holdover, the higher the danger it fails to meet the exception.
Signature Requirement – 90 Days to Rectify. Previously the regulations allowed either 30 or 90 days for a party to rectify the signature requirement based on whether or not the failure to obtain the signature was inadvertent. The Final Rule creates a 90-day period to obtain the signature in all cases. This should eliminate fretting over the intent behind the failure to obtain a signature affecting how quickly it needs to be remedied.
Remuneration clarification - Carve Outs and Split Billing. The definition of “remuneration” does not include items, devices, or supplies that are used solely to collect, transport, process or store specimens for the entity providing the items, devices, or supplies, or to communicate the results of the test or procedures for that providing entity. Despite it appearing that only one of the purposes is allowed, CMS clarified in the Final Rule that as long as the sole purpose is “one or more” of these exempt purposes, and nothing else, then it is not remuneration. CMS also clarifies that while split billing is not remuneration (e.g., the entity bills the technical fee and the provider bills her professional fees), global billing of a non-Medicare payor by an entity and then payment to the physician for professional services can be considered remuneration.

As mentioned before, the Stark Law requirements and exceptions can be complex and this is just a summary of some of the more relevant changes in the Final Rule. The Final Rule makes other changes and anyone wishing to know more about a particular change should consult the Final Rule itself. Moreover, the Final Rule does have a comment period on these changes until December 29, 2015.

(*Louis Szura is an attorney with Vezina Law Group in Birmingham, Michigan. This article is intended for general informational and educational purposes only and should not be construed as legal advice.)(Copyright 2015).