The 2009 IPPS Final Rule - American Health Lawyers Association

stand in the shoes of an organization in which it has a 100% ownership interest and
would be deemed to have the same compensation arrangements with the same parties
and on the same terms as the organization that it owns. CMS also proposed a set of
conventions in the 2009 IPPS Proposed Rule that would dictate how physician SITS
and entity SITS would be applied in a chain of relationships.
B. The Here and Now of Physician Stand in the Shoes
1. Basic Rule for Physician SITS
In the 2009 IPPS Final Rule, CMS finalized revisions to the physician SITS. CMS
adopted the simpler of its proposed alternatives, amending the Stark compensation
arrangement provisions to provide that effective October 1, 2008, a physician is deemed
to stand in the shoes of his or her physician organization and have a direct
compensation arrangement with an entity furnishing DHS when:
• the only intervening entity between the physician and the DHS entity is his
or her physician organization, and
• the physician has an ownership or investment interest in the physician
organization.
42 C.F.R. § 411.354(c)(1)(ii)(A) & (B).
Similarly, CMS amended the definition of an indirect compensation arrangement
to provide that, for the purpose of analyzing an unbroken chain of financial relationships,
a physician is deemed to stand in the shoes of his or her physician organization if the
physician has an ownership interest in the physician organization (42 C.F.R.
§ 411.354(c)(2)(iv)(A)). Thus, the only operational difference between the Phase III Rule
and the 2009 IPPS Final Rule is as follows: between December 4, 2007, and
September 30, 2008, all physicians stood in the shoes of their physician organizations,
whereas on and after October 1, 2008, only certain physicians (i.e., owners) stand in the
shoes of their physician organizations.
2. Exceptions
The new SITS rules incorporate the following exceptions:
• AMCs. The physician SITS rule does not apply to an arrangement that
satisfies the AMC exception requirements under § 411.355(e). This
exception applies even if a faculty practice plan within an AMC includes
physician owners or investors whose interests are not titular. As a result,
mission support payments between an AMC component and the AMC’s
faculty practice plan do not trigger the SITS provisions as long as the
arrangement meets the requirements of the AMC exception. However, if
an AMC does not meet the requirements of § 411.355(e), the physician
SITS requirements would apply to a physician-owned faculty practice plan.
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