Stark II Regulations Published

The Centers for Medicare and Medicaid Services (CMS) published the long-awaited final rule on the second phase of the Stark physician self-referral regulations on March 26 in The Federal Register. The new rule will become effective on July 24, 2004.

The Stark regulations address physician referrals of Medicare and Medicaid patients for 11 designated health services (DHS) to entities with which they have a financial relationship. Phase I of the regulations outlined exceptions to the rule including physician services and in-office ancillary services.

The Phase II regulations respond to numerous comments and questions submitted in response to Phase I as well as the Phase II proposed rule from January 1998. Issues addressed in the final rule include:

• Physician ownership or investment in publicly-traded securities and mutual funds;
• Physician ownership of rural providers and hospitals;
• Rental of office space and equipment;
• Bona fide employment relationships;
• Physician recruitment; and
• Certain group practice arrangements with hospitals.

Phase II also revises and clarifies some of the existing exceptions and expands them to address the following issues, among others:

• Implants in an ASC;
• Anti-kickback safe harbors;
• Professional courtesy;
• Charitable donations by a physicians;
• Retention payments in underserved areas; and
• Community-wide health information systems.

The final rule is available online at http://www.cms.hhs.gov/QuarterlyProviderUpdates/downloads/cms1810ifc2.pdf. More details regarding the rule will be published in upcoming issues of The Physiatrist.