In the CY 2017 Medicare Physician Fee Schedule (CY 2017 MPFS), the Centers for Medicare & Medicaid Services (CMS) issued proposed updates to the physician self-referral law (Stark law). The primary Stark law update focused on unit-based compensation in certain leases of office space or equipment. The D.C. Circuit Court (the Court) prompted CMS to re-address this issue in Council for Urological Interests v. Burwell [PDF] on June 12, 2015,1 which challenged CMS’s rulemaking authority related to the FY 2009 IPPS final rule.
In the current proposed rule, CMS provides an overview of the Stark law’s regulatory history. Within this background, CMS highlights and excerpts several passages from the regulatory history addressing certain per-unit-of-service (per-click) compensation formulas. A 1993 Conference Committee Report and CMS rulemakings formed the basis of Council for Urological Interests’ (CUI’s) case against the Secretary. CUI challenged the Secretary’s authority related to the prohibition on per-click rental charges for the lease of equipment found at §411.357(b)(4)(ii)(B).
The Court concluded that “[t]he text of the statute does not unambiguously preclude the Secretary from using her authority to add a requirement that bans per-click leases. To the contrary, the statutory text of the exception clearly provides the Secretary with the discretion to impose any additional requirements that she deems necessary ‘to protect against program or patient abuse.’''2 Although the Court determined that the Secretary was not outright prohibited from considering and perhaps implementing a ban on per-click leases, the reasoning provided by CMS in the FY 2009 IPPS final rule was insufficient. The Court felt that the rule contained “an unreasonable interpretation of the conferees’ statements” in the Conference Committee Report. As a result, the Court remanded the case to CMS for a fuller consideration of the legislative history. The CY 2017 MPFS proposal is intended to address that instruction from the Court.
CMS proposes to include at “§§ 411.357(a)(5)(ii)(B), (b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B) the requirement that rental charges for the office space or equipment are not determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.” CMS is relying on the authority granted to the Secretary in sections 1877(e)(1)(A)(vi) and (B)(vi) of...
