The 2016 Physician Fee Schedule ("PFS") included significant changes and clarifications to the federal Physician Self-Referral Law (commonly known as the "Stark Law"). This webinar will provide an overview of some of the recent Stark Law updates implemented in the PFS. Our agenda: -New Non-physician Practitioner Recruitment Assistance Exception -New Timeshare Arrangement Exception -Numerous Technical Revisions to the Stark Law such as Clarifications to the Writing Requirement, Signature, Term, and Holdover Provisions

1. Recent Changes to the Stark Law
June 2, 2016
Presented by:
Bill Hoffman, Amy J. McCullough

2. Agenda
1. SRDP Update
2. New Non-Physician Practitioner Exception
3. New Timeshare Arrangement Exception
4. New Holdover Provision & Fair Market Value Compensation
Exception Revision
5. New Signature Grace Period
6. Technical Clarifications:
A. “Signed Writing” Requirements
B. 1-Year Term Requirement
C. Physician-Owned Hospital Requirements
7. Definitional Clarification - “Remuneration” (“Split Bill” Arrangements)
8. “Incident to” Rule Clarification

3. Overview
 CY 2016 Medicare Physician Fee Schedule
published on October 30, 2015 (“Final Rule”)
included significant changes, including two
new exceptions and clarifications to the Stark
Law.
 Effective: January 1, 2016 (except for definition
of “ownership or investment interest”).
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4. CMS Self-Referral Disclosure
Protocol
 Update on the SRDP as of Dec. 31, 2015
– The number of submissions: 740
– The number that ended in settlements: 131
– The number withdrawn: 52
– The number being reviewed: 169
– The percentage of disclosures to the SRDP that have been settled or
withdrawn: 25%
– The percentage under review: 23%
– The percentage of disclosures settled, withdrawn, or under active review:
48%
 Applicability of the 60-day Overpayment Rule
– 6 year look-back period for new disclosures after March 14, 2016
– 4 year look-back period for submitted disclosures prior to March 14, 2016
Source: With Stark Changes in Effect, Compliance, Self-Disclosure are a Whole New Ballgame, 25 Report on Medicare Compliance 1, 3 (2016).
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5. NPP Recruitment Exception:
What?
What is the Non-Physician Practitioner (“NPP”)
Recruitment Exception?
– 42 C.F.R. § 411.357(x) establishes an exception for
remuneration from a hospital/FQHC/RHC to a physician to
assist the physician with compensating an NPP to furnish
services to patients of the physician’s practice.

6. NPP Recruitment Exception: Who?
To What Providers does the Exception Apply?
 NPPs
– Physician Assistants; Nurse Practitioners; Clinical Nurse Specialists;
Clinical Psychologists; Clinical Social Workers; Certified Nurse-
Midwives
– Not CRNAs
 Specialty NPPs?
– Substantially all of (>75%) the services provided by the recruited NPP
must be:
• Primary Care Services; and/or
• Mental Health Care Services

7. NPP Recruitment Exception: Who?
(Cont.)
 What are Primary Care Services?
– Internal medicine;
– General practice;
– Family practice;
– Geriatric medicine; and
– Pediatric medicine
 What are NOT Primary Care Services?
– Specialties (e.g., cardiology, orthopedics, surgery, etc.)
– “Multispecialty” groups?

8. NPP Recruitment Exception:
When?
When can the exception be used?
 Recruitment of NPP by a physician (and, physician
organization by virtue of SITS (“PO”))
 Remuneration provided to physician by the DHS entity (for
example, a hospital)
 NPP has direct compensation arrangement with physician (or
PO)
– Employment, contractual, or other arrangement
– Not ownership
– No staffing company arrangements
 Referral of DHS by physician, PO, or NPP

9. NPP Recruitment Exception:
When? (Cont.)
When can the exception be used (cont.)?
 NPP has not, within 1 year of starting:
– Practiced in geographic service area of the hospital
– Been employed/engaged by physician or PO with a practice site in area
served by hospital (regardless of where NPP actually practiced)
 Only once every 3 years for the same physician (note: If the physician is
part of PO that has more than one nontitular owner, the entire PO is
subject to the 3 year limitation)
– Exception:
• Replacing NPP who left within 1 year of starting
• 2 year recruitment assistance limitation is measured from the
original NPP’s start date

