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CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

CMS Issues Proposed Stark Law Changes in the Proposed 2016 Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2016 Medicare Physician Fee Schedule (Proposed Rule), which included several significant proposed changes and clarifications by CMS to the Stark Law regulations. These proposed changes include several important clarifications by CMS of its positions on certain questions related to the interpretation of the Stark Law and, if finalized, would relax certain technical requirements and create a couple of new exceptions to the Stark Law.

Although these proposed changes to the Stark Law may not be finalized until the end of 2015, hospitals, physicians and other healthcare providers may rely on the clarifications by CMS as existing and new arrangements are reviewed for compliance purposes.

Proposed Changes and Clarifications

The following are some of the significant clarifications and proposed changes in this Proposed Rule to the Stark Law regulations:

Proposed Changes to Stark Law Exceptions related to “Writing Requirements.” Several of the Stark Law exceptions require that the arrangement be in writing. For example, the Stark Law exceptions for rental of space and equipment require a written agreement, and the exception for personal services arrangement includes the requirement than the arrangement be “set out in writing.” CMS proposed to make certain changes to the written agreement requirement for these exceptions to clarify that signed writings need not be formal agreements or contracts. CMS commented that, depending on the facts and circumstances, a “collection of documents” including contemporaneous documents evidencing the course of conduct between the parties, may suffice.

Clarification of Term Requirement. The existing Stark Law exceptions for space rentals, equipment rentals and personal services arrangements all specify that the arrangement must have a term of at least one year. CMS clarified that the requirement for a one-year term does not mean that the arrangement must include an explicit provision setting forth a term of at least one year. CMS commented that the term requirement can be satisfied as long as there is some contemporaneous documentation establishing that the arrangement in fact lasted for at least one year or that the parties did not terminate the arrangement during the first year and enter into a new arrangement for the same space, equipment or services during that first year.

Expand the Holdover Allowances. CMS proposed to amend the six-month holdover provisions in the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements to permit indefinite holdovers or, in the alternative, to extend permitted holdovers to a definite period that is greater than six months, provided that additional safeguards are met.

Updates Regarding Definitions of “Remuneration,” “Geographic Area” and “Takes Into Account.” CMS also proposed several new or revised definitions intended to provide clarity to several Stark Law exceptions. These proposed changes include:

  • Revising the definition of “remuneration” to make it clear that the provision of items, devices or supplies is not considered “remuneration” if it is used solely for one or more of six delineated purposes: to collect, transport, process or store specimens for the entity providing the items, devices or supplies, or to order or communicate the results of tests or procedures for such entity.
  • CMS also commented, (important for hospitals), that CMS does not consider a physician’s use of an entity’s exam and procedure rooms, nursing and other non-physician personnel and supplies when treating patients to constitute remuneration under the Stark Law, where the physician bills the payor only for professional fees, and the entity bills the payor for its services (i.e., technical component). However, CMS also emphasized that where a physician and an entity (i.e., hospital) submit a global bill to a payor, the Stark Law is implicated because there is now “remuneration” between the parties.
  • CMS proposed adding a new definition of “geographic area” for areas served by federally-qualified health centers (FQHCs) or rural health clinics (RHCs) to ensure that the definition captures the areas where patients of such providers actually reside and to provide certainty to FQHCs and RHCs that their physician recruitment arrangement satisfy the recruitment exception.

New Exception for Certain Timeshares. CMS proposed a new Stark Law exception for timeshare arrangements for the use of office space, staff and equipment where the arrangements are structured as a license (rather than a lease). This proposed exception would require that the licensed premises, equipment, personnel, items, supplies and services be used by the physicians to furnish predominantly evaluation and management services to patients of the licensee.

Expansion of Temporary Noncompliance with Signature Requirements Exception. CMS has proposed to expand the rule regarding temporary noncompliance with signature requirements to allow up to 90 days for the obtaining of all required signatures, regardless of whether a late signature is advertent or inadvertent.

Clarification of the “Stand in the Shoes” Signature Requirement. CMS also proposed to amend the “stand in the shoes” rules to clarify that all physicians in a physician organization are considered parties to a compensation arrangement between the physician organization and a designated health-service entity (i.e., hospital) for all purposes, except satisfying signature requirements. This would mean that referrals from all physicians in a physician organization (i.e., physician practice) must be considered when evaluating whether a physician organization’s compensation arrangement with an entity takes into account the “volume or value” of referrals.

New Exception for Non-Physician Practitioners. CMS proposed a limited exception for hospitals, FQHCs, and RHCs to provide remuneration to physicians to assist with the recruitment and subsequent employment of non-physician practitioners (i.e., nurse practitioners, physician assistant, clinical nurse specialists and certified nurse midwives) for fair-market compensation.

Clarification of Retention Payment Regulations. CMS proposed modifying the regulations regarding retention payments for physicians practicing in underserved areas to mirror the language of the Stark Law Phase III preamble, which reflects CMS’s intent to promulgate a specific methodology for calculating the upper limit of retention payments.

Clarification on Ownership Requirements for Physician-Owned Hospitals. CMS proposed specific guidance on how physician-owned hospitals may meet the physician-ownership disclosure requirement on any public website and in any public advertising by the hospital. CMS also proposed modifying its existing regulations to specify that, for purposes of determining the baseline bona fide investment level and the bona fide investment level thereafter, the ownership of investment interests of both referring and nonreferring physicians (i.e., retired physicians) would be included. Prior CMS guidance required calculation of the maximum percentage of physician investment based on the investment level of referring physicians only.

A copy of the Proposed Medicare Physician Fee Schedule for CY 2016 with the proposed changes to the Stark Law is available on the CMS website at www.cms.gov/

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