Refuge. The above exceptions and other exceptions not listed here largely follow safe harbor theory. Under a safe harbor exception, both parties must have signed a written agreement setting out the terms of their relationship and trade agreement. Any implied, informal, or handshake agreement is unlikely to be considered an exception to the Safe Harbor. Emanuele represents the first time a federal court has had the opportunity to interpret and apply the 2016 amendment to cmS with respect to the drafting requirement. It cannot be stressed enough that the writing requirement is essential to ensure compliance with exceptions and avoid any liability under Stark. Although the language transition to an “agreement” is intended to relieve service providers of the need to maintain and strictly update written agreements, the collection of contemporary writings must still contain the minimum requirements set out in the regulations, in particular a signature. Without meeting these requirements, health care providers can be held liable under Stark and the FCA, as federal courts are likely to continue to interpret the written requirement to arrive at the “basis of agreement” between health care providers and CMS. CMS also pointed out that an agreement that appears prima facie to promote a legitimate business objective of the parties may not be commercially reasonable if it merely duplicates another legitimate agreement.
CMS cited as an example a medical director agreement that duplicates another existing director agreement and is therefore not necessary. CMS also clarified that the remuneration can be changed prospectively without the need to renew the agreement for one year (which had led to some previous comments by CMS to adopt) and that there is no limit to how often the parties can review the remuneration as long as they meet the “predetermined” requirements each time (provided: that the term “predetermined” is an element of the relevant exception). It should also be noted that CMS also noted that nothing in the fair return at market value exception requires that renewals be in writing, but that the parties must be able to provide written documentation demonstrating that the agreement was renewed on the same terms as the original agreement. With respect to the perpetual retention provisions, CMS pointed out the following: CMS has adopted a new rule that gives parties 90 days to obtain or collect the necessary documents if an exception requires a written document – an extension of their leniency treatment of the previous 90 days with respect to signatures. This 90-day grace period only applies if the agreement complies with all other elements of an applicable exception. In addition, the rule states that an electronic signature is allowed if it is “valid under federal or state law,” and CMS`s commentary states that the authorization of electronic signatures also applies to a typed signature or even a name on the signature block of an email if it is “valid” under federal or state law. The concept of “validity” under federal or state law is not explained. Under general contract law, a signature is not required for most types of contracts to be enforceable; in fact, oral agreements are generally enforceable under state law, and only certain types of contracts require a written agreement. Temporary non-compliance with signature requirements. CMS completed its proposal without revision to give a company 90 days to obtain the required signatures, whether the non-compliance is unintentional or not.
[12] Previously, a company had only used a 30-day grace period to comply with the requirements if the breach was not accidental. Companies are still only allowed to apply this exception once every three years per doctor or group of doctors. CmS has revised the definition of “designated health services” (DHS) so that services ordered by a physician for a hospital hospital but do not increase reimbursement from a hospital`s Prospective Payment System (PPS) are not considered DHS. CMS offers the example of a specialist who is consulted in hospital and orders an imaging examination. If the imaging study does not increase reimbursement for PPH for hospital inpatients, the radiology test is not considered DUS, although it would otherwise fall under the DHS category of “inpatient hospital services.” This revised definition applies to short-term inpatient PPS, inpatient rehabilitation PPS, inpatient psychiatric facility PPS and long-term hospital PPS, but does not apply to referrals to an outpatient hospital reimbursed under outpatient PPS. With further revisions made by CMS, the term “commercially reasonable” in the Stark exceptions for compensation agreements is now still followed by the phrase “even if no reference has been made” between the parties, with the exception of the new exception for value-based agreements. Therefore, in practice, the reservation “even if no reference has been made” is engraved in the requirement of economic adequacy. However, CMS has extended the “predetermined” rule to require that the revised remuneration conditions – as opposed to the initial remuneration conditions – be effectively reduced in writing prior to the supply of goods and services to which the revised remuneration conditions apply so that the new remuneration is deemed to have been fixed in advance. CMS gave the example of a reserve agreement that was not initially reduced to the letter, but for which the parties reach an actual agreement whereby compensation would be $500 per shift.
Compensation of $500 per shift would be considered predetermined and, as mentioned above, the parties would have 90 days to create a letter and signatures (provided all other elements of an exception were met). However, if the parties agreed on Day 70 to increase compensation to $600 per shift, the revised pay conditions would have to be set out in writing prior to the provision of services so that the revised compensation would be considered “predetermined”. This also applies if the review of compensation took place within the 90-day period for the preparation of pleadings and signatures. CMS also reversed its previous position, stating that it will now allow the exemption from fair market value offsetting to be used to cover the rental of space and equipment. This is important since the exception for the rental of office space and the rental of equipment at fair market value does not require a term of at least one year. In November 2016, the Centers for Medicare & Medicaid Services (“CMS”) codified amendments to the Stark Act to make it easier for healthcare providers to meet the writing requirement. Many of the Stark exceptions require a written agreement between a referring physician and an entity with which they have a financial relationship. This requirement was originally interpreted as pleading in the form of a single signed agreement, but CMS amended the wording throughout the Statute to relax this high standard. Rather, the amendments codified the letter in an “agreement” or various contemporary documents proving conduct between the parties. CMS explains: Strict liability is a legal theory for law enforcement. Under strict liability, if a person committed the crime, he or she is guilty, regardless of his or her intent.
The most common example of strict liability is a speeding ticket. Police ran over a person who was running along the road. The person was traveling too fast and gets a ticket. It doesn`t matter if the person wanted to drive too fast or even knew they were driving too fast. The mere fact that they drove too fast is enough to be guilty. Exception for indirect compensation. A physician may receive compensation for a referral as an exception to the Stark Act. The compensation must have a fair value, disregard the value or number of references made by the physician, and must be provided for in a written agreement. CMS stated in its commentary that these initial remuneration terms do not have to be set out in writing to be considered “predetermined” as long as they have actually been agreed upon prior to the supply of goods or services for which compensation is paid. The provisions of the Stark Act include a provision that compensation is considered predetermined if it is reduced to a letter and stated in sufficient detail prior to the provision of services, but CMS stated in the commentary that compliance with the “judging” provision is not necessary for the initial remuneration terms to be considered “predetermined”. Exception for fair market compensation. The fair market compensation exemption allows doctors to enter into written agreements with other doctors and medical institutions.
These agreements must specify a timeline for the services and the cost of each service. Costs must be fair market value. In one comment, the CMS noted that physician compensation surveys do not always conform to fair market value, which requires a case-by-case determination. At the same time, cmS said physician compensation surveys are “an appropriate starting point” and, in some cases, “may be anything needed” to ensure compensation does not exceed market value. As an example, CMS explained that a salary survey may not correctly capture the fair market value of an orthopedic surgeon who is one of the “best” surgeons in the country and highly sought after by professional athletes due to the surgeon`s “specialized techniques” and good success rate. On the other hand, the CMS stated that it may not be appropriate to rely solely on a physician compensation survey to determine the fair market value of a primary care physician in a geographic area with a low cost of living, good schools and recreational activities, and a hospital with weak finances ..