10. NPP Recruitment Exception: How?
How should the compensation be structured?
 Recruitment Remuneration
– Total compensation provided by
the physician to the NPP may not
exceed FMV for the patient care
services furnished by the NPP to
patients of the physician’s practice
– Hospital’s assistance to the
physician cannot exceed 50% of the NPP’s total
actual compensation, signing bonus, and benefits
(e.g., health insurance, paid leave)

11. NPP Recruitment Exception: How?
(Cont.)
How should the compensation be
structured (cont.)?
 Recruitment Remuneration (cont.)
– Hospital’s assistance to the physician is limited to the first
2 consecutive years of compensation arrangement
between NPP and physician
– May not be determined in a manner that takes into
account the volume or value of referrals (referrals of
physician, other PO physicians or NPP) or other business
generated by the parties

12. NPP Recruitment Exception: How?
(Cont.)
• Other Requirements:
1. Set out in writing
2. Signed by all parties (hospital, physician (PO) and NPP)
3. Not conditioned on referrals
4. May not violate Anti-Kickback Statute or any Federal or State law or
regulation governing billing or claims submission
5. 6 year record retention
• Remuneration paid by hospital to physician (PO)
• Remuneration paid by physician (PO) to NPP
• Benefits = health insurance, paid leave and other routine non-case
benefits provided to similarly situated employees/contractors of the
physician’s practice
6. No unreasonable practice restrictions

13. NPP Recruitment Exception:
How? (Cont.)
How is the exception different from the Physician
Recruitment Exception?
 No income guarantees permitted
 No reimbursement of actual additional incremental
expenses (unless included in compensation/benefits)
 Limitations (e.g., types of NPPs, frequency of use of
exception)

14. NPP Recruitment Exception:
Practical Implications
 May help alleviate primary care shortage
–Projected shortage of primary care
physicians of 20,400 physicians by 2020
 Increase access to primary care and mental
health services
 Reduce financial burdens on physician
practices
 Attract new practitioners to hospital’s service
area
Source: Department of Health and Human Services, Projecting the Supply and Demand for Primary Care Practitioners Through 2020 (November 2013).

15. Timeshare Arrangement Exception: What?
What is the Timeshare Arrangement Exception?
– 42 C.F.R. § 411.357(y) establishes
an exception for arrangements
between physician/physician
organization (stand in the shoes)
and a hospital or physician organization (for which the
physician is not an owner, employee, or contractor) under
which the right to use premises, equipment, personnel,
items, supplies, or services for purposes of evaluation and
management services (“E/M”) is granted to the licensee.

16. Timeshare Arrangement Exception: Who?
Who can use the Timeshare Arrangement Exception?
 Parties: Must be:
– Hospital or PO; and
– Physician (or PO in whose
shoes the physician stands) who is not an owner, employee,
or contractor of the PO
 Either may be the licensor or licensee
 Other DHS entities such as labs or diagnostic testing facilities
cannot be parties to the arrangement

17. Timeshare Arrangement Exception: When?
When can the Timeshare Arrangement Exception be
used?
 Purpose: Premises, equipment,
personnel, items, supplies, and
services must be used:
– Predominantly for the provision
of E/M services to patients
– Not available where licensee
solely or primarily furnishes DHS

18. Timeshare Arrangement Exception: When?
(Cont.)
 Purpose (cont.):
– Purpose is to provide access to care for beneficiaries – NOT access to
DHS income streams or to facilitate intermittent DHS in multiple
medical practice sites
– Predominantly is not defined.
– May demonstrate “predominate” use for E/M services through any
reasonable, objective, and verifiable means (e.g., volume of
patients seen, number of patient encounters, types of CPT codes
billed, amount of time spent using premises, equipment, etc.).
 Identical E/M and DHS schedules. ◊ Added in final rule ◊
– Purpose is to prevent entities from allowing flexible use of the DHS
portion only (i.e., not paying for the E/M portion of the
space/equipment/services).

