Medicare Compliance & Reimbursement

What the much-anticipated Stark II, phase 2 rule means for you.

The long-awaited second phase of the Stark rule has finally arrived. But whether it will provide straightforward guidance or stir as much controversy and confusion as its predecessor remains to be seen.
 
The Centers for Medicare & Medicaid Services published interim final regulations governing physician referrals in the March 26 Federal Register. Stark's second phase, which represents CMS' efforts to establish "bright-line" rules as often as possible, covers the remaining statutory exceptions not covered in the first phase, including physician investment interests in publicly traded securities and mutual funds and physician ownership of rural providers and hospitals.

New or revised regulatory exceptions are aimed at compensation arrangements involving physicians and hospital ownership -- the latter of which takes into account the new 18-month moratorium on physician ownership of specialty hospitals.

In response to comments received on its first phase of the regulation, CMS made a number of adjustments to the rule. The rule now:

protects legitimate arrangements involving certain specialty groups that provide oncology and radiology services,
revises the definition of compensation that is "set in advance" to permit certain common percentage compensation arrangements,
makes the academic medical centers exception more flexible,
expands the medical staff incidental benefits exception to include facilities other than hospitals, and
expands the exception for certain dialysis-related drugs to include more drugs used in connection with dialysis treatment. The new rule will be effective on July 24, 2004.

To see the rule, go to www.access.gpo.gov/su_docs/fedreg/a040326c.html. Lesson learned: Health care organizations finally have some firm guidance on how to construct business arrangements.