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AAOS Now

Published 10/1/2007

CMS isues final ‘Stark III’ rules

The Centers for Medicare and Medicaid Services (CMS) have issued final regulations prohibiting physicians from referring Medicare patients for certain items, services, and tests provided by businesses in which they or their immediate family members have a financial interest.

These final regulations are the third phase of implementing the physician self-referral prohibition commonly referred to as the Stark law. These “Phase III” regulations do not establish any new exceptions to the self-referral prohibition, but rather make certain refinements that could permit or, in some cases, require restructuring of some existing arrangements, according to CMS officials.

AAOS Now will include an analysis of the regulations in an upcoming issue, but following are highlights of the final regulations:

  • Enhanced flexibility in structuring nonabusive compensation arrangements; for example, expanding the rules regarding physician recruitment and retention payments to permit recruitment of more physicians into extended areas when needed
  • Relief for inadvertent violations of the self-referral prohibition under certain circumstances; for example, allowing repayment of excess nonmonetary compensation under certain circumstances
  • Reduced regulatory burden for compliance with certain exceptions; for example, eliminating the written notice requirement to an insurer for entities that provide professional courtesy with a reduced coinsurance
  • Clarification of existing regulation interpretations; for example, clarifying which provisions in office space and equipment lease agreements may be amended during initial and subsequent terms of the agreements

CMS has also signaled that it envisions additional changes beyond these Phase III regulations. It recently engaged in a lengthy discussion regarding exceptions to the Stark rules in its calendar year 2008 Physician Fee Schedule proposed rule. The AAOS submitted comments to CMS on this discussion and will continue to monitor CMS actions and respond accordingly to ensure that orthopaedic patients have access to appropriate and convenient care.

The final rule was published in the Sept. 5, 2007 Federal Register. For more information, visit the CMS Web site at: www.cms.hhs.gov