AHLA's Speaking of Health Law
The American Health Law Association (AHLA) is the largest nonprofit, nonpartisan educational organization devoted to legal issues in the health care field with nearly 14,000 members. As part of its educational mission, AHLA's Speaking of Health Law podcasts offer thoughtful analysis and insightful commentary on the legal and policy issues affecting the health care system. AHLA is committed to ensuring equitable access to our educational content. We are continually improving the user experience for everyone and applying the relevant accessibility standards. If you experience accessibility issues, please contact accessibility@americanhealthlaw.org.
AHLA's Speaking of Health Law
Latest Stark Law Trends and Developments
Joe Wolfe, Attorney, Hall Render Killian Heath & Lyman PC, speaks with Charles Oppenheim, Partner, Hooper Lundy & Bookman PC, about trends, updates, reforms, and developments related to the Stark Law. They discuss the history of Stark and recent reforms, how both new and experienced lawyers can approach Stark, practical applications of the 2021 changes, and best practices for analyzing financial arrangements and creating compliance processes. Charles is the author of the supplement to the Seventh Edition of AHLA’s The Stark Law: Comprehensive Analysis and Practical Guide. From AHLA's Fraud and Abuse Practice Group.
Watch the conversation here.
New Health Law Daily Podcast Coming in January 2025
Coming in January 2025, AHLA’s popular Health Law Daily email newsletter will also be available as a daily podcast, exclusively for AHLA Premium members. Listen to all the current health law news from the major media outlets on this new podcast! Subscribe Now
<silence>
Speaker 2:This episode of A HLA speaking of Health law is brought to you by A HLA members and donors like you. For more information, visit american health law.org.
Speaker 3:Uh , welcome everyone to today's A HLA podcast where we'll be talking about key trends and developments under the, the physician self-referral law , uh, often referred to as the Stark Law. I think many of us have heard that, that quote by Troy Barsky , that the Stark Law is a , a tortured web of confusing standards , uh, from his time when he was , um, you know, he's a former director of division of , of Technical Payment Policy at CMS, and it, it is a technical law, but I , I , I do think there, there are ways to find themes and ways to provide some clarity by talking about it. Um, there's a lot we could cover in today's podcast on the Stark Law . Um, things like trends, new updates and interpretations, some flexibilities and , and enforcement priorities. Um, and our hope today is that you leave with just a better understanding of this law , um, and that we've, and we, and we hopely, will help untangle some of that web that Troy was referring to. Uh , my guest today is Charles Oppenheim, and we are, and he and I are going to pick a few topics from that list to focus on today. Um, I'm sure his name sounds familiar to most of you. He's , uh, well-respected , um, in the fraud and abuse space. Uh , he recently authored a supplement to the sixth edition of The Les's Guide titled The Stark Law Comprehensive Analysis and Practical Guide, along with Ben Dory and Amy Joseph. Uh, today's podcast is brought to you by the American Law Health Law Association's Fraud and Abuse Practice Group. Uh, I currently chair the the Practice Group, and our mission is to help our members stay informed about healthcare fraud and abuse and compliance issues. Uh, we're getting ready to wrap up another program year, and our vice chairs are doing a great job of developing webinars , uh, publications and other content to educate our members. Um, before we get into the , the kind of back and forth here , um, Charles, why don't you go ahead and introduce yourself.
Speaker 4:Thanks, Joe . Uh, so my name is Charles Oppenheim, and I'm a partner in the law firm of Hooper Lundy and Bookman. Uh , I'm located in Los Angeles and San Francisco offices , uh, of HLB. And , um, I'm a transactional healthcare lawyer. I've been doing healthcare law for more than 30 years, and in particular, one of my signature issues is kind of the Anti-Kickback Statute and the Stark Law. Um, and I wrote the , the , the book that Joe referenced on the Stark Law. I wrote the first edition all the way back in 1998, and then every few years we update it most recently with the seventh Edition, and then even more recently with the supplement to the seventh Edition. And , um, I'm sure stark aficionados are on the edge of their seat waiting for , uh, the eighth edition, which will be the next one out. That'll be in another year or two. Every, you know, the Stark Law evolves. So, you know, every few years there's, you know, a need to kind of update the information that's available out there. Thanks, Joe .
