In its recently published 2016 Physician Fee Schedule Rule (the “Rule”), the Centers for Medicare & Medicaid Services (CMS) finalized two new exceptions from the federal physician self-referral regulations ("Stark Law") on (1) employment assistance for certain non-physician practitioners and (2) timeshare arrangements.

The Rule establishes a new exception at 42 C.F.R. 411.357(x) to permit payment by hospitals, Federally Qualified Health Centers, and Rural Health Clinics to physicians for the purpose of compensating non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives) under certain circumstances. The exception will apply only when the non-physician practitioner is a bona fide employee of the physician or practice receiving the support and when the purpose of the employment is to provide primary care services. The exception caps the amount of support at 50% of the non-physician practitioner’s actual compensation, signing bonus and benefits for a period not to exceed two years.

The Rule also creates a new exception at 42 C.F.R. 411.357(y) to permit the common practice of timeshare arrangements between hospitals or physicians for the use of office space, equipment, personnel, items, supplies, and other services that must be used predominantly to furnish evaluation and management services. It is important to note that the exception specifically excludes imaging equipment, radiation therapy equipment, and clinical or pathology laboratory equipment, and does not protect timeshare arrangements offered by other types of healthcare organizations. 

As with other Stark Law exceptions, the newly created exceptions require that the arrangements be in writing and not be conditioned on referrals to a hospital, remuneration from a hospital, or other business generated between the parties, and must be based on fair market value.