The CMS posted hundreds of pages to its Web site Aug. 27 that include the text of the final rule, as well as comments and responses on the draft of rules in effect since 2004. Lawyers poring over the text quickly noted the CMS has recast the way the self-referral ban views relationships long considered indirect and therefore granted fairly wide berth.
In the new rule, if a physicians group has a financial relationship with a hospital or other facility providing health services, the physician is considered to stand in the shoes of the group. That means the arrangement will have to satisfy one of the other exceptions, which are generally tighter and more complicated.
Theres no question that CMS approach here is just to eliminate the application of that exception, said Thomas Crane, who co-leads the fraud and abuse, and compliance practice in the Boston and Washington offices of Mintz Levin Cohn Ferris Glovsky and Popeo. Many attorneys felt it even bordered on being a loophole.
A grandfather clause allows contracts that meet the exception to run their course before the deal has to be restructured.
If youre in the middle of negotiating a contract or in the eleventh hour, you have a lot more problems, Crane said.
The new rule, set to go into effect Dec. 4, also scrubs a controversial but clear way to establish fair-market value for a physicians services, which has involved a choice of averaging rates in the relevant market or crunching data from national surveys.
That on the one hand avoids what some physicians and others thought was an unofficial ceiling, said Gerald Griffith, a healthcare lawyer who is a partner in the Chicago office of Jones Day. On the other hand, it takes away one of the bright-line tests, and with many of the other, quote flexibility changes, opens it up more to interpretation, and that can be a good thing or a bad thing.
On that score, the regulations attempt to add flexibility and clarity to an exception allowing hospitals to use financial incentives to get doctors to relocate and join their medical staffs, which may be helpful in theory but extremely difficult to use.
It is so horribly complicated, said Robert Homchick, a partner in the Seattle office of Davis Wright Tremaine. Out in the field, to expect a hospital assistant administrator or to expect a physician whos gone to medical school and not law school to be able to understand and apply that exception I think is really being disingenuous.