Question: We just discovered that we have been providing a service to certain medical staff members pursuant to a written agreement that has expired. What can we do?
Answer: First and foremost, DO NOT PANIC! While all agreements with any person who is in a position must be at fair market value, due to the potential financial penalties that can arise from noncompliance, a hospital’s primary concern is compliance with the Stark Law. However, the first thing that you have to determine is whether the Stark Law applies. Is the other party to the agreement a “physician” as this term is defined in the Stark Law? In most instances, the answer will be yes. However, if, for example, the other party is a physician assistant or CRNP, then those mid-level providers are not “physicians” and the Stark Law will not apply.
If a physician is involved, what is the physician’s specialty? Is the physician a pathologist, radiologist or radiation oncologist? If so, then, according to the Stark Bill, those physicians do not make “referrals,” so Stark does not apply. Was there a previous agreement? If so, then 42 C.F.R. §411.357(d)(1)(vii) provides that as long as a new agreement is executed within 180 days of the date of the expiration of the previous agreement, then the agreement will continue to comply with the personal services exception. Then consider the law in your state regarding expired agreements. In many states, the agreement will renew as an operation of law.
Also remember that while the personal services exception is the exception that usually applies, the hospital must only satisfy one exception to the Stark Law. If the physician is making a payment to a hospital for any item or service, see if the “payment by physicians” exception applies (42 C.F.R. §411.357(i)). This often overlooked exception may prove to be invaluable in these types of situations since the exception does not define “item or services,” and does not require a written agreement. A written agreement is also not required if an employment relationship is involved, or if the service can be considered to be a medical staff incidental benefit (42 C.F.R. §411.357(m)).
If all else fails and your legal counsel advises you that a voluntary disclosure is legally required, make sure that your legal counsel advises you to consider the foregoing when determining the amount that may be due to the government pursuant to that disclosure.
Want more information on this and many other issues related to hospital-physician financial relationships? Then join Dan Mulholland and Henry Casale in New York City on November 21-23 for our Hospital-Physician Contracts: Survival Strategies seminar.