lori k. nomura 206.447.7895 | [email protected] association of washington public hospital districts...
TRANSCRIPT
Lori K. Nomura206.447.7895 | [email protected]
Association of WashingtonPublic Hospital Districts
“Leading Wisely, Living Well”The Seventh in a Series of Retreats
April 29 - May 1, 2008
Stark II Phase III Regulations
2Stark II Phase III Regulations
Objectives
1. Review basic framework of the statute
2. Discuss the most significant changes in the Phase III
regulations
3. Identify action items
3Stark II Phase III Regulations
The Stark Prohibition
If a physician (or a physician’s family member) has a financial
relationship with an entity, the physician may not refer Medicare
patients to the entity for designated health services unless an
exception applies
Stark also prohibits an entity from billing for services provided
as a result of a prohibited referral
4Stark II Phase III Regulations
Penalties
Payment denial/recovery by Medicare
Refund to the individual
Civil monetary penalties of up to $15,000 per prohibited
service/billing
Civil monetary penalties of up to $100,000 for a circumvention
scheme
Program exclusion
5Stark II Phase III Regulations
Analytical Approach
Is there a financial relationship between the referring physician
and hospital? If yes,
Does the physician refer Medicare patients to the hospital for
DHS? If yes,
Does the arrangement comply with an exception? If no, any bill
submitted for a DHS resulting from a prohibited referral violates
the statute.
6Stark II Phase III Regulations
Physicians “Stand in the Shoes” of PC
Physician Org/Group Practice
Hospital
MD
MD
MD
OLD Rule
OLD Rule
7Stark II Phase III Regulations
Arrangements With Non-Professional Entities Are Still OK
MDs
Hospital
LeasingCompany
8Stark II Phase III Regulations
Arrangements With Professional Entities Must Be Reevaluated
Hospital SubsidiaryNonprofit
Hospital
MD
MD
MD
9Stark II Phase III Regulations
Delay and Changes to SITS
CMS delayed the effective date of SITS for certain arrangements of AMCs and exempt, integrated health systems
2009 IPPS Proposed Rule:
1. SITS wouldn’t apply if certain compensation arrangement exceptions are met
2. SITS would apply only to physicians who own the physician organization
3. New exception for “mission payments”
10Stark II Phase III Regulations
Physician Recruitment
Exclusive exception
Only available for “qualified recruits”
Distinction between direct and indirect recruitment
Greater flexibility for rural providers
11Stark II Phase III Regulations
Who Qualifies for Recruitment?
Recruit must
1. not be on the medical staff;
2. relocate his/her medical practice;
3. into the hospital’s “geographic service area”
12Stark II Phase III Regulations
Zip Codes IP % Total
99210 22%
99211 20% 42%
99212 18% 60%
99218 16% 76%
99225 8% 84%
99301 7% 91%
99302 2% 93%
99310 2% 95%
99314 2% 97%
urban
rural
Rural Hospitals Have a Larger Service Area
13Stark II Phase III Regulations
Physician Recruitment, continued
Direct recruitment requirements:
Written and signed agreement
Not conditioned on referrals
Remuneration not tied to referrals or other business
Recruit can establish privileges and refer elsewhere
14Stark II Phase III Regulations
Indirect Recruiting
Except for actual recruiting costs incurred by the
physician/group, the remuneration passes directly to the recruit
In an income guarantee, costs allocated to the recruit cannot
exceed the actual additional incremental costs attributable to
the recruit
15Stark II Phase III Regulations
Actual Additional Incremental Costs
What qualifies?
Recruit’s salary and benefits
Recruit’s malpractice premium and license dues
Cost of space rental? Maybe.
Cost of staff salary and benefits? Maybe.
General overhead? Probably not.
16Stark II Phase III Regulations
Indirect Recruiting, continued
The physician/practice cannot impose unreasonable practice
restrictions on a recruit
Records of actual costs and amounts paid to a recruit must be
maintained for five years and be made available to CMS
17Stark II Phase III Regulations
Retention Exception is Expanded
Available to hospitals, FQHCs and RHCs
Practice located in rural area, HPSA or underserved area
Bona fide offer requiring relocation outside of the hospital’s
service area
Written offer from other hospital or physician organization for
recruitment or employment
Certification from physician recruit
18Stark II Phase III Regulations
Retention Payment Limits Vary
Written Certification (the lower of…) Amount equal to 25% of current annual income (calculated
uniformly)
Reasonable cost to recruit a new physician to replace the physician
Bona Fide Written Offer (the lower of…) Amount = income physician would receive minus current income Reasonable cost to recruit a new physician to replace the
physician
19Stark II Phase III Regulations
Disclosure of Financial Relationships
CMS proposes data collection about financial relationships Description of all compensation arrangements with physicians
such as: employment personal services leases recruitment
Report must be completed and returned within 60 days CMP of $10,000 per day
20Stark II Phase III Regulations
Copies Of Contracts Are Required
Include a copy of the written agreement
with the physician
Include a copy of the written agreement
with the physician
22Stark II Phase III Regulations
Non-Monetary Compensation Requires Record-Keeping
Hospitals must track the value of all benefits provided to
physicians
New “cure” period
New holiday party exception
23Stark II Phase III Regulations
Set In Advance Changes Again
Lease, personal services & FMV exceptions
Cannot amend the financial terms during the
term
After first year, a new agreement is
permissible
Limited holdover permitted
24Stark II Phase III Regulations
Period of Disallowance
Begins when the relationship failed to comply with the statute
Ends when either
Arrangement brought into compliance
When excess/shortfall is paid
25Stark II Phase III Regulations
Rural Referrals
Phase II created the exception for referrals from a physician to
his/her family member or DHS entity with a financial
relationship with that family member if:
patient lives in a rural area
no other person or entity to furnish the DHS within 25 miles of
patient’s residence
Phase III alternative test of 45 minute transportation time
Warning to retain documentation such as weather report
26Stark II Phase III Regulations
Limitation on Incident-To Billing
CMS defined “incident-to” services to exclude services and
supplies that have their own benefit category under the Social
Security Act
diagnostic x-ray
diagnostic lab test
Any credit to physician group practice members is prohibited
27Stark II Phase III Regulations
Phase III Action Items
Monitor arrangements with physicians to ensure all aspects of
exception are met
Gather certain minimum data set based on DFRR requirements
Track nonmonetary compensation
28Stark II Phase III Regulations
Contact Information
Lori Nomura
Telephone: 206-447-7895
Email: [email protected]
Foster Pepper PLLC
1111 Third Avenue, Suite 3400
Seattle, WA 98101
www.foster.com
Lori K. Nomura206.447.7895 | [email protected]
Association of WashingtonPublic Hospital Districts
“Leading Wisely, Living Well”The Seventh in a Series of Retreats
April 29 - May 1, 2008
Stark II Phase III Regulations