Two New Exceptions to Stark to Become Effective in the New Year

Starting January 1, 2016, physicians and certain health care organizations will be able to take advantage of two new exceptions to the physician self-referral law (commonly referred to as the “Stark Law”).  Stark contains two broad restrictions.  First, it prohibits physicians from making referrals of certain designated health services (“DHS”) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless an exception applies.  Second, Stark prohibits those entities from billing for the referred services.

The two new Stark exceptions, when satisfied, will permit (1) remuneration from a hospital, federally-qualified health center (“FQHC”) or rural health clinic (“RHC”) to a physician to assist the physician to compensate certain non-physician practitioners (“NPPs”) who will provide primary care or mental health services in the geographic area served by the hospital, FQHC or RHC (the “NPP Recruitment Exception”) and (2) arrangements in which physicians (or physician organizations) and hospitals may use one another’s space, equipment, personnel, items, supplies or services to provide services on a time-sharing basis (the “Timeshare Arrangements Exception”).

In announcing the new exceptions, CMS recognized several important policy considerations, many of which relate to increasing access to care.  CMS noted NPPs’ increased role in health care delivery in light of health coverage expansion under the Affordable Care Act and the looming shortage of primary care physicians.  Also, in a victory for mental health providers, CMS was persuaded to include clinical psychologists and clinical social workers within the definition of NPP and to add mental health care services to the scope of permissible services that may be provided by NPPs engaged under the NPP Recruitment Exception.  (The exception, as initially proposed by CMS, included only physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives and restricted their services to primary care.)  The Timeshare Arrangements Exception reflects a similar acknowledgment that time-sharing may increase access to specialists in rural areas that cannot support a specialist on a full-time basis.

Both the NPP Recruitment Exception and the Timeshare Arrangements Exception include several elements that must be strictly satisfied in order for the arrangement to qualify for protection.  Health care organizations and physicians interested in learning more about the new exceptions, or whether arrangements they are considering might qualify, should feel free to contact Parker Poe.

Amanda Hayes

Amanda Hayes

Amanda Hayes counsels clients in connection with mergers and acquisitions, divestitures and other business matters, with a particular focus on the health care industry. She regularly serves as lead counsel on acquisitions and divestitures, guiding the client through deal structuring, due diligence, drafting, negotiation and closing. In addition to health care, Ms. Hayes’ mergers and acquisition experience includes a variety of industries, such as manufacturing, retail, automotive, contract research, environmental remediation, engineering and construction supply.

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