Stark Undergoes Another Change

by John W. Kaveney and Marissa Koblitz-Kingman

The Stark Act, 42 U.S.C. § 1395nn, prohibits physicians from engaging in a “self-referral” when referring patients elsewhere for certain services. Generally, if a physician (or an immediate family member of such physician) has a financial relationship with an entity, then the physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under Medicare. For example, an orthopedist may not refer a patient for imaging to a facility in which the physician or a member of her immediate family has an interest. The entity accepting the prohibited referral may not present or cause to be presented a claim to Medicare or bill to any individual, third party payor, or other entity. If the referral entity collects payments billed in violation of this prohibition, it must refund those amounts on a timely basis, typically within 60 days of identification.

Exceptions to Stark do exist, and on November 16, 2015, the Department of Health and Human Services, Centers for Medicare and Medicaid Services, (CMS) issued a final rule revising and adding further exceptions to offer providers additional flexibility in their efforts to comply with Stark. Some of the major changes include:

1.) CMS created a new exception for assistance to compensate a non-physician practitioner. The exception permits remuneration from a hospital, federally qualified health center, or rural health clinic to a physician to recruit a non-physician practitioner (physician assistants; nurse practitioners; clinical nurse specialists; certified nurse midwives, clinical social workers and clinical psychologists) where substantially all of the services furnished by the non-physician practitioner to the patients of the physician’s patients are for primary care services or mental health care services;

2.) CMS created a new timeshare arrangement exception to cover the use of some premises, equipment, personnel, items, supplies, or services. Compensation for such arrangements must be carefully structured. Percentage compensation and per-unit services fees are prohibited; hourly or half day rates are acceptable. The arrangement cannot be conditioned upon referrals and cannot convey a possessory interest in the office space;

3.) CMS revised the temporary noncompliance with signature requirement. Previously, parties who inadvertently failed to comply with the signature requirement had 90 days to comply with others having 30 days. The revision provides a flat 90 day period to comply with this requirement, regardless of whether the failure to obtain a signature was inadvertent or not;

4.) CMS created a new, indefinite holdover provision. An expired arrangement under the office space and equipment rental exceptions and the personal service arrangements exception can now be “held over” indefinitely rather than for only six months, provided the arrangement: (a) satisfies all of the requirements [list] at the time of expiration; (b) continues on the same terms and conditions; and (c) continues to satisfy all of the enumerated requirements during the holdover;

5.) CMS clarified the writing requirement, requiring only an arrangement need be set out in writing. Although CMS recommends having one signed written contract that satisfies every requirement of the exception, this requirement may also be satisfied through a collection of documents that relate to one another and to the exact arrangement.

These are only some of the revisions and only the highlights of a very technical set of regulations. It is critical that physicians, hospitals, health care facilities and business associates ensure that they are aware and up-to-date with all of the major changes to Stark. Complying with Stark in practice can be particularly complex and thus must be closely monitored.