Home Health & Hospice Week

Home care providers running into Stark Law barriers when crafting retirement plans for ESOP agencies will get some relief from a new proposed rule. On Oct. 9, the Centers for Medicare & Medicaid Services released the rule, “Modernizing and Clarifying the Physician Self-Referral Regulations.”

The problem: After CMS published a final rule on the Stark Law in 2009, “in certain cases, employers seeking to offer retirement plans to physician employees may find it necessary or practical ... to structure a retirement plan using a holding company,” explains the proposed rule scheduled for publication in the Oct. 17 Federal Register. When “the retirement plan owns the holding company, and the holding company owns the home health agency, the physician has an indirect ownership or investment interest in the home health agency that would not be carved out under §411.354(b)(3)(i) and may not satisfy the requirements of an applicable exception at §411.356,” the rule notes. Such plans may be “particularly advantageous for agencies with employee stock ownership plans (ESOPs).”

The solution: CMS proposes to remove interests in an entity arising through participation in an ESOP from the definition of “ownership or investment interest” for purposes of section 1877 of the Act. Excluding such an interest doesn’t pose “a risk of program or patient abuse,” says the rule at https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-22028.pdf.