Speaker 3:Yeah , and thanks Charles. I , I guess that shows, I think I referenced the sixth edition in the intro, and I need to run out and get the seventh. Um , so ap appreciate that. Um, and then I'm Joe Wolf. I chair the , uh, fraud and Abuse , uh, practice Group for the American Health Law Association. Uh , I'm a shareholder at Hall Render and I lead hall Renders Health Regulatory Practice Group. And like Charles , um, focus a lot of my practice on , um, stark and Kickback. I think Charles and I presented maybe the first time 10 years ago or so, and so , um, and it's good to be be back together. Um, just starting off a bit of level setting , we think about the Stark Law. Um, I, for , for the listeners that aren't that familiar with the law , um, again, the Stark Law is another name for the physician Self-Referral Law. This is a law that Charles mentioned. You know, the , the first , uh, edition of the book was back in 1998. This law has been around , uh, for a while now. Uh, it was enacted to address policy concerns that when a healthcare organization, let's say a hospital or a medical group has a financial arrangement with a referring physician, that arrangement might inappropriately influence the physician's medical decision making , uh, cause patient steering or perhaps over utilization , um, under the Medicare program. Uh, so the Stark Law Framework says that if there is a, that there is essentially a referral and billing prohibition. So essentially to that means that when you have that financial arrangement and it's present between the entity, again, let's say a hospital or a medical group, and the referring physician, then the physician can't make a referral for certain kinds of designated health services, like inpatient or outpatient hospital services, for example. And the entity can't submit claims for the inappropriately referred services. So that's how the law works. Um, and so if you have that financial arrangement , um, it's supposed to meet a stark exception. And so a lot of my work, and a lot of what Charles does , um, is analyzing whether or not arrangements meet , um, a stark exception. Uh, and, you know, one , analyze whether Stark applies, if it does apply, how does the analysis work on a stark exception , uh, there are a lot of stark exceptions. There are over 30 of them. Um , if you look just at the compensation exceptions alone found in 4 11, 3 57 of the regulations we're up to BB in the regulations. So I mean, that's means there's 28 just in that part of the regulations alone. Um, when you do this kind of analysis, what's critical is that you kind of work through and sequence, do you have a physician? Do you have an entity? Uh, is there a financial relationship? Is there a referral being made , uh, from the physician to the entity? Are there designated health services in the mix? Um, is it payable under under Medicare or, or perhaps Medicaid too . Um, and so there's a lot to unpack there, and that's why, you know, looking at a , a resource like Charles , uh, has, has developed and , and is team is so important. Um, as he alluded to, you know, there have been iterations of that book, but when we look at the history of Stark, it has had a very complex rollout over time. It's incremental and it's a bit , uh, complex , um, over time. And you have to look at the rules that were in effect at the time. So if you're kind of new to Stark, you're gonna start hearing about , uh, the importance of a more granular review of the Federal Register and about the different iterations called Stark one or Stark two , and then phase 1, 2, 3, and the regulatory sprint. Those will be words you get , uh, very familiar with. And that last one , um, is really important. Back in 2021, some new regulations went into effect that we, we often refer to as a regulatory sprint. That reform stark , uh, notably it made the law more flexible. Uh , it also clarified the big three of fair market value, commercially reasonable in the volume or value standard. Um, it rolled out the new Stark value based enterprise framework. Uh , and those are some of the big items that have taken place again, since these new rules went into effect. So again, the goal here was to level set, and now Charles and I are gonna have some back and forth about , uh, practicing in this space, what those rule changes mean , um, and just hopefully give you some, some practical guidance on, on how to interpret this law. So , um, I'll start off with a question for Charles. Um, you know, Charles, you mentioned earlier you practice has largely focused on Stark over the years. Um , if you're thinking about someone new to healthcare, how do you recommend that they get their arms around the law and, and the complexity that we were just alluding to?
