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At the end of 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that resulted in major changes to the federal physician anti self-referral law (the “Stark Law”). Those changes, most of which went into effect on January 1, 2016, include the addition of two new exceptions: one pertaining to the recruitment of non-physician practitioners; the other concerning timeshare arrangements.
Stark Law Basics:
The Stark Law prohibits physicians from making referrals for certain
designated health services (DHS) payable by Medicare to an entity with which the physician (or an immediate family member of the physician) has a financial relationship – unless an exception to the law applies. The law sets forth numerous exceptions that apply to ownership arrangements, compensation arrangements, or both.
 Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for VY 2016, 80 FR 70866-01 (November 16, 2015).
 42 C.F.R. § 411.357(x); 42 C.F.R. § 411.357(y)
 42 C.F.R. § 411.353
 42 C.F.R. § 411.357
Milligan Lawless, P.C., is pleased to announce that our shareholder Steven T. Lawrence has been awarded a Master of Laws (LLM) degree in Health Law from Loyola University Chicago. Steve recently completed his thesis entitled “The Stark Law: Revisions are Mandated to Grow the American Healthcare System,” which presents the case that the federal self-referral prohibition should be modified to take into account new models for payment, including payment systems in pay-for-performance structures and Accountable Care Organizations. Loyola University Chicago is one of the preeminent health law programs in the United States. “Steve’s achievement adds another significant qualification for our firm as the foremost provider of health and life sciences law services in Arizona,” said shareholder Bob Milligan.
Steve continues to represent companies and individuals in corporate, transactional and health care matters, including mergers and acquisitions, financing transactions, employment agreements, co-management arrangements, licensing agreements and many others. Steve is listed since 2009 in Best Lawyers in America for Corporate Law and since 2010 in Chambers USA for Corporate Law/M&A.
Steve’s biography is located here.
By Steve Lawrence, Shareholder, Milligan Lawless, P.C. (2013).
The following is an abstract of Mr. Lawrence’s article, Regulatory Issues that Affect Funding of Physician-Backed Medical Enterprises: A Primer:
This paper provides a summary of key federal regulatory issues that affect funding of physician-based medical enterprises. Margins in medical practices continue to face pressure from all sides. As physician compensation from core medical practices declines, physicians seek new avenues to profit. Many physicians start or sponsor spin-off businesses related to their practice or their medical background. As angel investors, venture capitalists and private equity firms consider investing in such medical businesses, the regulatory constraints on such enterprises becomes an important concern. Beginning with a hypothetical scenario suggested by recent regulatory enforcement cases, this paper examines key federal laws that govern physician-backed medical enterprises that could affect funding of such enterprises – the Stark law, the anti-kickback law and the False Claims Act… (read more)
The Centers for Medicare & Medicaid Services announced its sixteenth settlement from a disclosure reported through the Self-Referral Disclosure Protocol for violations of the Stark Law. The disclosure was initiated by an acute care hospital in California that was unable to satisfy the personal service arrangement exception for an on-call physician arrangement. The disclosed violations were settled for $1,600. The government only publishes information related to certain disclosures.
The personal services arrangement exception is the most applicable exception to on-call arrangements with physicians. This exception requires an executed written agreement that describes the services to be performed by the parties. Among other elements, the compensation paid over the term must be fair market value and must not be determined in a manner that takes into account the volume or value of certain referrals.
Compliance with the Stark Law is particularly complex with on-call arrangements because of the difficult of determining fair market value of the compensation. In fact, the government only recently publicly approved providing compensation to physicians for on-call services. The government has been increasingly scrutinizing on-call arrangements due to the difficulty of valuing the services provided and the perceived opportunity to compensate referring physicians for referrals contemplated outside of the on-call arrangement.
To see the government’s notice of the settlement, click here.