CMS Extends Stark Regulations Deadline

From Foley & Lardner LLP — Health Care Industry Team [HealthIndTeam@foley2.com]:

On March 23, 2007, the Centers for Medicare & Medicaid Services (CMS) published a notice in the federal register extending for one year its timeline for issuing the next round of Stark regulations (Stark II, Phase III), originally due March 26, 2007.

However, the informal word is that the regulations are in final review at the Office of Management and Budget (OMB) and that they will probably come out within the next couple of months. Also, changes can be expected in (1) physician recruitment, (2) indirect compensation, (3) the physician hourly compensation fair market value “safe harbor” and (4) the definitions. Other changes and clarifications can also be expected. Finally, these regulations are also supposed to address the application of Stark to Medicaid.

CMS states

“On March 26, 2004, we published an interim final rule with comment period (the Phase II rule), which set forth the physician self-referral prohibition and applicable definitions, interpreted various statutory exceptions to the prohibition, and created additional regulatory exceptions for arrangements that do not pose a risk of program or patient abuse (69 FR 16054). Phase II also responded to comments received from an earlier interim final rule (the Phase I rule) regarding the physician self-referral prohibition, which was published on January 4, 2001 (66 FR 856). Under the previously established regular timeline for the publication of a final rule, we must respond to public comments on the Phase II rule in a final rule (the Phase III rule) published no later than March 26, 2007.

This notice announces an extension of the timeline for publication of the Phase III physician self-referral final rule and the continuation of effectiveness of the Phase II interim final rule. We are not able to meet the 3-year timeline for publication because we received extensive public comments requesting clarification of and revisions to the [Page 13711] physician self-referral regulations. We have given the numerous and varied public comments exhaustive review, which required a significant amount of time and resources. Further, because the physician self- referral rules are jointly enforced by CMS, the Office of Inspector General, and the Department of Justice, substantial interagency coordination has been necessary. This notice extends the timeline for publication of the Phase III final rule through March 26, 2008. In accordance with section 1871(a)(3)(C) of the Act, the March 26, 2004 interim final rule shall remain in effect through March 26, 2008 (unless Phase III is published and becomes effective before March 26, 2008). “