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Stark Law changes are looming
An October event by the ISMA, Krieg DeVault and Katz, Sapper & Miller offered education on key
changes in the Stark Law, known as the physician self-referral law.
The Stark Law states that if a physician (or immediate family member) has a financial relationship with an entity, the physician may not refer to the entity for “designated health services” (DHS) payable by Medicare. Also, the entity may not present a claim or bill for payment unless an exception applies.
Penalties for violation of Stark can include $15,000 and exclusion from Medicare and Medicaid. The Centers for Medicare & Medicaid Services (CMS) has been changing the Stark Law, as covered in the recent program. Here’s a brief review.
Stark III Final Rules
CMS published Phase III of Stark Law regulations Sept. 5, 2007. The rules are effective Dec. 4.
Indirect compensation arrangements: Physicians will now “stand in the shoes” of their group practice to determine direct and indirect compensation arrangements. This closes a “loophole” so compensation arrangements between physician organizations and DHS entities will be treated as arrangements between the entity furnishing DHS and the group’s referring physician directly.
Fair market value safe harbor: The safe harbor that strictly required one of two specific methodologies for calculating fair market value of physician services has been eliminated. Parties may now choose their own valuation methodologies.
Physician recruitment: This now includes rural health clinics. A recruited physician must relocate from “outside” the hospital’s “geographic area” (further clarified), plus either a minimum number of miles or minimum percentage of new patient revenue. When a hospital makes recruitment payments through a physician group practice, a signed, written agreement is required and must be enforced. In certain circumstances, a practice may allocate costs on a per capita basis rather than as an actual additional incremental cost. A group may impose on a recruited physician reasonable “practice restrictions,” such as restrictive covenants.
Group practice issues: Independent contractors must provide services under a direct contractual arrangement with the group practice; leased employees are prohibited. Includes new rules related to profit sharing and productivity bonuses.
In-office ancillary services exception: The exception is clarified, discussing telemedicine, shared space and per-use/per-click fees.
Office space and equipment rental: A clarification indicates lessee must exclusively control the facility and staffing when a patient is provided a DHS. Per-use fee arrangements are unlikely to comply.
Non-monetary compensation/medical staff incidental benefits: Repayment of any exceeded non-monetary compensation caps to avoid violation is limited. Hospitals may host an annual medical staff appreciation event. Pagers must be dedicated for hospital communication.
Other changes address charitable donations, compliance training, retention payments and intra-family referrals. Check future ISMA Reports for a discussion of additional Stark proposed rules.
Find the Stark changes; scroll to CMS.
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