CMS is proposing significant changes to the Stark II, Phase III rules that were promulgated last September. The changes are contained in the 2009 Inpatient Prospective Payment System Proposed Rule that was published in the April 30, 2008 Federal Register. Here are some highlights.
CMS is proposing to narrow the application of the new "stand-In-the-shoes" rule. Under one proposal, the stand-in-the-shoes rule would not apply if the only financial arrangement between the physician and the physician organization is a compensation arrangement that meets the employment exception, personal services exception, or fair market value exception. A physician will continue to stand in the shoes of his/her physician organization if the physician is an owner and receives a share of the profits, receives any compensation protected under the in-office ancillary services exception or has a space or equipment rental arrangement with the group. This means the stand-in-the-shoes concept would continue to apply to agreements with a physician group, unless the physician-owners receive only employment compensation from the group.
CMS is seeking comments on whether it should develop a set of exceptions to the stand-in-the-shoes rules for arrangement that do not pose a risk of program or patient abuse. Examples include mission support payments made by an academic medical center and payments within an integrated healthcare system. These arrangements are currently exempt from the stand-in-the-shoes rule.
CMS is also soliciting comments on an entity stand-in-the-shoes rule, which it originally outlined in the 2008 Medicare Physician Fee Schedule Proposed Rule. Under the current proposal, a DHS entity would stand in the shoes of any wholly-owned organization, not just a wholly-owned DHS entity. CMS is considering whether to apply this rule to partially-owned organizations and organizations which are controlled, but not owned, by a DHS entity (e.g., non-for-profit membership corporations).
Because of the overlaps that could occur when applying both the entity stand-in-the-shoes rule and the physician stand-in-the-shoe rule, CMS is developing conventions for determining which order to apply the rule. This will make applying the Stark regulations to a particular situation almost as much fun as settling a conflicts of law issue.
If an arrangement with a particular physician does not satisfy a Stark exception, how long is that physician prohibited from making referrals to the DHS entity? CMS is proposing to amend the regulations to establish three finite periods of disallowance: (i) for relationships that are non-compliant for reasons unrelated to compensation, the date the relationship becomes compliant; (ii) for relationships that are non-compliant due to payment for excess compensation, the date on which the excess compensation, plus applicable interest, is returned; and (iii) for relationships that are non-compliant due to payment of insufficient compensation, the date on which the additional required compensation, plus applicable interest, is paid. Note: the DHS entity can't wait until the period of disallowance has ended to submit claims for prohibited referrals.
Finally, CMS is also soliciting comments on its (currently suspended) disclosure of financial relationship reporting initiative, gainsharing arrangements, and physician-owned implant and other medical device companies.
Comments on these proposals are due June 13, 2008.