Health care providers should be aware of a proposed rule recently issued by the Centers for Medicare & Medicaid Services (CMS) that expands the regulations governing physician self-referrals, (the “Stark Law”).

The Stark Law prohibits a physician from making referrals for certain services to an entity with which he or she (or an immediate family member) has a financial relationship, unless an exception applies; and it prohibits the entity to which a prohibited referral is made from filing claims for those services.

The proposed rule establishes new exceptions and clarifies certain terminology and requirements regarding physician self-referrals. For example, the proposed rule establishes a new exception to permit payment by hospitals, federally qualified health centers and rural health clinics to physicians to assist them in employing non-physician practitioners. This exception arose in light of the increased demand for and shortage of primary care physician services, as well as new health care delivery models that increase the role of non-physician practitioners, which include physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives.

The proposed rule clarifies that a single formal contract is not required in order to satisfy certain writing requirements under the Stark Law. Instead, depending on the facts and circumstances of the arrangement, a collection of documents evidencing the course of conduct between the parties may satisfy the requirement.

Also, CMS recognized that in some regions, particularly including rural and underserved areas, there may be a need for certain specialty services, but that need is not great enough to support the full-time services of a physician specialist. To ensure adequate access to specialty care, CMS proposes another new exception that allows certain timeshare arrangements in which a hospital or physician practice licenses (as opposed to leasing) space, equipment, personnel or supplies owned by the hospital or practice to a specialist on an as-needed basis.

Other proposed changes to the Stark Law regulations include, but are not limited to:

  • Clarification that the term of a lease or personal services arrangement need not be in writing if the arrangement lasts at least 1 year and is otherwise compliant;
  • Allowing expired leasing and personal services arrangements to continue on the same terms if otherwise compliant; and
  • Clarification that a financial relationship does not necessarily exist when a physician provides services to patients in the hospital if both the hospital and the physician bill independently for their services.

Comments on the proposed rule are due by September 8, 2015, and CMS is interested in hearing about the impact of the physician self-referral law on health care delivery and payment reform, as well as perceived barriers to achieving clinical and financial integration posed by the law.

For more information on this topic or other health care-related issues, contact Attorney Jillian N. Jagling at 401-824-5100 or email . We welcome your comments and suggestions.