CMS Proposes New Exceptions to the Stark Law

The Centers for Medicare and Medicaid Services (“CMS”) has proposed revisions to the regulations governing enforcement of the physician self-referral law, commonly known as the Stark Law.   The changes are part of a 282-page proposed rulemaking that establishes the 2016 Medicare Physician Fee Schedule.  According to CMS, the proposed changes to the Stark regulations are intended to accommodate delivery and payment system reform, to reduce regulatory burdens, and to facilitate compliance.  Many aspects of the proposal appear to be in response to physician self-disclosures of highly technical violations that have been submitted under the Medicare self-referral disclosure protocol (“SRDP”) adopted as part of the Patient Protection and Affordable Care, also known as Obamacare.

The Stark law  generally prohibits a physician from making referrals for certain designated health services (“DHS”) that are payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership or compensation), unless an exception applies.  Among other things, the proposal would add two new exceptions, primarily targeted at rural and underserved areas.  As with all things Stark-related, the proposed exceptions are highly technical.

The first new exception to Stark would permit a hospital, federal qualified health center, or rural health center to subsidize a physician’s payment of a nonphysician practitioner’s salary.  The proposed exception would apply only where the nonphysician practitioner is a bona fide employee of the physician or the physician’s practice and the purpose of the employment is to provide primary care services to the physician’s patients.  To qualify under this exception, a non-physician practitioner would have to be a physician assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife.  The subsidy would also be subject to a financial cap and two year time limitation.

The second new exception would expressly permit “timeshare arrangements,” and is intended to benefit communities where there is a need for certain specialty services but that need is not great enough to support a full-time physician specialist.   Under timeshare arrangements, a hospital or local physician practice may ask a specialist from a neighboring community to provide the services in space owned by the hospital or practice on a limited or as-needed basis. In such circumstances, the visiting physician may not have exclusive use of the premises and there may not be a one-year arrangement as required by the current exception for leased office space.

The proposed timeshare exception would provide relief from Stark where the visiting physician is a temporary licensee of the space rather than a lessor.  However, the proposed exception includes numerous technical requirements, including limitations on certain types of equipment that may be used in connection with the license.  In addition, the proposed exception would not protect a license of office space that is primarily used to furnish DHS to patients.

The proposed rule impacting the Stark Law can be found at the following link: http://www.gpo.gov/fdsys/pkg/FR-2015-07-15/pdf/2015-16875.pdf

© 2015 Houghton Vandenack Williams
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