Stark Law Revisions Go into Effect

New anti-self-referral rules in the Stark law went into effect Oct. 1. Being unprepared or remaining ignorant of these revisions may cause some physician-hospital arrangements to fall out of compliance, according to AMNews (Sorrel, 9/28).

“Stark is a strict-liability statute. So even if you have the most innocent of intentions, you are still subject to the grossest of penalties, as if you meant to violate the law,” says Boston attorney Lawrence W. Vernaglia, co-chair of Foley & Lardner LLP’s national health care payments, fraud and abuse, and compliance work group (AMNews, Sorrel, 9/28).

The Stark law prohibits physicians from referring Medicare patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician’s immediate family has a financial relationship—unless an exception applies.

In the 2009 Inpatient Prospective Payment System (IPPS) final rule, the Centers for Medicare & Medicaid Services (CMS) changed the definition of the term “entity” to include the person or entity performing the health service, not just the person or entity billing for such service.

Other revisions restrict:

  • So-called “under arrangements,” in which hospitals contract with physician-owned entities to provide a wide range of ancillary services, such as clinical labs or imaging services;
  • Per-use or “per-click” payments for equipment and space leases; and
  • Compensation deals based on a percentage of revenue generated by space or equipment use.

Prepare for Change

Legal experts, according to AMNews, recommend physicians take the following steps to ensure compliance:

  • Consult legal counsel to find out if current hospital joint ventures or space and equipment leases will continue to be compliant.
  • Review contracts for clauses that allow parties to amend or dissolve agreements as a result of changes in the law. Include such clauses in future contracts.
  • Consider restructuring existing deals to limit the scope of services provided or to take advantage of other applicable safe harbors. In some cases, doctors may be forced to unwind the arrangements.
  • Make sure any changes to compensation reflect fair market value.
  • Review any state self-referral laws.
  • Make any changes to agreements in writing.

For more information about the Stark law, visit the CMS Physician Self Referral Web site.

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One Response to “Stark Law Revisions Go into Effect”

  1. Juliette Morell says:

    The Stark law prohibits physicians from referring Medicare patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician’s immediate family has a financial relationship—unless an exception applies.

    How does this effect physicians with an interest or ownership of an ambulatory surgery center??

    Thanks.

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