Stark II and physician compensation models: integrating business and legal issues

In March of 2004, the Centers for Medicare & Medicaid Services released new regulations that interpreted the Federal Physician Self Referral Act, otherwise known as Stark II. The new regulations, commonly referred to as the Phase II regulations, must be carefully considered when structuring physician compensation models. Stark II generally holds that physicians may not make a referral for designated health services to an entity with which they have a direct or indirect financial relationship. This Article outlines the provisions of Stark II that are applicable to physician compensation methodologies. In addition, the authors evaluate hypothetical transactions involving physician groups seeking viable compensation schemes and explore the validity and risks of each.     

Medicare program; fee schedule for physicians' services--HCFA. Correction of final rule

In the November 25, 1991 final rule (56 FR 59624) on the Medicare fee schedule for physician services, we inadvertently set forth regulations on the fee schedule at 42 CFR, part 415. However, our plan for the recodification of HCFA regulations calls for general regulations on payment for Part B medical and other health services to be codified in part 414, with part 415 reserved for regulations on payment to teaching physicians, teaching hospitals, and provider-based physicians. Therefore, in this correction notice, we are redesignating in their entirety the physician fee schedule regulations contained in part 415, subpart A to part 414, subpart A, and reserving part 415 for future use. Also, this document corrects technical errors that appeared in the final rule published in the Federal Register on November 25, 1991 (56 FR 59502) entitled "Medicare Program; Fee Schedule for Physicians' Services".     

Medicare program; reporting requirements for financial relationships between physicians and health care entities that furnish selected items and services--HCFA. Interim final rule with comment period

This interim final rule sets forth reporting requirements under the Medicare program for the submission by certain health care entities of information about their financial relationships with physicians. It implements section 1877(f) of the Social Security Act, which includes the requirements that entities furnishing Medicare covered clinical laboratory services must provide HCFA with information concerning their ownership arrangements. It also provides notice of HCFA's decision to waive the requirements of section 1877(f) with respect to certain entities that do not furnish clinical laboratory services.     

Medicare program; Medicare coverage of home health services, Medicare conditions of participation, and home health aide supervision--HCFA. Final rule

This regulation specifies home health aide supervision and duty requirements applicable to all home health agencies (HHAs) and hospices that furnish home health aide services under the Medicare program. It also specifies limitations and exclusions applicable to home health services covered under Medicare. The purpose of this regulation is to clarify Medicare home health policy and to promote consistent administration of the home health benefit.     

Medicare program; update of the reasonable compensation equivalent limits for services furnished by physicians--HCFA. Notice

This notice sets forth updated payment limits on the amount of allowable compensation for services furnished by physicians to providers that are not covered by the prospective payment system or per resident payments for graduate medical education. These services are paid by Medicare on a reasonable cost basis. The revised reasonable compensation equivalent limits are based on updated economic index data and replace the limits that were published in the Federal Register on February 20, 1985 (50 FR 7123).     

Medicare program; payments to HMOs and CMPs and appeals: technical amendments--HCFA. Final rule with comment period

This rule clarifies and updates portions of the HCFA regulations that pertain to payment for services furnished to Medicare enrollees by health maintenance organizations (HMOs) and competitive medical plans (CMPs); appeals by Medicare enrollees concerning payment for those services; and appeals by HMOs and CMPs with regard to their Medicare contracts. This rule completes the special project aimed at the total technical revision of part 417. Part 417 contains the regulations applicable to all prepaid health care organizations, that is, HMOs, CMPs, and health care prepayment plans (HCPPs). These are technical and editorial changes that do not affect the substance of the regulations. They are intended to make it easier to find particular provisions, to eliminate needless repetition and remove obsolete content, and to better ensure uniform understanding of the rules.     

Medicare and Medicaid programs; advance directives--HCFA. Final rule

This final rule responds to public comments on the March 6, 1992 interim final rule with comment period that amended the Medicare and Medicaid regulations governing provider agreements and contracts to establish requirements for States, hospitals, nursing facilities, skilled nursing facilities, providers of home health care or personal care services, hospice programs and managed care plans concerning advance directives. An advance directive is a written instruction, such as a living will or durable power of attorney for health care, recognized under State law, relating to the provision of health care when an individual's condition makes him or her unable to express his or her wishes. The intent of the advance directives provisions is to enhance an adult individual's control over medical treatment decisions. This rule confirms the interim final rule with several minor changes based on our review and consideration of public comments.     

Medicare program; home health agencies: conditions of participation--HCFA. Final rule

This final rule responds to the major comments we received on an interim final rule that was published on August 14, 1989 (54 FR 33354). That interim final rule added requirements to the current conditions of participation for home health agencies (HHAs). Specifically, the rule specified requirements for protecting and promoting patient rights; training and competency evaluation of home health aides; notifying State entities responsible for the licensing or certification of HHAs of changes in ownership of the agency or management of the agency; including an individual's plan of care as part of the individual's clinical records; and operating and furnishing services in compliance with applicable Federal, State, and local laws and regulations and with accepted professional standards and principles that apply to professionals furnishing home health services. Most of the provisions of the rule implemented section 930 of the Omnibus Reconciliation Act of 1980 (Pub. L. 96-499), section 4021 of the Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-203), and section 411(d) of the Medicare Catastrophic Coverage Act of 1988 (Pub. L. 100-360). This final rule implements changes, based on our review and consideration of the public comments, concerning patient notification of changes in payment liability, requirements for evaluators and instructors of home health aides, in-service training, and supervisory visits, and clarifies other home health issues.     

