New Stark Rules Bring Major Changes
On August 19, 2008, the Centers for Medicare and Medicaid
Services ("CMS") published the latest changes to the
Stark Law. As you know, the Stark Law regulates the types of
arrangements into which physicians may enter. Violations of the
Stark Law bring hefty civil fines and penalties.
This latest set of changes to the regulations will affect
many physician arrangements, requiring many to be restructured
or terminated before the effective date of the applicable
provisions on October 1, 2008 or October 1, 2009. It cannot be
overly stressed how important compliance is with these new
regulations. Our concern is that these regulations will have
broader application than advertised and that unintended
arrangements will be affected, particularly with respect to the
first three changes discussed below.
"Under Arrangements" Under Siege
The final rule deals with a perception by CMS that
"under arrangements" structures, through which a
hospital provides certain services to its patients by
contracting with another entity to furnish the service, are
being used abusively to reward physicians for referring
patients to the hospital.
As contemplated by CMS for Stark purposes, an "under
arrangement" structure occurs when a hospital essentially
outsources its technical needs, such as MRI, to a group of
physicians who refer to the hospital. Typically, the group is
paid a fee for the procedures done and the hospital is able to
bill Medicare directly for such procedures. These arrangements
currently permit physicians to be paid by the hospital for
procedures performed, not just on the owner physician's own
patients, but on other providers' patients, as well. The
"abuse" that is perceived is that, according to CMS,
there really is no need for these types of arrangements except
to tie physicians to the hospital and obtain their loyalty and
referrals.
The solution promulgated by CMS is to redefine the term
"entity" to include under one definition both the
entity that performs the service and the entity that
bills for the service, treating them as an amalgamated unit for
purposes of wrapping in the DHS into one entity. That being
done, physician owners of the group that furnishes the service
may not refer to the "under arrangements" service,
and the combined "entity" is prohibited, absent an
exception, from billing CMS for the service.
Because it will be difficult, if not impossible, for the
"under arrangements" relationship to fit within a
Stark exception with...
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