CMS Releases Final Rule on Stark Law, Physician Fee Schedule, and Medicare Part B Revisions.

Date posted: December 1, 2015

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule updating the Medicare Physician Fee Schedule (PFS) and Medicare Part B payment policies. The final rule also updates the Physician Self-Referral Law (Stark Law) by establishing two new Stark Law exceptions and clarifying regulatory terminology and requirements.

Significant changes to the Stark Law include:

  • Two New Exceptions:
    • New Exception for Recruitment of Non-Physician Practitioners (NPPs) – The final rule permits certain remuneration from a hospital, federally qualified health clinic (FQHC), or rural health clinic (RHC) to a physician to assist in employing NPPs in geographic areas. However, only certain NPPs who become bona fide employees or independent contractors of the physician or group receiving the remuneration qualify for the exception.
    • New Exception for Timeshare Arrangements – Under timeshare arrangements, specialists can provide services in a hospital or physician practice-owned space on a limited or as-needed basis. CMS acknowledged that timeshare arrangements face difficulty in complying with the office space rental exception, and has therefore compared a timeshare arrangement to a licensing arrangement rather than a leasing arrangement. The final rule establishes a new exception for qualifying timeshare arrangements that meet certain conditions. For example, the equipment, premises, personnel, items, supplies and services covered by the arrangement must be used predominately for evaluation and management services.
  • Clarifications:
    • Writing requirements – Various exceptions, including those for renting office space and equipment, require leases to be set out in writing. Depending on the facts and circumstances of an arrangement, a collection of documents, rather than a single formal contract, now satisfies the writing requirement for these exceptions. However, the Stark Law’s signature requirement states that documents still must include a signed contemporaneous writing evidencing the course of conduct between the parties to properly document the arrangement.
    • “Takes into account” – Many compensation exceptions to the Stark Law prohibit compensation that “takes into account” the volume or value of physician referrals. However, many exceptions use phrases other than “takes into account,” such as “varies with.” The final rule revises the compensation exceptions to utilize the phrase “takes into account” consistently and uniformly.
    • “Stand in the shoes” – Phase III of the Stark Law established that physicians who stand in the shoes of his or her physician organization are deemed to have the same compensation arrangements as the physician organization. The final rule clarifies that only physicians with ownership or investment interest in their physician organizations “stand in the shoes” for the purposes of complying with the signature requirement. The rule clarifies that for all purposes other than the signature requirements, all physicians in a physician organization are considered parties to the compensation arrangement.

Additionally, the final rule includes discussions and proposals on Medicare PFS and other Medicare Part B payment policies including:

  • Potentially misvalued PFS codes;
  • Telehealth services;
  • Establishing values for new, revised, and misvalued codes;
  • Target for relative value adjustments for misvalued services;
  • Phase-in of significant RVU reductions;
  • “Incident to” policy;
  • Updating the ambulance fee schedule regulations;
  • Physician Quality Reporting System;
  • Medicare Shared Savings Program; and
  • Electronic Health Record Incentive Program.

The final rule will take effect on January 1, 2016.  CMS will accept comments until December 29, 2015.

The final rule is available at:

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2016; Final Rule; 80 Fed. Reg. 70885 (Nov 16, 2015).

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