Fewer indirect pay deals will be subject to Stark scrutiny in 2022: 3 notes

Practice Management

CMS reduced the number of indirect compensation agreements subject to Stark Law referral and billing prohibitions in its Nov. 2 clarification of indirect compensation arrangements , according to a JDSupra report by Matthew Westbrook, an attorney specializing in healthcare regulatory compliance.

CMS released the Modernizing and Clarifying the Physician Self-Referral Regulations Final Rule in January, which made changes to Stark Law. After discovering issues with the indirect compensation arrangements guidance, it has clarified those oversights. 

Three things to know about the new definition of indirect compensation:

1. Prior to the clarification, an indirect compensation arrangements only existed if:

  • There's a chain of financial relationships between the referring physician, or immediate family member, and the entity providing the designated health service
  • The referring physician receives compensation that varies based on the volume or value of referrals, and the compensation unit isn't fair market value 
  • The entity ignores the fact that the referring physician receives compensation for referrals 

An indirect compensation agreement still must meet these three qualifications, but CMS' new rule clarified aspects of the existing amendment. 

2. CMS clarified an "individual unit" of physician compensation as services performed by the physician, according to Mr. Westbrook.

3. The new rule also clarifies that an indirect compensation arrangement exists if a referring physician receives compensation that varies with the volume or value of referrals and that unit of compensation either is not fair market value, could directly fluctuate as physician referrals fluctuate or is payment for the lease of office space or equipment.

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