Speaker 4:No , that's a great question, Joe. I think , um, for the person who's new to the area, I think , um, you know, the , the, the , the initial idea would really just be to familiarize yourself. So you kind of have , um, the ability , ability to do some issue spotting. There are some , uh, introductory materials available. CMS has a website dedicated to the Stark Law. The government doesn't call it Stark. They usually call it the federal physician Self-Referral law. But , um, so CMS has a website. Um, the OIG has compliance guidance, and they mention the Stark Law, again, just in a cursory way, but enough to kind of give you, to give the beginner kind of a little bit of a , a heads up . And there are articles and other things out there. If you, you know, do some Google research that will give you a little bit of an intro. If you have , uh, the good fortune to be at a firm where there are lawyers who are experienced practitioners in the area, one of the best ways is just to sit down with 'em for a few minutes and ask them to give you an overview and an introduction. I mean , Joe just gave us, if you're new to the Stark area, just like, again, like a very high level, and as an introductory matter, you know, you probably wanna approach fact patterns kind of with that, with almost like a checklist in mind, like Joe mentioned. You know, like, is there an ownership or a compensation arrangement between the physician and the entity? Is the physician making referrals of designated health services and have a list in case you haven't memorized the 10 designated health services and, and, and , and such and so on. And , um, but approach , uh, stark analysis. I think with great care, it , it is , um, very convoluted, and there have been, you know, decades of regulatory analysis, and the regulatory pendulum has swung back and forth with CMS trying to tighten the screws and then loosening the rules. And so it goes back and forth. But not withstanding that there are things that they said in the regulations even 20 or 25 years ago that haven't been overruled and are still valid. You can rely on them, but there's also a lot in there that has been overruled. So unless you're really familiar with it, or you , or you go through all of the regulations in order , um, it , it's, it's not hard to kind of get lost in the woods. So issue spotting is, is kind of your first step as a beginner, but , uh, it's, it's pretty daunting to take on a complicated stark analysis if you're new to the area , I guess, you know. So I've talked a little bit about what it , how to get into it if you're new to the area. But, but Joe, I wonder if you have suggestions or thoughts to people who are more veterans, like, what do you, what are your practice tips for them ? What do , what do you see as kind of like the big picture trends at the moment?
Speaker 3:Yeah, thanks Charles. You know, I , I, I would say to even those that have practiced for a while, that I think it is really important to get a good grasp of these recent rule changes , uh, to make sure you're not just advising. Like things have always been. Um, if you do that, I, I think you'll come up with conclusions that situations are, are potentially noncompliant when the , the new rules provide a lot more flexibility. Um, you know, we've even seen where self disclosures that were, you know, placed in the disclosure protocol, the government comes back and says, you know, have you looked at these, you know, new rule changes since these were submitted? So I think those the , for a person who's practicing the space, get some familiarity with the new rules. Uh, in this most recent iteration with the regulatory sprint, I think the government , uh, CMS did a , a good job of rehashing where we've been and , and where we are now. Um, that was really the case under the big three. The government kind of discussed some of the historical thinking on fair market value, how extenuating circumstances are important , um, with commercial reasonableness, how the new definition would be interpreted in similarly the volume or value standard. Uh, the government also gave lots of good examples , um, in that part of the commentary and also in others, like the value-based enterprise rules. And I think , um, our healthcare clients and, and those working in the space can kind of compare their scenarios with some of those examples as they, as they analyze , uh, these arrangements. I think along those lines too , the new , uh, value-based enterprise rules, getting your arms around that and how they sort of fit in the stark toolbox is important. You , you might have models that in include or could include incentives for things like care coordination, quality , uh, control of cost to a payer, or that are sort of transitional models that are moving us from , uh, volume towards value. And so understanding how they fit within the, the toolbox , uh, is , is gonna be really important. And it is really hard to stay on top of these changes. So, you know, if you're not in the weeds on this, I , I would recommend even somebody that's been practicing a while to try to take a look at these rules again, or to bounce ideas off of somebody who's a little closer to them, try to find resources, interpreting the rule changes as well. 'cause I think it's really important. Um, kind of a Charles, you know, the , the 2021 changes, I actually, I hit on it a little bit more earlier, regarding flexibility. Um, they, those rule changes provided some flexibility. Can you give us some examples of practical applications of, of those rule changes?
