|In addition to value-based model changes, CMS finalized several new rules and revised several others which will be helpful in addressing administrative and other historically problematic or confusing Stark compliance issues. We think several of these will be very useful in addressing common Stark compliance challenges and recommend a careful review of the regulatory language and commentary.
Reconciliation of Compensation Errors. CMS added a new rule that allows parties to reconcile compensation errors for up to 90 days after a compensation arrangement ends. 42 C.F.R. §411.353(h).
Limited Remuneration to a Physician. This new exception allows for the provision of limited remuneration to a physician if certain requirements are met, including instances when the amount of, or a formula for, calculating the remuneration is not set in advance of the provision of items or services and the remuneration does not exceed an aggregate of $5,000 per calendar year. 42 C.F.R. §411.357(z). We note this exception could be helpful in addressing compensation to a physician without a signed agreement and CMS specifically stated this exception may be used in conjunction with the special rules that allow 90 days to document and sign an arrangement.
Electronic Signatures. CMS has included a new provision specifically allowing electronic signatures that are valid under federal or state law. 42 C.F.R. §411.354(e)(3).
Patient Choice and Directed Referrals. Under the special rule for directed referrals, an entity is permitted to direct a physician who is a bona fide employee, independent contractor, or party to a managed care contract, to refer to a specific provider, practitioner, or supplier. CMS finalized its proposal to add specified conditions designed to preserve patient choice, comply with insurer’s determinations, and protect the physician’s judgment as to the patient’s best medical interests requirements to §411.354(d)(4) as an element of the exceptions for the following:
- § 411.355(e) for academic medical centers;
- § 411.357(c) for bona fide employment relationships;
- § 411.357(d)(1) for personal service arrangements;
- § 411.357(d)(2) for physician incentive plans;
- § 411.357(h) for group practice arrangements with a hospital, §411.357(l) for fair market value compensation, and
- § 411.357(p) for indirect compensation arrangements.
CMS also added a condition that neither the existence of a compensation arrangement nor the amount of compensation may be contingent on the volume or value of referrals to a particular provider, practitioner, or supplier. However, an arrangement, may require that the physician refer an established percentage or ratio of the physician’s referrals to a particular provider, practitioner, or supplier.
Compensation Documentation and Set in Advance. CMS added the ability to document and sign agreements within 90 days of the beginning of the arrangement to the special rules on compensation arrangements. The arrangement must satisfy all requirements of an applicable exception except for the writing and signature, and the 90-day period does not apply to agreement modifications/amendments.
The Final Stark Rule also added flexibility to the “set in advance” requirements so that compensation may be amended during the term of an agreement so long as the new compensation is not based on the volume or value of referrals. Importantly, the change can occur at any time, including the first year, as long as all of the requirements of an applicable exception are met as of the date of the amendment; the new compensation (or formula) is set prior to the furnishing of the items, services, office space, or equipment; and the new compensation (or formula) is set forth in writing in sufficient detail so that it can be objectively verified. Importantly, the new compensation need not remain in place for a year and there is no limit to the number of times that the compensation may be amended during the term of an agreement.
Revisions to Definitions. CMS finalized revisions to several definitions including: (i) designated health services; (ii) physician; (iii) referral; (iv) remuneration; and (v) transaction. Importantly, CMS confirmed that an isolated transaction does not include a single payment for multiple services over an extended period of time, but does include a payment made to forgo compensation in a bona fide dispute.
Fair Market Value Compensation Exception-Office Space. CMS finalized extending the exception for fair market value compensation arrangements to office space leases. The prohibitions on per unit of service and percentage-based arrangements are incorporated into the fair market value exception for office space leases, but notably a one-year term is not required (unlike many other Stark exceptions).
Eliminated Period of Disallowance. CMS finalized its proposal to delete the rules on the period of disallowance in their entirety due to the confusion surrounding the ways it had been interpreted.
Removing Link to AKS and other Laws. CMS stated generally compliance with the AKS and federal and state laws or regulations governing billing or claims submission are no longer necessary requirements of the exceptions to the physician self-referral law. Accordingly, the Stark Final Rule removes this requirement from all physician self-referral law exceptions other than the fair market value exception at 42 C.F.R. §411.357(l).