Home Health & Hospice Week

You may need to rethink 'fair market value,' rule shows.

Home health agencies and their attorneys are still wading through a hefty final rule affecting physician referrals, but there's some good news: The rule may make Stark law compliance easier for HHAs.

Complying with the Stark law will still warrant the careful attention of HHAs, cautions attorney Elizabeth Zink-Pearson of Pearson & Bernard in Covington, KY. But the 500-plus page regulation refrains from making agencies jump through any major new hoops.

"For home health agencies, not a lot has changed," summarizes attorney Robert Markette of Gilliland, Markette & Milligan in Indianapolis.

Background: On Aug. 27, the Centers for Medicare & Medicaid Services released the Stark final rule. It interprets the Stark law's prohibitions and exceptions governing referrals that physicians make to HHAs and other entities in which they have a financial interest.

Providers should note the following changes:

1. The personal services exception provisions have changed slightly. In the past, agencies had a grace period of six months if a contract covered under the office space and equipment exception expired. Now the same is true of the personal services exception.

A bigger burden: "There should be a lapse in time from the signing of the contract to the point of a referral," cautions Pearson. Be wary of that change if you're hiring a new medical director or contracting with another compensated physician, she urges.

2. The physician certification language is clearer. Though the substance of the rule on this point hasn't changed, the feds have made it easier for providers to reference related sections and definitions.

Bottom line: A physician who has a financial relationship with an HHA may not certify or recertify the need for home health services or establish or review a plan of treatment of the HHA unless the financial relationship meets one of the Stark exceptions.

3. The new rule doesn't change a hospital's ability to refer patients to its own home health agency, if it meets certain requirements. Unchanged is the requirement that the hospital discharge plan for a patient needing home health services include a list of local home health agencies, notes Markette. According to the rule, the patient may choose a particular provider from which he or she wishes to receive treatment, and the hospital and the patient's treating physician must honor that choice.

4. "Fair market value" is more loosely defined. The feds dropped the controversial methodology for calculating fair market value compensation that was included in the previous regulation, Pearson tells Eli. That means more freedom regarding how HHAs may calculate physician compensation.

Downside: The feds could be more likely to question the agency's formula. "HHAs are now kind of out there on their own," she says.

The rule will go into effect 90 days after its publication in the Federal Register on Sept. 5. To see the rule, go online to www.cms.hhs.gov/PhysicianSelfReferral/04a_regphase3.asp.