Speaker 4:Y yeah , I think, I think absolutely. So one of the things is, you know, stark , um, has exceptions that are designed to allow referrals to continue for designated health services, notwithstanding financial relationship. And , um, as Joe mentioned, there's a lot of different exceptions in the comp , uh, for, for different types of compensation arrangements. And many of them require that the compensation arrangement , um, be memorialized in a written agreement signed by the parties. And CMS has provided greater and greater latitude over time in that particular regard. And like, for example, in the , in the most recent , uh, regulations, they've said that , um, your arrangement, even if it's required to be in writing, in a writing signed by the parties, and satisfied the exception, as long as all the other requirements of the exception are satisfied other than writing and signature. Um, and then you have up to 90 days after the start of the arrangement to, to, to document it in writing and, and sign it. So that's an example where there's a lot of latitude. That never was the case in the old days. And clients would often , um, have a kind of a , a foot fault where they needed to get an arrangement going right away. It , there was a desperate need and immediate clinical need. So the doctor started doing the services. Um, and then , you know, there was some catch up where <laugh> , you know, you got the lawyers involved and you wrote , wrote something up and got it signed by the parties. But if it happened after the fact, you would have a technical stark violation for a period of time between when the arrangement began and when it was signed up and documented. So that's a , that's a terrific , um, break. There's another, another example of leniency is the sort of imperfect performance. So for years, we know lawyers like Joe and I struggled when clients came to us where arrangements were perfectly documented, perfect writing , uh, perf signed by the parties, and the, the exception was satisfied for, for a compensation arrangement. But the parties had accidentally veered off, like, let's say you have an office lease, but the parties had forgotten to implement A-A-A-C-P-I adjustment, and all of a sudden they were a year or two in, or even six months in, and they had an oopsie moment where they realized that the rent they had been collecting was the old rent. They hadn't adjusted as they were required to under the terms of the lease, and folks weren't worried that they had a star violation. Now, CMS has said that as long as those kinds of , um, technical bloopers occur in the course of an agreement, but they , not intentionally , you don't have deliberately changing things , uh, but you just have a mistake. You can fix them during the course of the arrangement or even up to a period, a grace period after the arrangement ends, and as if the parties at least are restored to the place where they supposed to be under the written agreement. It's kind of a no harm, no foul . So again, these are the kinds of examples of the leniency that CMS has provided to people that are really very welcome.
Speaker 3:That's excellent. Charles. I, I probably would've picked those examples as well. They, they have provided , um, good flexibility.
