|
|
|
May 2004 - STARK II FINAL REGULATIONS |
|
I. Introduction On March 26, 2004, the Centers for Medicare & Medicaid Services (CMS) published the final Stark II physician self-referral regulations (69 Fed. Reg. 16053). The Stark II regulations become effective on July 26, 2004. CMS divided the Stark II final rule making process into two phases. First issued in 2001, Phase I addressed the general prohibition on self-referrals and the general exceptions applicable to both ownership or investment interests and compensation arrangements. The recently released Phase II regulations incorporate public comments received by CMS during the Phase I process and also make some revisions and additions to the existing Stark II regulations. II. The Stark Law Effective January 1, 1992, the original Stark self-referral prohibition, referred to as Stark I, was enacted with the purpose of prohibiting physicians from referring patients for laboratory services to entities in which they had a financial interest. In 1993, Stark II was drafted to expand the Stark I prohibitions to cover additional health care services. Stark II went into effect on January 1, 1995. Stark II bans physicians from referring Medicare and Medicaid patients for certain “designated health services” (DHS) to entities with which the physician or the physician's family members have a financial relationship. DHS includes the following categories of services and supplies:
III. Physician Relationships Many types of physician relationships may trigger a Stark II “analysis”. Examples of Stark II “trigger” relationships include physician employment contracts, physician independent contractor agreements, medical director agreements, lease agreements, hospital-physician recruitment agreements and group practice arrangements. Unless the relationship falls within an exception, no referrals are permitted. Exceptions to the Stark II ban fall within the following three categories, based on the type of financial relationship the physician has with the entity to which he or she refers patients for DHS:
IV. Highlights of the Stark II Final Regulations 1. New Exceptions The Stark II Final Regulations create new exceptions to the self-referral ban including Medicare managed care plans, charitable contributions by physicians and most notably, professional courtesy arrangements. The professional courtesy exceptions allow health care providers to extend professional courtesy to a physician and members of the physician’s immediate family or office staff provided that certain conditions are satisfied. 2. Clarifications As outlined below, the Stark II Final Regulations clarify existing exceptions including physician compensation, the in-office ancillary exception, physician recruitment, personal service arrangements and space and equipment rentals. a) Physician Compensation. Phase II provides clarification as to physician compensation arrangements as members of a group practice, employees, independent contractors, at academic medical centers and as part of risk-sharing arrangements with managed care organizations. Provided certain conditions are satisfied, physician compensation for all of these physicians can be based upon any of the following:
c) Physician Recruitment. The new regulations expand this exception to apply to federally qualified health care centers (FQHCs). Additionally, the exception focuses on the relocation of the recruited physician’s medical practice, rather than on the physician’s residence as previously required. The exception also allows hospital to pay remuneration to induce a physician to relocate to the hospital’s geographic area and become a medical staff member. d) Personal Service Arrangements. The regulations create a new approach to the determination of “fair market value” for hourly payments made to physicians for their personal services. An hourly payment for a physician’s personally performed services will be deemed to be fair market value if the rate is either:
In addition, the regulations emphasize that parties entering into personal service arrangements must document all separate arrangements between the parties either by incorporation by reference or by maintaining a master list of contracts. e) Space and Equipment Rentals. The regulations modify the third prong of the existing office space and equipment lease exception. To meet this exception, the new regulations require the following conditions to be met:
3. Protections for Temporary Noncompliance The Stark II Regulations create a protection for providers against inadvertent noncompliance with Stark, provided the following conditions are met:
4. Reporting Requirements The final regulations address, for the first time, the reporting requirements of Stark II. If requested by the Office of the Inspector General or CMS, all entities (except those furnishing 20 or fewer Part A or Part B services, or those furnishing services outside of the United States) are required to submit certain information to the Secretary including the name and UPIN of each physician who has a “reportable financial relationship” with the entity, the name and UPIN of each physician who has an immediate family member who has a “reportable financial relationship” with the entity; and the covered services furnished by the entity. V. Stark Law Violations Violations of the Stark law have substantial financial consequences including the denial of payment for DHS claims, civil monetary penalties, exclusion from participation in Medicare and Medicaid programs and possible liability under the Federal False Claims Act. VI. Recommendations As a health care provider, we recommend that you carefully review the Stark II Final Regulations and consider these requirements in connection with all your physician arrangements. Popovits & Robinson, P.C. is available to assist you with the interpretation and implementation of the Stark laws and regulations and to review any relationships and agreements you have with physicians and referral entities. |