As anticipated, the Centers for Medicare and Medicaid Services (CMS) issued the final version of its 2008 Physician Fee Schedule on November 1. None of the suggested Stark revisions in the proposed schedule were enacted at this time. Instead, CMS proceeded with its expected expansion of the anti-markup provision. While the flood of comments received by CMS may have delayed substantial Stark revisions, CMS representatives have indicated to us that CMS intends to promulgate Stark revisions “as soon as possible.” Squire Sanders will hold a national teleconference to discuss such changes as soon as they become available.

Stark Revisions Delayed

CMS stated that:

“[G]iven the number of physician self-referral proposals, the significance of the provisions both individually and in concert with each other, and the volume of public comments, we do not believe it is prudent to finalize any of the proposals in this rule …[however] we are confident that we have sufficient information, both from the commenters and our independent research, to finalize revisions to the physician self-referral regulations without the need for new proposals and additional public comment.

“We intend to publish a final rule that addresses the following proposals:

  • Burden of proof;
  • Obstetrical malpractice insurance subsidies;
  • Unit-of-service (per-click) payments in lease arrangements;
  • The period of disallowance for noncompliant financial relationships;
  • wnership or investment interests in retirement plans;
  • ‘Set in advance’ and percentage-based compensation arrangements ‘Stand in the shoes’ provisions;
  • Alternative criteria for satisfying certain exceptions; and
  • Services furnished ‘under arrangements.

“Because we did not make a specific proposal regarding the in-office ancillary services exception, but rather merely solicited comments regarding its scope and application, any revisions to the exception in §411.355(b) will be accomplished through a future notice of proposed rulemaking with provisions for public comment.”

Anti-Markup Prohibitions Extended

Medicare regulations (42 CFR §414.50) currently prohibit the markup of the technical component (TC) of certain diagnostic tests provided by outside suppliers and billed to the Medicare program. The program also restricts those who can bill for the professional component of diagnostic tests (Section of the CMS Internet-Only Manual, Publication 100-04, Medicare Claims Processing Manual, Chapter 1, general billing requirements, as amended or replaced from time to time).

In the Proposed 2008 Physician Fee Schedule, published in the Federal Register on July 12, 2007, CMS suggested an anti-markup provision on both the technical and professional component of diagnostic tests irrespective of whether the physician or medical group purchases the test outright or receives reassignment of the billing rights after purchase of the technical or professional component of a diagnostic test.

In the 2008 Physician Fee Schedule, issued on Friday, CMS imposes an anti-markup provision on the TC and (professional component) PC of diagnostic tests where such tests were ordered by the billing physician or other supplier if the TC or PC is purchased or performed at a site other than the office of the billing physician or other supplier that ordered the test. The “office of the billing physician or other supplier” is interpreted to include a space where the physician or other supplier “provides substantially the full range of patient care services that the physician organization provides generally.”

Most important, these provisions continue to allow a markup if the services are performed on-location, regardless of the employment status of the lab technicians and pathologists.