Speaker 4:One question I had for you, Joe, is , um, do you see , uh, what do you see in , in , uh, in terms of clients that have , uh, multiple complicated financial relationships where a physician may have , um, various sources of income? Like, do you , um, how do you view that under Stark? Do you view that a physician would potentially come within several different Stark compensation arrangements at the same time? Or do you view it as the doctor can only satisfy one at a time? Like, how do you look at those types of situations? Joe ,
Speaker 3:I Thanks Charles. It's a good question. Um, you know, first of all, under the Stark regulations, and as you, you work your way through the commentary, it , it does say that, that you only have to meet one stark exception. So we, we know that that's sufficient to, I would say, protect a financial arrangement. Um, you know, I do think sometimes it's helpful if you think about relying on multiple exceptions. Uh , I sometimes call it a redundancy analysis. Maybe you have an employed physician. Um, and then, you know, under an employment arrangement, you are relying essentially on the big three, making sure that the compensation's fair market value that's commercially reasonable, that you haven't taken into account referrals. Um, so you might be on all, all, you know, squarely on , uh, fitting within that exception. And maybe that's sufficient. But if, if it, it also is natural that you could be a stark group practice , uh, that may, may allow for an additional analysis to help protect the arrangement. And beyond that, if the model's structured perhaps to align with the new value-based enterprise rules, why not, you know, wrap that into the same analysis, it would put you in perhaps the best spot , um, if the arrangement was ever challenged. Again, if it , you don't have to step through more hoops , um, you know, why not , uh, why not try to, you know , incorporate those. Um, I do think there, you know, that's one area , uh, answering the question. The other is, can you look at potentially kind of segments, you know, some of the compensation , um, is, is protected under one , uh, exception and , and perhaps another one could be , um, compensated un under another. I think there are, are opportunities to do that. Um, you know, I I think of what if you have an employed physician group and , um, your , your physicians are , are earning compensation cons under that employment. But what if you also have , um, an arrangement with an IPA , um, where their re the medical group or the physicians are receiving separate compensation that flows through, you know, could you rely on the employment exception for the core compensation? Maybe the risk sharing exception for that, that other compensation. Uh, this also comes up sometimes in the context of, of a CO related distributions as well. And I think there is an opportunity to think through how those different , um, arrangements fit together and what strategy may be available. Um, you know, if this services can be separated out, maybe that's an , an opportunity. Uh , but, but I think that there is, if you look back to the commentary, there was some commentary back in phase two of Stark where the government discussed , um, situations where an arrangement , uh, where , where Stark could permit , um, multiple agreements between a physician and an entity as long as those individual agreements fit within an exception , um, to , to the, to the stark clause . So I think there's an opportunity to look at that , um, as a redundancy analysis or if there is a , a, a discreet services or, or there's some combinations of how you could do that.
Speaker 4:Yeah, I , I think that makes sense. One , one issue I just just throw out there, I guess is , um, something referred that's sometimes referred to as stacking, where you have an arrangement , uh, you have an arrangement between a physician, let's say, and a hospital that satisfies an exception. Maybe it's an employment agreement, then maybe you have an on-call coverage agreement, then you have a medical director agreement, and you may have a whole bunch of, you know, maybe one after another and they're stack on top of each other. Each one looked at alone , you know, may look absolutely copacetic. But that you have to also consider kind of the big picture, like, if you add all of these things together, do you have a doctor who's working 27 hours a day? You know, do you have compensation that's kind of skyrocketed? So, so that's kind of a , a , another kind of issue to think about on the side as well.
Speaker 3:Yeah , I agree. And I, I think you know what , with all of this , um, it does come down to defensibility , um, in a straightforward way. If you're designing a model, how do you intend to ultimately defend the model? Um, again, back to a redundancy analysis. Well, we think it, we could defend it this way. Um, and we think we have a solid foundation for that. And, and we've documented that. We also think these alternative approaches may also , uh, be be there and available as well . So , uh, Charles, I was thinking about, you know, we talk about kind of complexity and, and we were first just focusing on Stark, but , um, as, as those of us work in this space, you're not just talking about Stark when you design arrangements. You're talking about the Stark Law, the kickback statute, civil monetary penalty laws , state laws , um, you know, how do you think about , uh, this, the , an analysis involving, you know, the , the , these different laws? Do you focus on one over another? How do you, how do you, how do you think about these multiple analyses that are, that are often necessary?
