Potential Changes to the Stark Exceptions in New CMS Proposed Rule

The Centers for Medicare and Medicaid Services (“CMS”) published its Calendar Year 2016 Physician Fee Schedule Proposed Rule (80 FR 41685 et seq.) which, in addition to updating the fee schedule, contains: (1) a proposed new quality measure that an Accountable Care Organization (“ACO”) must meet to qualify for shared savings in the Medicare Shared Savings Program (“MSSP”); (2) changes to the “incident to” billing rules; and (3) proposed changes to the existing Stark regulations, including adding two new potential exceptions to Stark for the purpose of promoting access to care.  Among its justifications for the changes, CMS emphasized the necessity to reduce burden on practitioners and the overall accommodation of delivery and payment system reform.

New Quality Measure in MSSP

Through the process of reviewing quality measures to ensure that such measures are consistent with current clinical practice, CMS identified a gap in the MSSP quality measures addressing treatment of patients at high risk of cardiovascular disease due to high cholesterol. Finding that cardiovascular disease affects a high volume of Medicare beneficiaries and that prevention of such disease is a priority, CMS is proposing a new measure, Statin Therapy for the Prevention and Treatment of Cardiovascular Disease, to the Preventive Health domain.  The measure is intended to support prevention and treatment of cardiovascular disease by measuring the use of statin therapies against updated clinical guidelines for high cholesterol patients.

Changes to “Incident to” Billing Requirements

“Incident to” services are those that are performed by auxiliary personnel (e.g., nurse practitioner) under the direct supervision of and incident to the professional services of a physician (or other authorized practitioner).  Such services are treated as if they are furnished by the billing provider for purposes of Medicare billing and payment.  Providers authorized to bill Medicare for “incident to” services are paid at 100% of the fee schedule amount.  By contrast, appropriately credentialed auxiliary personnel billing for such services are paid at 85% of the fee schedule amount.  Under current regulations (42 CFR § 410.26(b)(5)), the physician or other practitioner supervising the auxiliary personnel is not required to be the same provider upon whose professional service the “incident to” service is based, which means the billing practitioner may not be the same as the practitioner who supervised the services.  Concerned that this aspect of the regulation permits the “incident to” services of the auxiliary personnel to be insufficiently connected to the professional services of the billing practitioner, CMS is proposing to amend the regulation to ensure that the billing practitioner is the same as the practitioner who is directly supervising the “incident to” service.  CMS believes that this will ensure that the billing practitioner has a personal role in and responsibility for the services being billed. CMS is also proposing to amend the regulation to explicitly prohibit auxiliary personnel who have been excluded from federal health care programs or who have had their enrollment revoked for any reason from providing “incident to” services.

In an effort to minimize or eliminate any potential administrative burden on practitioners, CMS invites comments regarding possible approaches they could take to ensure compliance with applicable Medicare statute and regulations and the options which are currently under consideration.

Changes to Stark Self-Referral Law

Reduction of Regulatory Burdens

The proposed rule includes guidance regarding several Stark exceptions that include writing and term requirements, such as lease and management services arrangements. In order to reduce regulatory burden, CMS has proposed the following:

1. Writing Requirement – CMS clarifies that there is no requirement that a written arrangement be documented in a single formal contract. Rather, the “writing” required by may be satisfied through a collection of documents.
2. Signature Requirement – Currently, the regulations permit an entity to receive payment if an arrangement is otherwise in compliance with the exception but temporarily does not satisfy the applicable exception’s signature requirement for a period of 30 days. CMS proposes an extension of the deadline for obtaining required signatures from 30 days to 90 days, regardless of whether the signature noncompliance was inadvertent.
3. One Year Term – CMS clarifies that the term of an office lease, equipment rental or personal services arrangement does not need to be specified in the writing evidencing the arrangement if the arrangement in fact lasts at least one year and is otherwise compliant.
4. Holdover – Currently, certain Stark exceptions (i.e., rental of office space, rental of equipment, personal service arrangements) permit a six month “holdover” arrangement if the arrangement continues on the same terms and conditions. The proposed alternative considers whether to allow indefinite holdovers or holdovers for a defined period greater than six months such as one to three years. CMS also proposes to permit indefinite holdovers in certain circumstances.

New Exceptions

In the interest of promoting access to care, CMS is proposing two new exceptions to the Stark self-referral law in the area of recruitment and retention.

The proposed rule adds an exception for timeshare arrangements that protects the license of office space, property and personnel between a hospital or physician group and a physician. The exception would apply only to arrangements between a hospital or physician organization and a physician with the following additional conditions:  (i) the licensed premises, property and personnel must be used predominantly to furnish evaluation and management (“E&M”) services, (ii) any equipment covered by the arrangement must be located in the office suite where the physician performs E&M services, (iii) such equipment must be used only to furnish Designated Health Services incidental to the physician’s E&M services, and (iv) the services must be furnished at the time of such E&M services. The proposed rule states that the licensed equipment may not include advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment. As with other similar exceptions, the compensation methodology under the timeshare arrangement must be set in advance and for fair market value, among other conditions, and may not be based on per-unit of service or percentage methodologies

CMS has also proposed a new exception for payments made to a physician by a hospital, federally qualified health center (“FQHC”), or rural health clinic to assist the physician in employing a non-physician practitioner (“NPP”) furnishing primary care services. To meet the exception: (i) the NPP must be a bona fide employee of the physician or practice receiving payment from the hospital or FQHC and (ii) the purpose of the NPP’s employment must be to provide primary care services to patients of the physician.

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CMS is accepting comments to the proposed rule until September 8th at 5pm. Although the proposed rule may be subject to revision, such potential changes as the abovementioned will be relevant considerations for providers participating in the MSSP and for all providers who bill “incident to” services.  In addition, the proposed revisions to the Stark regulations would afford more flexibility to providers seeking to enter into compliant business arrangements under that fraud and abuse law.