19. Timeshare Arrangement Exception: When?
(Cont.)
 Covers “use” arrangements only - permission to use someone
else’s “stuff”
– Does not protect traditional lease arrangements where a
possessory leasehold interest is conveyed. ◊ Added in final
rule ◊
– Not for arrangements transferring “control” (“right
against the world”)
– The language in the documents/contracts do not control
(e.g., lease, license, grant)
– Possible to have “exclusive use” arrangements or
arrangements with a term of one year or more that qualify
for the exception.

20. Timeshare Arrangement Exception: When?
(Cont.)
 If Equipment is Included:
– Equipment must be located in the same building where the E/M
services are furnished. ◊ Added in final rule ◊
– Equipment may not be used to furnish DHS other than those
incidental to E/M services furnished at time of patient’s E/M visit.
• e.g., x-rays, rapid strep tests, urine
dipstick tests for pregnancy diagnosis
– Equipment cannot include advanced
imaging, radiation therapy, clinical or
pathology lab equipment (except
CLIA-waived lab tests).

21. Timeshare Arrangement Exception: How?
How should the compensation be structured?
 Fee Formula:
– Set in advance
– Fair-market value
– Does not take into account volume/value of
referrals or business between the parties
– Prohibited: Fees based on a percentage of revenue
formula or a per-unit of service formula to the extent
those fees reflect services provided to patients referred by
the party granting permission to use or for services
covered by the arrangement to the party to which the
permission is granted.

22. Timeshare Arrangement Exception: How? (Cont.)
 Permitted:
– Time-based formulas (e.g., hours, ½ days, days, etc.)
– No minimum amount of time requirement.
– Significant development: CMS recognized that time-based
formulas are not at significant risk of fraud & abuse (at least for
this exception).
– Flat fee formulas
 NOTE: Per-unit/per-click prohibition promulgated under CMS’s Section
1877(b)(4) authority (exceptions that do not pose risk of program or
patient abuse).
– See also the Council for Urological Interests v. Burwell, 790 F.3d 212
(D.C. Cir. 2014) decision regarding CMS’s “arbitrary and capricious”
interpretation of legislative history.

23. Timeshare Arrangement Exception: How? (Cont.)
 Other Requirements:
1. In writing
2. Signed by the parties
3. Specify the premises, equipment, personnel, items,
supplies, and services covered by the arrangement
4. Not be conditioned on the referral of patients by the
physician to the hospital or physician organization on the
other side of the arrangement
5. Be commercially reasonable even if no referrals were
made between the parties
6. Not violate the Anti-Kickback Statute or any other federal
or state law/regulation government billing or claims
submission

24. Timeshare Arrangement Exception: How (Cont.)
How is the timeshare arrangement exception different
from the Office Space Exception?
 No exclusive-use requirement.
 No minimum duration of one-year requirement.
– Be careful of short-term arrangements modified frequently
to take into account referrals
 No requirement to confirm the space does not
exceed that which is reasonable/necessary.
 No minimum blocks of time.
– Be careful of selective time slots given to physicians based
on referrals

25. Timeshare Arrangement Exception:
Practical Implications
 Increase access to specialty care,
particularly in rural areas
 Flexibility afforded to hospitals and
physicians who may not require long-
term lease arrangements
 Exception still very limited
 Anti-Kickback and state law still apply

26. New Holdover Arrangement Rule
 The rental of office space and equipment exceptions and the
personal service arrangements exception permit holdover
arrangements if certain conditions are met.
(42 C.F.R. §§ 411.357(a), (b), (d))

27. New Holdover Arrangement Rule
(Cont.)
 Prior Rule: “Holdover” arrangement for up to 6 months if: (1)
an arrangement of at least 1 year expires; (2) the arrangement
satisfies the requirements of the applicable exception when it
expires; and (3) the arrangement continues on the same
terms and conditions after its stated expiration.
 New Rule: Indefinite “holdover” arrangements permitted if:
(1) the arrangement satisfies the requirements of the
exception when it expires; (2) the arrangement continues on
the same terms and conditions as the immediately preceding
arrangement; and (3) the holdover continues to satisfy the
requirements of the applicable exception.

