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CMS Proposes 2 New Stark Exceptions

drIf adopted, the new exceptions will provide physicians with more options when setting up financial arrangements with hospitals.

On July 15, the Centers for Medicare & Medicaid Services (CMS) published several proposed changes to the Stark regulations as well as two new exceptions. The changes made pursuant to the proposed rule would clarify certain requirements which must be met for many of the Stark Law exceptions.

One notable change would impact several Stark exceptions (e.g., office space and equipment rental, personal service arrangements, physician recruitment arrangements, etc.) which require that an arrangement be either “in writing” or memorialized in a “written agreement.” If adopted, the proposal would make the writing requirement uniform throughout by replacing “written agreement” with “in writing.” CMS’s comments further clarify that a formal contract is not required. Rather, if under the circumstances it is appropriate, the writing requirement may be satisfied with a collection of “contemporaneous documents evidencing the course of conduct between the parties.”

CMS also provides clarification on how to satisfy Stark exception requirements that are conditioned on having an arrangement that lasts at least one year. According to CMS, a “formal contract or other document with an explicit ‘term’ provision is generally not necessary to satisfy the [one-year-term] element.” An arrangement that lasts at least one year satisfies the requirement.

The two new Stark Law exceptions involve payments related to employment of non-physician practitioners and timeshare arrangements for the use of office space, equipment, supplies, etc. The first exception would allow hospitals, Federally Qualified Health Centers and Rural Health Centers to subsidize physicians for the cost to employ physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives up to a certain amount. The goal of the proposed exception is to promote the expansion of access to primary care services.

The other proposed exception would protect timeshare arrangements if certain requirements are met. Such arrangements would need to be between a hospital or physician organization (licensor) and a physician (licensee) for the use of the licensor’s premises, equipment, personnel, items, supplies, or services. Additionally, the licensed premises, equipment, personnel, items, supplies, and services would need to be used predominantly for evaluation and management services to patients of the physician.

If adopted, the new exceptions will provide physicians with more options when setting up financial arrangements with hospitals. However, CMS also clarifies and broadens certain limitations — the percentage of a hospital that may be owned by physicians will now encompass all physician owners, regardless of whether a physician owner refers patients to the hospital.

The CMS publication can be read here.

If you have any questions about the CMS guidance and proposed changes, our attorneys can help. Please contact Danielle Hildebrand at dhildebrand@jeylaw.com at 678-325-3872

 

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