The 2009 IPPS Final Rule - American Health Lawyers Association

CMS, however, wants to “incent” parties to exercise diligence. CMS states that it
believes that ninety days is sufficient time for parties to discover whether a signature is
missing, and thirty days is sufficient time for parties to procure signatures that they know
are missing when they enter into relationships (73 Fed. Reg. at 48707).
An entity may use the provision for alternative method for compliance with
signature requirements only once every three years with respect to the same referring
physician. CMS specifically declines to extend relief to failures to satisfy other
procedural or form criteria of an exception such as the amount of compensation or the
description of the services.
B. CMS’ Stark Worldview
During its preamble discussion, CMS responds to a number of comments
seeking guidance as to when the Stark Law referral prohibition would be triggered. The
agency’s responses reflect a rigid application of the statute. CMS flatly rejects a number
of ways to interpret Stark so as to reduce the frequency of technical violations. Instead,
the agency reiterates a strict analysis that many consider to be at odds with practical
realities. The agency also fails to address the complexities created by the intersection of
state law and Stark.
CMS takes the position that all elements of an exception must be satisfied at the
onset of the financial relationship between a physician and a DHS entity in order to
avoid triggering the referral prohibition. The alternative method of compliance with
signature requirements is the only practical concession to the healthcare industry
offered by the agency. CMS specifically rejects the notion that the parties can
retroactively correct deficiencies: “[A]ll of the requirements of the exception must be met
at the time the referral is made. Further, we believe that the statute does not
contemplate that parties have the right to back-date arrangements, return
compensation, or otherwise attempt to turn back the clock so as to bring arrangements
into compliance retroactively” (73 Fed. Reg. at 48703). CMS also emphasizes that Stark
is a strict liability statute and flatly refuses to explore when inadvertent or unknowing
violations should be subject to special consideration or more lenient treatment (73 Fed.
Reg. at 48704).
In explaining its analysis of the Stark Law, CMS fails to address the effect of
state law. More specifically, CMS does not address whether an enforceable written
agreement under state law would satisfy the written agreement requirement under a
Stark exception. Likewise, the agency does not analyze the implications under the Stark
Law when state law permits parties to make an agreement effective and enforceable as
of a past date. Many healthcare lawyers rely upon state law contract principles to
determine what configuration of writings, payments, and signatures constitute a written
agreement. Although CMS may disagree, looking to state contract law to define a
written agreement is a practical approach and an approach that many would contend is
consistent with congressional intent.
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