28. New Holdover Arrangement Rule
(Cont.)
 Safeguards built into indefinite holdovers under the rental of office space
and equipment exceptions and personal service arrangements exception
– Amendment to the terms and conditions of the arrangement are not
permitted during the holdover
– FMV requirement must be met at all times during the holdover
 Application of the Final Rule to current “holdover” arrangements
– Arrangements in a valid holdover under the 6-month holdover
provisions on January 1, 2016 may make use of the indefinite holdover
provisions if all the requirements of the new holdover provisions are
met.
– Arrangements not in a valid holdover under the 6-month holdover
provisions may not make use of the indefinite holdover provisions.

29. Revision to Fair Market Value
Compensation Exception
 The FMV compensation arrangement exception permits renewals if: (1)
the arrangement is renewed on the same terms and conditions; and (2)
the renewed arrangement satisfies all the requirements of the exception.
(42 C.F.R. § 411.357(I))
– Prior Rule: Arrangements for less than 1 year may be renewed any
number of times.
– New Rule: Arrangements of any timeframe, including arrangements
for more than 1 year, may be renewed any number of times.
 Renewals under the exception are not required to be in writing
– Arrangement can be renewed by course of conduct; and
– Must have documentation establishing the renewed arrangement is
on the same terms and conditions as the original arrangement.

30. New Signature Grace Period
 Special rule permits temporary noncompliance with the signature
requirements of several compensation arrangement exceptions if the
arrangement otherwise fully complies with the applicable exception. (42
C.F.R. § 411.353(g))
– Prior Rule: If the failure to comply with the signature requirement is
inadvertent, the parties have 90 days to obtain the required
signatures. If the failure to comply is not inadvertent, the parties have
30 days to obtain the required signatures.
– New Rule: All parties have 90 days to obtain required signatures,
regardless of whether or not the failure to obtain signatures was
inadvertent.
 Still very limited - may only be used once every 3 years for the same
referring physician.

31. Technical Clarification: Writing
Requirement
 Current Rule: Exceptions require the arrangement to be set
out in writing including:
– Rental of office space and equipment (§ 411.357(a) and (b))
– Bona fide employment relationships (§ 411.357(c))
– Personal service arrangements (§ 411.357(d))
– Physician recruitment (§ 411.357(e))
– Isolated transaction (§ 411.357(f)
– Group practice arrangements (§ 411.357(h))
– Fair market value compensation (§ 411.357(l))
– Indirect compensation arrangement (§ 411.357(p))
– Obstetrical malpractice insurance subsidies (§ 411.357(r))
– Retention payments in underserved areas (§ 411.357(t))
– Electronic prescribing items and services (§ 411.357(v))
– Electronic health records and items and services (§ 411.357(w))

32. Technical Clarification: Writing Requirement
(Cont.)
 Final Rule Clarified: Single formal contract is not required to
meet “writing” requirement.
– Collection of documents may satisfy the writing
requirement
– Collection of documents may include “contemporaneous
documents evidencing the course of conduct between the
parties”
 Standard: Whether the available contemporaneous
document would permit a reasonable person to verify
compliance with the applicable exception at the time that a
referral is made.

33. Technical Clarification: Writing Requirement
(Cont.)
 Relationship of documents in a collection:
– Must clearly relate to one another
– Must clearly evidence one and the same arrangement between the
parties
 Signature requirement for a collection of documents:
– Required on a contemporaneous writing document the arrangement
– Must clearly relate to the other document in the collection and the
underlying arrangement
– This is still the hardest requirement to meet – Don’t forget about
electronic signatures, fax machines, e-mail, etc.
 Best Practice: single signed written contract

34. Technical Clarification: Writing Requirement
(Cont.)
 Examples of a collection of documents to demonstrate compliance with
the writing and signature requirement:
– Board meeting minutes or other documents authorizing payments for
specified services
– Written communication between the parties, including hard copy and
electronic
– Fee schedules for specified services
– Check requests or invoices identifying items or services provided,
relevant dates, and/or rate of compensation
– Checks issues for items, services, or rent
– Time sheets documenting services performed
– Call coverage schedules or similar documents providing dates of
services to be provided
– Accounts payable or receivable records documenting the date and rate
of payment and the reason for payment

35. Technical Clarification: 1-Year Term
Requirement
 Current Rule: Exceptions for the rental of office space, rental of
equipment, and personal service arrangements require a term of at least
one year. (42 C.F.R. §§ 411.357(a), (b) and (d))
– Note: the FMV exception still does not require a term of 1 year.
 Final Rule Clarified: 1-year term requirement is satisfied as long as the
arrangement clearly establishes a business relationship that will last for at
least one year.
– Formal written contract with an explicit provision identifying the term
of the arrangement is not required.
– An arrangement that lasts as a matter of fact for at least a year
satisfies the requirement.