Medicare program; scope of Medicare benefits and application of the outpatient mental health treatment limitation to clinical psychologist and clinical social worker services--HCFA. Final rule

This rule addresses requirements for Medicare coverage of services furnished by a clinical psychologist or as an incident to the services of a clinical psychologist and for services furnished by a clinical social worker. The requirements are based on section 6113 of the Omnibus Budget Reconciliation Act of 1989, section 4157 of the Omnibus Budget Reconciliation Act of 1990, and section 147(b) of the Social Security Act Amendments of 1994 (SSA '94). This rule also addresses the outpatient mental health treatment limitation as it applies to clinical psychologist and clinical social worker services. This final rule also conforms our regulations to section 104 of the Social Security Act Amendments of 1994. Section 104 provides that a Medicare patient in a Medicare-participating hospital who is receiving qualified psychologist services may be under the care of a clinical psychologist with respect to those services, to the extent permitted under State law. In addition, this final rule requires that clinical psychologists and clinical social workers use appropriate diagnostic coding when submitting Medicare Part B claims.     

Medicare program; removal of the requirements for the cardiac pacemaker registry. Health Care Financing Administration, HHS. Final rule

This final rule eliminates all requirements and references regarding the Cardiac Pacemaker Registry (the Registry) in our regulations. It conforms to the Food and Drug Adminstration's (FDA) recent final rule that required any physician and any provider of services who requests or receives Medicare payment for the implantation, removal, or replacement of permanent cardiac pacemaker devices and pacemaker leads to submit certain information to the Registry. We used the information to administer Medicare payment for these devices. This rule implements an Act to Repeal An Unnecessary Medical Device Reporting Requirement passed by Congress to eliminate duplicative and unnecessary reporting.     

Medicare program; Medicare appeals of individual claims--HCFA. Final rule with comment period

Under section 1869 of the Social Security Act, Medicare beneficiaries and, under certain circumstances, providers or suppliers of health care services may appeal adverse determinations regarding claims for benefits under Medicare Part A or Part B. This rule expands our regulations to recognize the right of Part B appellants to a hearing before an administrative law judge (ALJ) for claims if at least $500 remains in dispute and the right to judicial review of an adverse ALJ decision if at least $1,000 remains in controversy. Also, this rule codifies in regulations: Limitations on the review by ALJs and the courts of certain national coverage determinations, and the statutory authority for an expedited appeals process under Part A and Part B.     

Medicare program; application of inherent reasonableness payment policy to Medicare Part B services (other than physician services). Final rule

This final rule finalizes the process that was set forth in an interim final rule published on December 13, 2002, for establishing a realistic and equitable payment amount for Medicare Part B services (other than physicians' services) when the existing payment amounts are inherently unreasonable because they are either grossly excessive or grossly deficient. This process does not apply to services paid under a prospective payment system, such as outpatient hospital services or home health services. The December 2002 interim final rule also described the factors we (or our carriers) will consider and the procedures we will follow in establishing realistic and equitable payment amounts for Medicare Part B services. In addition, this final rule responds to public comments we received on two provisions in the December 13, 2002 interim final rule relating to how we define grossly excessive or deficient payment amounts and to the criteria for using valid and reliable data in applying the inherent reasonableness authority.     

Medicare program; physician liability on non-assigned claims--HCFA. Final rule

This rule establishes in regulations the circumstances in which a nonparticipating physician who does not accept Medicare assignment of a claim is required to refund to the beneficiary any amounts collected for physician services determined to be not reasonable and necessary. Its purpose is to extend limitation of liability protection to beneficiaries with non-assigned claims when the physician knew or could reasonably have been expected to know that Medicare would deny payment for the services. Physician appeal rights are also specified. This rule conforms our regulations to section 9332(c) of the Omnibus Budget Reconciliation Act of 1986.     

Medicare and Medicaid programs; advance directives--HCFA. Interim final rule with comment period

This interim final rule amends the Medicare and Medicaid regulations governing provider agreements and contracts to establish requirements for States, hospitals, nursing facilities, skilled nursing facilities, providers of home health care or personal care services, hospice programs and prepaid health plans concerning advance directives. An advance directive is a written instruction, such as a living will or durable power of attorney for health care, recognized under State law, relating to the provision of health care when an individual's condition makes him or her unable to express his or her wishes. The intent of these provisions is to enhance an individual's control over medical treatment decisions. This rule implements sections 4206 and 4751 of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90), Public Law 101-508.     

Medicare program; requirements for providers and suppliers to establish and maintain Medicare enrollment. Final rule

This final rule requires that all providers and suppliers (other than physicians or practitioners who have elected to "opt-out" of the Medicare program) complete an enrollment form and submit specific information to us. This final rule also requires that all providers and suppliers periodically update and certify the accuracy of their enrollment information to receive and maintain billing privileges in the Medicare program. In addition, this final rule implements provisions in the statute that require us to ensure that all Medicare providers and suppliers are qualified to provide the appropriate health care services. These statutory provisions include requirements meant to protect beneficiaries and the Medicare Trust Funds by preventing unqualified, fraudulent, or excluded providers and suppliers from providing items or services to Medicare beneficiaries or billing the Medicare program or its beneficiaries.     

Medicare program; additional supplier standards. Health Care Financing Administration (HCFA), HHS. Final rule with comment period

This final rule establishes additional standards for an entity to qualify as a Medicare supplier for purposes of submitting claims and receiving payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). These regulations will ensure that suppliers of DMEPOS are qualified to provide the appropriate health care services and will help safeguard the Medicare program and its beneficiaries from any instances of fraudulent or abusive billing practices.