CMS changes from capStark III represents a complete change in the characterization of financial arrangements between DUS companies and physician groups. Under this new regulation, doctors are supposed to be in the place of their medical practice, so a contract with a group is treated as if it were a contract directly between the hospital and each individual doctor in the practice. The treatment of these agreements as direct rather than indirect relations has two possible consequences. First, this approach may affect many contracts that did not previously fall within the scope of Stark`s dismissal bans. As in the example lease above, a contract that was previously classified as neither a direct relationship nor an indirect relationship can now be classified as a direct compensation agreement subject to Stark. Second, these contracts with medical practices must now comply with the exceptions that apply to direct agreements, such as the exception for leases discussed above, and not the exception that applies to indirect agreements. (iii) Notwithstanding the provisions of this paragraph (b)(5), ownership or joint participation in an entity does not, in itself, create ownership or indirect participation of a common owner or investor in another common owner or investor. (iv) An indirect ownership or investment interest requires an unbroken chain of ownership rights between the treating physician and the institution providing the DHS, such that the treating physician has indirect ownership or investment interest in the facility provided by DHS. (i) The remuneration of a facility providing certain health care services to a physician (or a member of the physician`s immediate family) reflects the volume or value of references only if the formula used to calculate the physician`s (or immediate family member`s) remuneration includes the physician`s references to the business as a variable, resulting in an increase or decrease in the physician`s (or immediate family) physician`s (or immediate family member`s) remuneration.

family members), which were positively related to the number or value of referrals from physician to entity. CMS believes that all compensation is essentially unit-based compensation and that service-based compensation arrangements for the rental of office space or equipment or for the use of space or equipment (directly or indirectly) may pose a significant risk of program abuse. PFS Final Rule at 1056. Accordingly, CMS`s proposed amendment and the nuanced and more focused revision of the PFS Final Rule for 42 C.F.R. 411.354(c)(2)(ii) (as amended) specifically ensure that the prohibition of certain performance-based compensation formulas for the rental of premises or equipment or for the use of premises or equipment applies to all compensation agreements contained therein. If the exemption set out in 42 C.F.R. is used, the compensation for the rental of office space or equipment cannot be determined using a formula based on the rental cost per unit of service, so that the fee reflects the services provided to patients referred by the tenant to the landlord. While it is relatively easy to identify situations where the stand-in-the-shoes doctrine applies, it is not entirely clear where this is not the case. Doctors are in the shoes of their respective “medical organizations” – a new term under Stark III that includes a physician, “doctor`s office,” or “group practice.” “Group practice” is also a defined term in Stark, but “doctor`s office” is not. In fact, Stark defines a group practice as “a doctor`s office that meets [certain specified conditions].” Since Stark essentially defines group practices as a subset of medical practices, listing these terms separately in the definition of a physician organization is redundant at best. (c) Indemnification Agreement.

A compensation agreement is a direct or indirect compensation agreement between a physician (or a physician`s immediate family member) and a business. A contract “under agreements” between a hospital and an entity that provides DHS to the hospital “under agreements” creates a compensation agreement for the purposes of these regulations. A compensation agreement does not include that part of a commercial agreement consisting solely of the remuneration described in section 1877(h)(1)(C) of the Act and subsections (1) to (3) of the definition of “remuneration” in section 411.351. (However, any other party to the agreement may still constitute an indemnity agreement.) CMS also proposed to define the term “single unit” for the above analysis, either as time or as a service.