Speaker 4:Right. No, that's a good question. And they are often necessary. Yeah. I, my starting place is always , um, under , under federal law is always the Stark Law. And then , um, when I've done that, I would turn to, if I'm looking at state law, the state's equivalent, which a lot of states have their own self-referral laws. And the reason is because the Stark Law is kind of a strict liability concept. So if the , if there's a financial relationship and the physician is making referrals to the entity for designated health services, you need to have an exception available to protect those referrals. And , um, if they don't, if you don't have an exception available, the referrals are prohibited and the entities prohibited from billing for the services performed pursuant to a prohibited referral. So that's the case, regardless of intent, the parties can be pure of heart, and in fact, their arrangement could be, you know, absolutely blessed, you know, and perfectly legitimate. But if it doesn't satisfy a stark exception, you , you know, you're dead in the water. And so that's always my starting place because you , you have to, you have to pass star , uh, stark in order to, to pass, go and collect $200. Now, I also think that if you do satisfy stark exceptions, I think it helps on the kickback analysis, because I think, I think there's, and the OIG will always have a disclaimer that says there are separate laws, and just 'cause you comply with Stark doesn't mean we're giving you a pass on the kickback statute. And I understand they have to say that, but from a practical standpoint, if the parties have worked hard to make sure they're satisfying a stark exception , um, which often means satisfying regulations set up been issued by the federal government fairly recently in great detail, I think that tends to show , um, a compliant mindset and a desire to be on the right side of the law. And that mindset actually does help on the kickback statute , because on the kickback statute intent matters a great deal. And if you can show that your pure heart, that goes a long way to putting to toes any kickback concerns. So that's always the order of operations when I'm looking at an arrangement. Well , we talked a little bit about some of the flexibilities , uh, the hold , the, the ability to go 90 days without collecting signature, et cetera. How do you , um, how do you view those flexibilities in terms of the way clients , uh, uh, put together their compliance process? In other words , um, do those new flexibilities allow a client to establish policies for contracting with physicians that say, Hey, you know, you got up to 90 days to write this thing up and sign it. Um, do they sort of build that into the process, or do they hold that kind of back as , um, you know, we have it if we need it, but our policy is still that you're supposed to write up the agreement and sign it before you start performing services and , and sending money out?
Speaker 3:Yeah, it's my, it's a good question. Um, you know, in , in my experience , um, many of the clients I work hold those in, in reserve. I mean, it is something to think about when you, when you write a policy , um, you know, I , I think it's important to incorporate , um, some best practices into your policy, but also make sure that the , um, the individuals implementing the policy , um, are viewing it as a policy. Sometimes I, I see , um, policies are drafted that , um, you know, they mention that their , their purpose is to comply with the Stark Law, but almost , um, say state that if you don't do it exactly by the policy, you have a stark violation. I think that's a little dangerous. Um, you know, I think a policy is an attempt to , um, have a contract process that's gonna be defensible under, under the law, but within the, I , I think educating your people as to the policy is what we think are some best practices, and that if we , um, don't follow the policy to a team , maybe we take the, the vari variance to compliance and they have some discretion as to how this policy's ultimately implemented, is a , is a way to sort of thread the needle here and avoid confusion. Um, I would rather have , um, you know, if if individuals , uh, don't get the contract signed, you know, in your example, Charles, and they get this contract signed 60 days after the date, it's, it's implemented. Um, we know and , and you that that's not a stark violation. Um, and I don't want someone running, you know , uh, raising concerns within the organization that we have a stark violation. I would rather have them say, Hey, we aren't following the policy here. We need to understand and then resolve that. Um, and , and of course, the conclusion would be we don't have a stark violation, you know, in that example. So most organizations , um, I think , um, are holding some of these concepts in reserve. It would be very difficult to have a process where a contract isn't written or signed for 90 days after the arrangement is entered. It would be confusing, difficult to implement, difficult to audit. Um , most organizations are going to want their contracts to be reduced to a single writing instead of relying on a collection of documents , uh, which is, is available , um, under the Stark regulations. You know, similarly , uh, even though the employment exception does not have a writing or signature requirement, most organizations are gonna just re still require that , uh, just for good contracting. And if they ever have some type of litigation down the road, they, they may want to have that signature in place as well. So I think what's really important for people to understand is that just failure to follow your policy does not equate to a stark violation. Um, perhaps have it trigger a review by counselor compliance. Um, and then maybe ultimately if that additional step's taken, you'll get comfortable and be able to document why it's okay under the Stark regulations. To me, that's the perfect cadence. Mm-hmm . <affirmative> for a potential stark issue rather than have it all, you know, be more rigidly viewed in, in my, my, from my perspective.