36. Technical Clarification: Public Website and Public
Advertising Disclosure Requirement
 Current Rule: A physician-owned hospital must
disclose on any public website for the hospital and in
any public advertising that the hospital is owned or
invested in by physicians.
(42 C.F.R. §411.362(b)(3)(ii)(C))
• Final Rule Clarified: Term “Public website for the hospital”
does not include: (a) social media websites; (b) Electronic
patient payment portals; or (c) Electronic health information
exchanges
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37. Technical Clarification: Public Website and
Public Advertising Disclosure Requirement
(Cont.)
 Current Rule: A physician-owned hospital must disclose on any public
website for the hospital and in any public advertising that the hospital is
owned or invested in by physicians.
(42. C.F.R. §411.362(b)(3)(ii)(C))
 Final Rule Clarified: Term “Public advertising for the hospital” defined “as
any public communication paid for by the hospital that is primarily
intended to persuade individuals to seek care at the hospital.
– Excluded:
• Communications primarily used for recruiting
• Public service announcements
• Community outreach
– Advertising is not limited to a certain type of
communication medium.
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38. Technical Clarification: Public Website and
Public Advertising Disclosure Requirement
(Cont.)
 Final Rule Clarified: Report overpayments for failure to comply with the
public website and public advertising disclosure requirement through the
SRDP.
 Determining period of non-compliance for the SRDP
– Earliest possible date for non-compliance: September 23, 2011
– Period of non-compliance is the duration of the applicable
advertisement’s predetermined initial circulation unless the hospital
amends the advertisement to satisfy the requirement at an earlier
date
• Example: If a hospital pays for an ad in one issue of a monthly
magazine and the hospital fails to include the disclosure in the
advertisement, the period of non-compliance would likely be the
applicable month of circulation, even if the magazine continued to
be available in publisher archives, waiting rooms or other public
places.
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39. Technical Clarification: Public Website and
Public Advertising Disclosure Requirement
(Cont.)
 Final Rule Clarified: (a) ownership or investment interests
held by both referring and non-referring physicians are
included when calculating the baseline bona fide investment
level and bona fide investment levels thereafter; and (b)
definition of “ownership or investment interest” at
§411.362(a) defined as a direct (i.e., no intervening persons or
entities) or indirect ownership or investment interest (i.e.,
unbroken chain of ownership or investment interests) in a
hospital
Note: Delayed effective date of January 1, 2017.

40. “Remuneration” Definition Clarification –
“Split Bill” Arrangements
 Current Rule:
– A “split bill” arrangement occurs when a physician makes use of a DHS
entity’s resources (e.g. examination room, nursing personnel, and
supplies) to treat the DHS entity’s patients.
– A “split bill” arrangement does not involve remuneration if the DHS
entity bills the appropriate payor for the resources and services it
provides and the physician bills the payor for his or her professional
fees only.
 Final Rule Clarified: A “split bill” arrangement does involve remuneration
if the DHS entity or the physician bills a non-Medicare payor globally for
both the physicians services and the hospitals resources and services.
– This repudiates most of the Kozenske case – but a grant of exclusivity
may be still be considered remuneration

41. “Incident to” Rule Clarification
 Current Rule: Medicare regulations permit the billing
of services performed by qualified auxiliary
personnel under the supervision of a physician or
NPP.
 Final Rule Clarified: Although the ordering and
supervising physician/NPP need not be the same
person, the physician/NPP billing for the incident to
services must be the same physician/NPP who
supervised the auxiliary personnel performing the
services.

42. QUESTIONS?
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Amy J. McCullough
ajmccullough@polsinelli.com
Atlanta, GA
404.253.6058
William (Bill) Hoffman
whoffman@polsinelli.com
St. Louis, MO
314.552.6816