CMS Creates New Stark Exceptions

On October 30, 2015 the Centers for Medicare and Medicaid Services (“CMS”) released a final rule that makes significant changes to the Medicare Physician Fee Schedule as well as other payment policies for 2016. Below is a summary of the major policy changes reflected by the rule, specifically provisions regarding the physician self-referral law, payment for advanced care planning services and incident to services, and updates to the Physician Quality Reporting System. The notice of final rule-making is scheduled to be published in the Federal Register on November 16, 2015 and interested parties will have an opportunity to comment on the rule until December 19, 2015, before it takes effect on January 1, 2016.

The Stark law prohibits physicians from making referrals for certain designated health services payable by Medicare to an entity in which he or she has a financial interest. The entity that receives the referral is also prohibited from filing a Medicare claim for services provided as a result of the referral. The law does, however, outline a few exceptions where referrals are permitted. The law aims to only prohibit such referral practices that pose a risk for Medicare fraud and abuse.

New Stark Exceptions

With this goal in mind, the new rule promulgated by CMS establishes two new exceptions and clarifies existing exceptions and requirements. To address the shortage of primary care providers, the first exception permits hospitals, Federally Qualified Health Centers, and Rural Health Clinics to provide remuneration to physicians or physician groups in order to assist the physicians or groups in recruiting efforts for non-physician employees, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, clinical social workers, and clinical psychologists. The following requirements must be satisfied for the exception to apply: (1) the non-physician employee must perform substantially all primary care or mental health services to patients of the employer’s practice; (2) the contractual relationship must be directly between the physician who received remuneration for the recruiting efforts and the non-physician employee who was hired as a result of those efforts; (3) the remuneration must not exceed fifty percent (50%) of the actual aggregate compensation, signing bonus and other benefits paid to the non-physician employee; (4) the hospital, Federally Qualified Health Center, or Rural Health Clinic cannot assist in recruiting efforts to the same physician more than once every three years, unless the non-physician employee does not remain employed for at least one year; and (5) the non-physician employee must not have practiced in the geographic area served by the entity that assisted in the recruiting effort for at least one year prior to the recruitment.

The second exception to Stark that was created by the new CMS rule is for timeshare arrangements for the use of office space, equipment, personnel, items, supplies, and other services. This exception addressed the concerns of hospitals and individual physicians who were not interested in a traditional lease arrangement, for which a Stark exception already exists. The new exception permits physicians to enter into agreements for limited or as-needed use of premises, equipment, and other items and services. Such timeshare arrangements are permissible under the new exception if they meet the following requirements: (1) they are in writing, signed by the parties, and specifically state the premise, equipment, personnel, items, supplies, or other services that are covered by the arrangement; (2) they are entered between a hospital or physician group (the “licensor”) and a physician or physician group (the “licensee”); (3) the licensed premise, equipment, personnel, items, supplies, or services must be used predominately to evaluate and manage services provided to patients of the licensee; (4) the arrangement is not conditioned on the licensee’s referral of patients to the licensor; and (5) remuneration for the license must be agreed upon in advance, consistent with fair market value, without taking into account volume of referrals between the two parties. If the arrangement is specifically for license of equipment, the following additional requirements must be met: (1) the equipment must be located in the same building where the physician performs the evaluation and management services; (2) it can only be used to provide designated health services that are incidental to the physician’s evaluation and management services and provided at the same time as the evaluation and management services; and (3) it cannot include advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment unless it is used to provide CLIA-waived tests. This timeshare arrangement exception is intended to add flexibility to the current space rental exception under Stark.

New “Incident to” Services Requirements

For Medicare billing purposes, incident to services are treated as though they were performed by the billing physician, not the auxiliary personnel who actually provided the service. The payment rate is consistent with that of the billing physician and not the auxiliary personnel performing the service. Thus, when services are billed by a physician, they are paid one hundred percent (100%) of the fee schedule amount, while nurse practitioners, for example, are only paid eighty-five percent (85%). In 2014, the “incident to” rule was amended to require all incident to services to be furnished in accordance with applicable state law. This included the requirement that the auxiliary personnel satisfied applicable licensure requires in the state where the services were provided. The amendment did not, however, address some cases where the auxiliary personnel is a licensed physician rather than a non-physician provider. In such cases, the supervising physician may not be the same physician who provides broader primary care to that patient.

For 2016, the new CMS rule establishes additional requirements to ensure that incident to services are properly supervised and billed for. Under the rule, only supervising physician may bill for services. Furthermore, the auxiliary personnel, although not billing for the services, cannot be excluded from Medicare, Medicaid or other federal health care programs.

Advanced Care Planning

The CMS rule also establishes two new billing codes for advanced care planning services. CPT Code 99497 will pay providers for a first-time, thirty-minute consultation with a Medicare beneficiary and his or her family members regarding advanced care planning. This consultation may include explanation about the type of care that is available to the beneficiary and execution of standard advanced directive forms. CPT Code 99498 will further pay providers for additional advanced care planning services, based on thirty-minute intervals. In the past, advanced care planning was only covered under the “Welcome to Medicare” visit when a beneficiary first enrolled in the Medicare program. However, many beneficiaries did not need such services at the time of enrollment. Under the new rule, beneficiaries and providers will have greater flexibility to discuss advanced care planning and maximize quality of care in the long run.

Changes to Physician Quality Reporting System

It is also important to note changes to the Physician Quality Reporting System under the new CMS rule. The reporting system encourages providers to report to Medicare on quality of care by providing incentive payments to eligible providers and group practices based on the quality measures they report. In the new rule, CMS explains its intent to continue to implement this reporting system by finalizing more robust quality measures in 2016. Furthermore, providers who do not satisfy their reporting requirements for 2016 will be subject to a 2% negative payment adjustment on all Medicare Part B services covered under the Physician Fee Schedule for 2018. This reflects a 0.5% increase from the 1.5% negative payment adjustment that providers were subject to during the 2013 and 2015 reporting periods.