Speaker 4:Yeah, I agree with that, Joe and I, I often suggest you actually put that right in the compliance policy, you say, you know, we have standards that are stricter than what the law requires to make it clear to people that you are holding yourself to a higher standard than you need to. But if you fall short of your own high standards, it could be a violation of the compliance policy, but not a violation of the law, as you just pointed out .
Speaker 3:Yeah. And I think we, you know, just adding on, I think we all can recognize that coming to a conclusion that's a violation of the Stark Law is not something that can be accomplished in a , just a written policy. That is a, that is, you know, we are , we're acknowledging all this complexity, right ? So, so , um, you know, the, Charles, you know, I touched on it before in, in the most recent stark changes, the government CMS reformed, the big three fair market value commercial reasonableness and the prohibition on taking into account referrals. Uh, they tried to make the standards more objective. Do you think that that was a successful , uh, effort?
Speaker 4:I, I do think it was successful in the sense that I think that the standards that they have come up with now are more objective and are cleaner and clearer. There's no such thing, of course, as, as perfect, you know, definitions or perfect regulations, and there's, there's still room for people to argue and there's still room for confusion. But they've done a good job, I think, of separating them out. There used to be a commentary , um, years ago that said that , uh, if compensation, even if it was a flat periodic monthly compensation was , uh, above fair market value or inflated because of the physician's referrals to the organization, that that could be viewed as compensation that took referrals into account. And, you know, that was confusing for people because they thought, well, we get it. If it's inflated and it's not fair market value, okay, you failed to satisfy the fair market value requirements, so you've failed one of the big three, as Joe mentioned, these are the big three requirements that are embedded in almost all the compensation exceptions. And so if the compensation's not fair market value, you , you already have failed to meet the Stark . But by throwing in the idea that you also might be taking the volume or value of referrals into account, even though it was a flat monthly comp, I think that may have muddied the waters a little bit. And CMS has tried to, I think, move away from that. And while not explicitly disavowing that earlier statement, they've really sort of clarified that, look, fair market value is fair market value. You're paying a market, you're paying ara within the range of what's marketplace fair market value, but a compensation, taking volume of value of referrals into account is something different. Now you're talking about a formula where the compensation fluctuates based on referrals. So the more referrals, the more compensation there is, and you actually have to have a methodology that, that has referrals embedded in it in order to be considered to have compensation that takes the volume of value of referrals into account. And I think that's helped , um, to try to clear up some of the analysis that we do. So I, I do think that's been helpful. Um, another, another area where CMS has made some reforms in an effort to kind of add clarity. Joe , this was a question for you, is in the world of indirect compensation arrangements, we haven't really talked about that much yet, but this is one of the things that makes stark confusing. There's direct compensation arrangements, you know, between the referring doc and the entity that performs designated health services, and then there's indirect and indirect, you know, can, can involve analyzing a string of financial relationships between different entities. And there's a complicated definition of when an indirect compensation arrangement exists. And then if it does a correspondingly complicated exception for whether or not that indirect compensation arrangement is okay under Stark. So, so Joe, I I, I'd be interested to hear some how your , you know, your thoughts on how sort of some of those changes , um, have impacted, you know, the parties and impacted the way that you analyze stark issues .
