CMS Issues Important Stark Clarifications

Posted on Health Care Law News by author

On October 30, 2015, the Centers for Medicare and Medicaid Services (CMS) issued important changes to the Stark regulations. CMS also added two new Stark exceptions – one for hospital incentive payments for recruitment of non-physician practitioners, and the other changed certain rules for physician owned hospitals, including how the percentage of physician ownership will be calculated.

The “clarifications” contained in the rule change, however, are likely to have a broader impact. Some of these changes are embodiments of existing CMS policy and rule interpretation, while others are designed to reduce the number of “technical” Stark violations that CMS concluded do not create a significant threat to the program.

Below is a summary of the clarifications:

  • The “writing” requirement contained in many Stark exceptions can be satisfied by a collection of documents, rather than just a single formal contract.
  • The term of a lease or personal services arrangement need not be set out in the written documents as long as the arrangement continues for at least one year.
  • Expired leases and personal services arrangements may continue indefinitely on the same terms if otherwise Stark-compliant. However, an arrangement must continue to be fair market value during the life of the continuing term. Best practice would dictate revisiting the fair market value determination ever several years.
  • The grave period for obtaining missing signatures on a written document is extended to 90 days regardless of whether the failure to obtain the signatures was inadvertent.
  • The definition of “remuneration” does not include a designated health services (DHS) entity’s provision of items, devices, or supplies that are used solely to collect, transport, process, or store specimens for the DHS entity, or that are used to order or communicate the results of tests or procedures for the DHS entity.
  • A professional/technical/facility split billing arrangement does not create a Stark financial relationship. When both the hospital and the physician bill independently for their services, there is no remuneration between the parties.
  • Compensation to a physician organization cannot take into account referrals of any physician in the physician organization, including referrals of employees and independent contractors who do not stand in the shoes of the organization. However, employed physicians and independent contractor physicians who do not stand in the shoes of their physician organization do not need to sign the writing between the DHS entity and the physician organization.

The Florida Health Care law firm of Nicholson & Eastin, LLP, represents and advises Medicare providers and suppliers on regulatory compliance with Stark, Anti-kickback and a variety of other regulatory requirements. If you have a Stark or Anti-Kickback Statute or other compliance matter, please do not hesitate to contact us.