On Oct. 30, 2015, the Centers for Medicare & Medicaid Services (CMS) added two new exceptions to the Federal physician self-referral law (the “Stark Law”), adopting most of its proposed July 2015 rules following the comment period. The two new exceptions address recruitment support for physicians to hire non-physician practitioners (NPPs) to provide primary or mental health care and physician timeshare lease arrangements with hospitals. The full text of the rule was published in the Federal Register on Nov. 16, 2015.
Recruiting Assistance for Non-physician Practitioners
Under this exception to the Stark Law, hospitals, Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs) may provide payments to physicians to assist in recruiting and employing primary care Non-Physician Practitioners (NPPs). According to CMS, Federal expansion of health care coverage increased the need for more primary and mental health providers, particularly in rural and underserved areas, necessitating an exception to incentivize recruitment efforts.
CMS defines covered NPPs as clinical social workers, clinical psychologists, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives. Recognizing the shortage of mental health professionals in many areas, CMS included clinical social workers and clinical psychologists. However, it chose not to extend the exception to non-primary care NPPs such as physical therapists, CRNAs, and registered dieticians or nutritional professionals.
The assistance exception includes specific requirements to limit possible abusive arrangements, specifically:
As with other Stark Law exceptions, the assistance exception still requires:
The assistance exception only applies to payments to the employing physician and not directly to the non-physician practitioner whose direct compensation is not subject to Stark’s restrictions (although it may be subject to other Federal laws such as the anti-kickback statute). It does not preclude reimbursing an NPP for relocation expenses, so long as that amount is included in the aggregate calculation of compensation. It cannot include the cost of purchasing shares in the practice. Importantly, the assistance exception "is not intended to provide a physician with the means to increase profit from the services of an NPP in his or her practice at the expense of a hospital, FQHC or RHC." CMS has stated it will continue to monitor the exception for potential abuse.
CMS’s final rule also adds the timeshare exception to permit the common practice of timeshare arrangements between hospitals or physicians for the use of office space, equipment, personnel, items, supplies, and other services that are used to furnish evaluation and management services. It applies to timeshare arrangements between a physician who may “stand in the shoes” of another group physician and a hospital, or a physician and another physician group (of which the physician is not an employee, contractor, or owner), notwithstanding which party is providing or using the space. While this exception could be useful in a variety of circumstances such as nursing homes, imaging centers and labs, its availability is limited to hospitals or other physician groups.
CMS defines timeshare arrangements as part-time arrangements not protected by the established space and equipment lease exceptions, particularly those that do not transfer exclusive dominion and control. Unlike leases, these arrangements typically provide a physician with the non-exclusive use of office space during scheduled time periods. The space may be fully furnished with basic medical office equipment, furniture, supplies and support personnel so that the physician is able to use the space, on a turn-key basis, to see patients during scheduled times. This exception expressly excludes imaging equipment, radiation therapy equipment, and clinical or pathology laboratory equipment.
Under the Final Rule, remuneration for the use of premises, equipment, personnel, items, supplies, or services is permitted if the following conditions are met:
CMS developed both exceptions based on prior comments and data collected from its administration of the Stark Physician Self-Referral Disclosure Protocol (“SRDP”). In both cases, CMS did not restrict use of the exception to rural areas.
Should you or your organization have any questions regarding the new Stark Law exceptions or any other Stark Law issue, please contact Peter Mellette (Peter@mellettepc.com), Harrison Gibbs (Harrison@mellettepc.com), Nathan Mortier (Nathan@mellettepc.com), or Elizabeth Dahl (Elizabeth@mellettepc.com), or call Mellette PC at (757) 259-9200.
This Client Advisory is for general educational purposes only. It is not intended to provide legal advice specific to any situation you may have. Individuals desiring legal advice should consult legal counsel for up to date and fact specific advice.
 80 F.R. 70886, November 16, 2015.
 42 C.F.R. 411.357(x).
 42 C.F.R. 411.357(y).