Speaker 3:Yeah, thanks, Charles. You know, this is, as you know, if you're talking about Stark being complex, this is the, the next level of complexity. When you start getting into the, the indirect analysis, I would say just kind of out you , you asked how does it impacted how I perform stark analysis? We're applying a slightly different test. Um, and are fewer arrangements falling under Stark because of this nearer interpretation? Narrower interpretation of indirect? My answer would be yes. If you historically look at this test , um, the government said, we , you can't follow every linkage in a chain down the indirect. So, so they, they , the test has always been, do you have an unbroken chain of financial arrangements? If, if yes, then does aggregate compensation to the physician in the closest non ownership linkage in the chain vary with the volume or value of referrals? Um, and so that, that's an important piece of the test. And then third, does the entity furnishing that the DHS have actual knowledge that the physician receives that aggregate compensation that varies with referrals. So that was the test historically. Um, it , it's a , it's a subtle change to, to most, but to stark attorneys, it was a big deal. The government said the new test is unbroken chain. When you get to that second part of the test, the compensation needs to not only vary with referrals to the entity, but also must be either not at fair market value, must include referrals to the entity as a variable in the compensation formula that positively correlates with the referrals. Um, and so this, the test there got narrower, and so fewer of the , um, arrangements are going to trigger an indirect , um, uh, def the definitional analysis. Um, and , and that's what CMS said. Even when you've heard CMS people talking about this, they, they were saying, there's gonna be fewer arrangements that trigger this because of that, that extra step in, in the test . So , um, you know, again, it gets very granular, but if you have an indirect analysis, it's important to step through, you know, that additional piece that the government built into the most recent star regulations. Uh, Charles, we covered a , a lot of ground here. Um, you know, thank you so much for being on , um, our podcast. Thanks for the, the , the next iteration of the book. Uh, just as a final thought, do you have any other trends of Stark we sh under Stark we should be aware of? Do you have any final remarks , uh, for our audience?
Speaker 4:Um, just , uh, just one other thing we haven't really talked about , um, self-disclosure. So when you, if you do discover that you have a stark violation , um, that tradition that typically means that the entity , um, has gotten referrals from a physician that shouldn't have been referrals of designated health services, and they billed for it . They found out that they, they find out they have an overpayment, and there's a process , uh, called the SRDP Self Referral Disclosure Protocol that you can use to go to CMS and self-report a stark violation and one thing to, to let people know about. I think it's a very favorable process. Um, people are frightened to go to CMS, you know, with their violations. And , uh, my experience has been pretty, pretty favorable. It hasn't typically triggered any big bad investigation , uh, of any other type. And typically the settlements are, you know, five to 10 cents on the dollar of Medicare collections, which is very favorable. Um, and one last statement about that, they traditionally have, CMS has been very backed up. They've had hundreds of self disclosures over the years, and , um, sometimes it takes them years to get to one and to propose the settlement back to the self-disclosure, but they are, they are starting to catch up a little bit. So that's the good news for those who are, you know, advanced in their pants and really wanna settle up with CMS as quickly as possible. CMS is starting to, to , uh, work its way through the backlog , um, and self-disclosure that are being made. Um, they will get to them a little bit faster than traditionally. They did
Speaker 3:Agree. Well, thank you, Charles. Um, you know , thanks to , uh, everyone for tuning in to today's , uh, podcast. Uh, watch for content that, that is emerging and that we're producing right now within the, the Fraud Abuse Practice Group. Uh, coming up next month, we will be , um, having a , a a a webinar titled OIG Compliance Program Guidance reboot what the Healthcare Industry Should Know. Uh, Charles and I didn't touch on that, but some really important OIG guidance came out , um, in November of 2023. Really important for all healthcare organizations to be looking into that , um, and , and understand that the , the components of that new, the new guidance. Um, so watch for that webinar. Um, if you're looking to get involved in the American Health Law Association, if you're looking to get involved in the Fraud and Abuse Practice group, you can reach out to me on LinkedIn. Uh, you can gimme an email at jayWolf@hallrender.com . Um, we'd love to find a way to get you involved. Charles, thank you so much for your time today. Um , and again, thanks to everyone for listening in.
Speaker 4:Thanks everyone .
Speaker 2:Thank you for listening. If you enjoyed this episode, be sure to subscribe to a HLA speaking of health law wherever you get your podcasts. To learn more about a HLA and the educational resources available to the health law community, visit American Health law.org.