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Sep 09

Not All Physicians “Stand In The Shoes” According To Final CMS Rules

From Nossaman LLP’s healthcare law e-alert:

After receiving public comments on its proposed rules, the Centers for Medicare and Medicaid Services (CMS) has narrowed the application of the physician "stand in the shoes" (SITS) provisions of the Stark anti-referral law.  Only physicians who have an ownership or investment interest in a physician organization stand in the shoes of that physician organization.  Non-owner physicians and physicians with only a titular interest will not stand in the shoes of their physician organizations.  (73 FR 48434)  The final rules mean that fewer agreements between designated health services (DHS) entities and physician organizations will have to be restructured to comply with Stark than under the original physician SITS provisions.

Background

Stark prohibits physicians from referring patients for DHS to entities with which the physicians, or their family members, have an ownership, investment or compensation arrangement, unless an exception applies.  Many Stark exceptions that permit otherwise unlawful arrangements depend in part on whether compensation arrangements between a physician and a DHS entity are direct or indirect.  The physician SITS provisions establish a standard for determining whether compensation arrangements are direct or indirect.

On April 30, 2008, CMS proposed several alternatives for revising the physician SITS provisions.  On August 19, 2008, CMS published final regulations that will go into effect on October 1, 2008.  The rules deem a physician who has an ownership or investment interest in a physician organization to stand in the shoes of that physician organization.  Physicians with only a titular ownership or investment interest will not be deemed to stand in the shoes of their physician organization.

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