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Stark Updates – 2022 Medicare Physician Fee Schedule

on Tuesday, 23 November 2021 in Health Law Alert: Erin E. Busch, Editor

CMS recently promulgated a few updates to the Stark rules in the 2022 Medicare Physician Fee Schedule (PFS) Final Rule.  Highlights of the changes are as follows:

Indirect Compensation Arrangements

  • Prior to 2021, “indirect compensation arrangements” only arose if an unbroken chain of financial relationships existed between a physician and DHS entity with the physician’s compensation varying in the aggregate based on the volume or value of referrals.
  • CMS confirmed its interpretation that payments based on units of service will likely result in the aggregate compensation varying with the volume or value of referrals or other business generated for purposes of applying the ICA definition.
  • With the changes to the Stark rules in early 2021, CMS revised the definition of “indirect compensation arrangement” to also require that the unit of compensation not be fair market value or include the physician’s referrals in a manner that positively correlates with the amount of compensation paid to the physician, thus further limiting the scope of the definition.
  • With the 2022 PFS, CMS acknowledged an error in its 2021 rulemaking in that arrangements involving the lease of space or equipment may be left out of “indirect compensation arrangements” altogether, thus, resulting in certain rental arrangements involving per unit financial arrangements being outside the scope of Stark. Recall that Stark’s lease exceptions prohibit payment arrangements that are based on per unit or percentage of revenue fees based on referrals from the physician.  CMS views such payment arrangements as potentially abusive. Thus, CMS revised the definition of “indirect compensation arrangement” to include instances where the unit of compensation is payment for the lease of office space or equipment.  CMS views this change as a technical correction. 
  • CMS reaffirmed its intent that even with the addition of certain leasing arrangements, the “indirect compensation arrangement” definition will be much narrower scope than prior to the 2021 rulemaking.

Under Arrangements

Importantly, CMS continues to recognize that “under arrangements” agreements and other agreements that do not transfer dominion and control over space or equipment are not lease arrangements and thus are not necessarily subject to the per click or percentage of revenue limitations.

COVID Vaccinations

Even though COVID-19 vaccination reimbursement is not currently paid through the Medicare program, CMS preemptively removed the frequency limits from the Stark exception related to immunizations as they pertain to COVID-19 vaccinations unless and until CMS otherwise imposes annual frequency limits on the COVID-19 vaccine.

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