CMS Proposes Significant Changes to the Stark Regulations

The July 11, 2007 Federal Register includes Proposed Revisions to the Physician Fee Schedule which also includes a number of proposed changes to the Federal Physician Self-Referral Law (commonly referred to as the Stark Law) . CMS is soliciting comments on the Proposed Rule, which must be submitted no later than 5:00pm on August 31.

Included in the Proposed Rule are changes that, if implemented, could have significant effects on the health care industry as a whole. A few examples of the significant proposed changes include:

  • revising the space an dequipment rental exceptions to prohibit "per click" payments to a physician when the physician leases space or equipment to a hospital and the hospital utilizes the space or equipment to furnish services to patients referred by the physician lessor;
  • limiting the ability to have percentage based compensation arrangements to only those that directly result from personally performed physician services;
  • revising the definition of an "entity" under the Stark Law to cover not only the person or entity that provides the designated health services but also any person that "causes a claim to be presented" which could significantly limit a number of arrangements between hospitals and physicians for services such as imaging, cardiac catheterization, radiation oncology, etc.; and
  • modifying CMS's interpretation of indirect financial relationships by collapsing certain financial relationships so that physicians are deemed as "standing in the shoes" of their physician group.

Epstein Becker & Green is in the process of developing one of the firm's Special Alertsthat not only reports on the proposed changes but also provides analysis and context on the impact these changes may have on health care providers and the types of financial relationships into which they can (and cannot) enter. We will be circulating this Special Alert in the near future.