Healthcare lawyers are bracing for changes in the way the CMS bars doctors from referring patients for government-paid services at facilities in which the doctors have a financial stake, either through ownership interest or other compensation agreements.
The changes could require restructuring of some common arrangements. They also create both flexibility and confusion for providers trying to comply with the complex regulations, which attempt to carve out exceptions for the arrangements that yield efficiency and better care rather than enrich doctors at the governments expense.
The CMS last month unveiled the final rule interpreting 1993 legislation known as Stark II, the second round of self-referral prohibitions pushed by Rep. Pete Stark (D-Calif.).
And final doesnt mean final. The agencys 2008 physician-fee schedule floated in July includes proposed Stark revisions, some of which are terrifying the people responsible for structuring arrangements. 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, says 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 says.
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, says 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, says 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.What do you think? Write us with your comments at [email protected]. Please include your name, title and hometown.