2018 Bipartisan Budget Act and Stark Law Amendments

On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018, providing a two-year budget agreement that increases federal spending, funds disaster relief efforts, and amends a number of healthcare programs, among a host of other changes.

While the Act has broad implications for many aspects of U.S. law, one amendment in particular should cause physicians and healthcare providers to take note. Section 50404 of the Act, titled “Modernizing the Application of the Stark Rule Under Medicare,” codifies recent regulations promulgated by the Centers for Medicare and Medicaid Services and adds new provisions to the Stark law in an effort to deregulate the law and provide greater authority to the Secretary of Health and Human Services to grant waivers or exceptions under the law.

The first changes to Stark amend the writing and signature requirements for the Stark exceptions, including, but not limited to, the office space, equipment lease and personal service arrangement exceptions. The new amendments allow the writing requirements of these exceptions to be “satisfied by such means as determined by the Secretary, including by a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties involved.” (Modernizing the application of the Stark rule under Medicare, 115 P.L. 123, 132 Stat. 64, 2018 Enacted H.R. 1892, 115 Enacted H.R. 1892)

These changes serve to eliminate confusion regarding whether these types of arrangements need to be reduced to written agreements and allow healthcare providers to use collections of documents which evidence the course of conduct between the parties, rather than written contracts, to satisfy the exceptions’ requirements. However, the collections of documents will need to support a finding, upon a review of the documents by a reasonable person, that compliance with the remaining requirements under the exceptions are satisfied. Moreover, an additional amendment to this section eases the signature requirements under the exceptions by providing a 90-day grace period for parties to an arrangement to obtain the necessary signatures. For arrangements which are set forth in collections of documents rather than written contracts, the signature requirement will be met if the parties sign a “contemporaneous writing documenting the arrangement…[which] clearly relate[s] to the other documents in the collection and the arrangement the [parties] are seeking to protect.” (80 FR 70885, 71314-71315)

The second group of amendments to Stark adds new provisions to the law setting forth how providers can treat holdovers under the office space, equipment lease and personal service arrangement exceptions. Under the new amendments, holdover lessees and personnel may continue to operate under their expired leases or personal service arrangements indefinitely, so long as the arrangements were and continue to be compliant under Stark and are under the same terms as the parties’ expired arrangements.

While the amendments to Stark under the Act may not contain sweeping changes to the law, they represent the government’s changing views toward some of the more cumbersome aspects of Stark and perhaps mark the beginning of many additional changes to come.