The long awaited second phase of the final regulations addressing the physician self-referral statute known as the "Stark Law" were published by CMS on Friday, March 26, 2004. See 69 Fed. Reg. 16056. The Stark Law prohibits a physician from referring Medicare and Medicaid patients for certain designated health services to entities with which the physician (or immediate family member) has a financial relationship unless the relationship qualifies for one of the exceptions set forth in the statute. The entity is also prohibited from billing for services furnished pursuant to a prohibited referral. Phase I of the final Stark II Regulations, published in January of 2001, addressed the scope of the prohibition, the category of exceptions applicable to both compensation and ownership relationships (most notable, the in-office ancillary services exception) and established certain new exceptions, including one for fair market value compensation relationships. Phase II addresses the categories of ownership exceptions, including the whole hospital ownership exception as modified recently by Congress for ownership in specialty hospitals, and compensation exceptions, including the exceptions for space and equipment rental, personal service and employment relationships, and physician recruitment. New regulatory exceptions are established, including one for professional courtesy discounts offered by hospitals to medical staff members. Other noteworthy items include a new exception to enable participation by physicians in community-wide health information systems, restrictions in the physician recruitment exception relating to recruitment of physicians to existing groups, and guidelines on establishing fair market value compensation. The Firm will publish a more comprehensive analysis of the new regulations shortly.
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