MDNews - Central New York

January/February 2015

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In New Stark Law Rules, CMS Provides Early Holiday Gifts to Physicians, or Does It? BY MARC BECKMAN, JD, MEMBER, COHEN COMPAGNI BECKMAN APPLER & KNOLL PLLC IN THE STARK L AW UPDATES INTRODUCED A S PART OF THE 2016 FINAL MEDICARE PHYSICIAN FEE SCHEDULE, PUBLISHED AT 80 FED. REG. 70886, THE CENTERS FOR MEDICARE & MEDICAID SERVICES ¦CMS§ INTRODUCE THE MOST SIGNIFICANT UPDATES AND CL ARIFICATIONS TO THE STARK L AW SINCE 2008. THIS ARTICLE WILL AT TEMPT TO POINT OUT SOME HIGHLIGHTS AND A FE W POTENTIAL LOWLIGHTS OF THE 2016 UPDATES. THE FEDERAL PHYSICIAN self-referral prohibition law, k now n a s the Sta rk L aw, i s a mes s . Si nce it s i nt roduc - tion in 1989 a s pa r t of t he Om nibus Budget R econci l iat ion Act of 1989, the Sta rk Law has been unnecessa rily con f u si n g a nd ex pen sive t o i mple - ment. Appa rently, the Sta rk Law ha s over t a xed even t he federa l gover n- ment 's abi lit y to rev iew a nd address volumes of volunta r y self-disclosure s ubm i s sion s m a de b y hos pit a l s or physicia n practitioners fea rful of the ha rsh pena lties that a rise from even inadver tent violations. The 2016 updates a re intended to ea se some a d m i n i s t rat ive bu rden s a n d r e du c e t h e n e e d for s o m a n y sel f- d i sclosu res. A few h i g h l i g ht s/ lowlights include: HOLDOVERS The Stark Law previously permitted holdovers of of f ice space a nd equip- ment lea ses, a s wel l a s independent cont ra c t or a r ra n gement s for up t o si x mont hs, prov ided such a r ra nge- ments other wise met the exception's element s . T he 2 016 upd at e s a l low holdovers indef initely. Thus, if a one- yea r lea s e t u r n s i nt o a t h re e -yea r lease because the pa r ties forgot to get the new lea se sig ned, but the tena nt ha s been pay ing rent — no v iolation. However, there is a big catch. If, over time, the fa ir ma rket va lue cha nges of the items or ser vices being provided, a nd a new a g reement is not entered i nt o at such t i me, t hat w i l l bou nce the a rra ngement out of the exception (f rom t hat poi nt for wa rd), whet her the pa r ties rea lize it or not. Once the pa r ties rea lize the problem, it is likely, too bad, too late. The lesson remains to avoid holdover a rra ngements. THE WRITING REQUIREMENT C o n s i d e r a o n e -y e a r l e a s e , f o r exa mple. A mong other elements, the exception a l low ing for t he renta l of of f ic e s p a c e b e t w e en a phy s ic i a n a nd a recipient of desig nated hea lth ser vices (DHS) referra ls requires that the "a g reement is set out in w riting, is sig ned by t he pa r ties." Unti l now, conventiona l w isdom dict ated t hat this mea nt a forma l contract must be executed by the pa r ties in the tradi- tiona l sense — the ma nner in which mos t people u nder s t a nd cont ra c t s to work. In the 2016 updates, CMS introduces what ha s been a ffectionately labeled the new "pi le o' documents" defense (not CMS's term). CMS states that it is a clarif ication of existing policy that "a col lection of docu ment s, i nclud- i n g c ont e mp or a n e ou s d o c u m e nt s e v i denc i n g t he c ou r s e of c on duc t between the pa r ties, 'may ' satisf y the w r it i n g requ i rement ." A g reement s w i l l now be refer red to a s a r ra nge - ments. To ma ke matters worse, CMS i nd ic a t e s t h a t whe t her or not t he a rra ngement in question is enforce- able under state law is not dispositive. Rather, CMS indicates that the relevant i nq u i r y i s " w he t her t he av a i l a ble contempora neous docu ment s [t hat is, contemporaneous with the arrange- m e nt] w ou l d p e r m it a r e a s on a ble person to verif y complia nce with the applicable exception at the time that a referra l is made." This is ex tremely problematic despite good intentions by CMS. The Sta rk Law is a str ict liabi lit y statute. That is, it is either satisf ied or it is not. If not, then no referra ls ca n be made a nd CMS ca nnot be billed for those w rong f u l referra ls. Moreover, a fa i lu re to resolve a v iolat ion may subject practitioners to fa lse cla i m liability a nd potentia l qui tam actions with their enormous pena lties. Now, practitioners may have to determine what a reasonable person would think. W ho is going to ma ke that determina- tion? At what point will a practitioner feel comfortable knowing he or she has satisf ied the exception such that he or she need not be concerned about a later 1 4❱❱❱❱❱ L E G A L E A S E 1 4

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