• CMS Buries Stark Landmines in 1700 Page Hospital Inpatient PPS Regulations
  • August 15, 2008 | Authors: Barron P. Bogatto; Edgar C. Morrison
  • Law Firms: Jackson Walker L.L.P. - Houston Office; Jackson Walker L.L.P. - San Antonio Office
  • Yesterday, CMS published another installment of final Stark regulations on a number of controversial topics that had been proposed previously in prior Medicare regulations (e.g., the final 2008 Physician Fee Schedule). The controversial topics include the "stand in the shoes" provisions, percentage based compensation formulas, "per click" arrangements, under arrangements contracts, and a number of other miscellaneous matters involving the period of disallowance, alternative methods for compliance, ownership in retirement plans, and burden of proof. Although not formally part of the Stark regulations, these new final regulations also contain provisions on the related topic of hospital relationships with physicians.

    Even though Federal agencies are essentially under a "White House moratorium" not to publish any further proposed regulations until after December 31, 2008 (i.e., after the presidential election), agencies are not precluded from publishing final regulations that have been in the works. CMS took this opportunity to finalize many of the controversial Stark regulatory provisions noted above. What is disappointing is that CMS again chose not to take the direct course in publishing these important final regulations in regulations devoted to this topic alone, and instead piggy-backed these controversial final regulations in an annual Medicare payment regulation covering the final hospital inpatient prospective payment regulations (the IPPS regulations), which are over 1700 pages devoted to a number of topics. What is also interesting and disappointing is that a CMS' press release on these regulations focused on Medicare and Medicaid's move to aggressively encourage greater patient safety in hospitals and reduce "never events" — an important topic, but not overly insightful in that over 230 pages of the IPPS regulations also contained the controversial final Stark regulations.

    Providers should be aware that the 238 pages of preamble discussion and final regulations devoted to Stark and other hospital relationships with physicians have various effective dates from October 1, 2008, to October 1, 2009.

    As a preview, of the Stark topics addressed, it appears that after devoting 39 pages of discussion to the complex "stand in the shoes" provisions, CMS still is not ready to finalize these provisions. On the other hand, consistent with CMS' prior articulated concern with "per click" arrangements, CMS has prohibited "per click" lease arrangements under certain circumstances. In doing so, CMS has not provided for grandfathering arrangements that are otherwise prohibited by this final rule, but has delayed the effective date of the revisions to the regulations concerning "per click" fees to October 1, 2009, in order to permit providers to restructure existing compensation arrangements or to unwind lease arrangements.