In July 2008, the Centers for Medicare and Medicaid Services (CMS) published a display copy of its final 2009 Hospital Inpatient Prospective Payment System (IPPS) regulations. This is the third change in the past 18 months to the federal Stark law limiting physician self-referral regulations. One change includes the definition of a designated health services (DHS) entity. The revision changes the definition of DHS entity to include any entity that performs a DHS service, even if the entity does not bill Medicare for such services. In other words, under the new regulations, if one entity bills for services it has purchased from an entity that furnishes the service, both entities will be considered DHS entities. In addition, CMS clarified, without defining, “performed” to mean if the components of the services provided would allow the furnishing entity to submit a claim to Medicare, it has performed the service and would be considered a DHS entity. Accordingly, as a DHS entity, any referral by a physician owner of a joint venture would need to meet a Stark exception. CMS also prohibited percentage-based payments for space and equipment leases (although acceptable for payment for services) and unit of service (per-click) payments for space and equipment leases. The effective date of the majority of the provisions is January 1, 2009; however, the provisions addressing percentage-based payments and per-click payments will not take effect until October 1, 2009. In addition, as of October 1, 2009, traditional “under arrangements” joint ventures are no longer allowed. CMS explained that it prohibited physician ownership in joint ventures that provide services “under arrangement” with hospitals because it violates the rules prohibiting physicians from having an ownership interest in a service company. A copy of the rules is available on the CMS website.

On October 30, 2008, CMS put on public display the 2009 Physician Fee Schedule final rules. Included within thoserules are the final “Anti-Markup Rules.” In general, the Angi- Markup Rules prohibit the markup of certain diagnostic tests that are purchased, or are deemed purchased, from an outside supplier. The Anti-Markup Rules will be published in the Federal Register on November 19, 2008, and are effective January 1, 2009.