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February 14, 2018

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Final Rule Expands Access to Services Under Stark

November 30, 2015:

On November 16, the Centers for Medicare and Medicaid Services (CMS) posted a final rule that, among other provisions, expands access to health care services by establishing two new exceptions to the physician self-referral law, also known as the Stark law. It also updates and clarifies certain regulations related to the law. The rule with comment period, which appeared in the Federal Register, includes revisions to payment policies under the physician fee schedule as well as other revisions under Part B for calendar year 2016.

CMS issued these clarifications and expansions in response to health care delivery and payment systems reform, as well as to reduce the burden on practitioners and to make compliance with the regulations easier.

The two new exceptions are:

  • Hospitals, federally qualified health centers, and rural health clinics may pay physicians to compensate nonphysician practitioners under certain conditions. CMS notes that the use of nonphysician practitioners can help alleviate the problems posed by the nationwide shortage of primary care providers.
  • Physicians and hospitals may now make timeshare arrangements for the use of office space, equipment, personnel, items, supplies, and other services. There are very specific criteria that must be adhered to in order to satisfy this arrangement.This can be particularly helpful in rural or underserved areas that do not have a great enough demand to warrant the full-time services of certain specialists.

CMS has updated the regulations to give physician-owned hospitals a broader array of options for complying with the requirement that they state on their websites and in advertising that they are owned by physicians.

Beginning January 2017, the agency also will include all physicians with direct or indirect investment interests, not just those referring to the hospital, in its calculations of a hospital’s percentage of physician ownership. The old policy did not include nonreferring physicians with ownership interests when calculating the bona fide investment levels.

Among the final rule clarifications are the following:

  • All physicians in a physician organization, not just those “standing in the shoes” of the organization, are parties to the compensation arrangements with a DHS entity.
  • A collection of documents, rather than one formal contract, can be used to qualify for many of the exceptions to the Stark law’s referral and billing prohibitions.
  • Expired leasing and personal services arrangements may continue on the same terms if they otherwise comply with the regulations.
  • Organizations have a 90-day grace period to obtain signatures whether or not the lack of signatures was inadvertent.
  • DHS entities can give physicians items used only for the purposes the law identifies.
  • There is no financial relationship between a physician and hospital when the physician provides services to hospital inpatients and the hospital and physician bill independently for their services.


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