A number of significant changes to the Stark Law may require physicians and hospitals to restructure joint ventures, leasing arrangements and other agreements. The changes were detailed in the fiscal year 2009 Inpatient Prospective Payment System Final Rule (Final Rule) published in late August. The Final Rule outlines several critical changes to the Stark Law that are likely to have a significant impact on many health care providers. The Stark Law generally prohibits physicians from referring patients to an entity for certain designated health services for which Medicare or Medicaid payment may be made if the physician has a financial relationship with the entity. Among the major impending changes:

  • "Stand in the Shoes" Provision: Only physicians who have an ownership or investment interest in their physician organizations will be required to stand in the shoes of those organizations. This change in the scope of the definition permits academic medical centers and integrated tax-exempt health care delivery systems to continue to use the indirect compensation exception to protect eligible financial relationships. Direct compensation exceptions are required to protect remuneration flowing through a physician-owned group to its owner or employed physicians.
  • Services Provided "Under Arrangements": Both the hospitals that bill for services provided "under arrangements" as inpatient or outpatient hospital services and the entities that provide those services will be considered to be furnishing "designated health services" (DHS) under Stark. This change will effectively eliminate a referring physician's ability to provide services under arrangement unless a Stark Law exception would permit a direct joint venture of the service. All existing "under arrangements" agreements must be reviewed by Sept. 30, 2009, to determine whether they must be restructured.
  • Percentage-Based Leasing Arrangements: Effective Oct. 1, 2009, the Stark Law will prohibit all percentage-based compensation in space and equipment leases.
  • "Per-Click" Leasing Arrangements: Effective Oct. 1, 2009, the Stark Law will restrict the use of unit-of-service-based (per-click) leasing arrangements.
  • Set in Advance" and Amendments to Agreements: Centers for Medicare and Medicaid (CMS) is reversing its prior position and allowing multiyear agreements to be amended after the first year without violating Stark's "set in advance" requirement.
  • Stark Compliance Audit: CMS plans to collect information from approximately 500 specialty and general acute care hospitals regarding their financial relationships with physicians. These providers will be required to complete a comprehensive Disclosure of Financial Relationships Report (DFRR). CMS will require each hospital to submit the DFRR within 60 days of receipt.