CMS has issued regulations within the intent of closing what it perceives to be loopholes in the Stark regulations. The major initiatives are as follows:

1.         The definition of the term “entity” will be expanded to include both sole practitioners as well as other types of entities. The definition will state that an entity will include a physician’s sole practice or a practice of multiple physicians or any other person, sole proprietorship, public or private agency or trust, corporation, partnership, limited liability company, foundation, non-profit corporation or unincorporated association that furnishes DHS. An entity will not include the referring physician himself or herself, but does include his or her medical practice.

2.         In order for compensation to be considered as “set in advance” and compliant, it may not be based on any percentage of revenue other than compensation based on revenues directly resulting from personally performed physician services. Compensation will be considered “set in advance” if the aggregate compensation, a time-based or per unit of service based (whether per use or per service) amount, or a specific formula for calculating the compensation is set in an agreement between the parties before the furnishing of the items or services for which the compensation is to be paid. The formula for determining the compensation must be set forth in sufficient detail so that it can be objectively verified, and the formula may not be changed to modify during the course of the agreement in any manner that reflects the volume or value of referrals or other business generated by the referring physician.

3.         Per unit, rental arrangements will not be allowed to the extent that such charges reflect services provided to the patients referred by the lessor to the lessee

4.         The burden of proof on billing arrangements will be shifted to the billing entity. The proposed regulations will require that, when payment for a designated health service is denied on the basis that the service was furnished pursuant to a prohibited referral, the burden will be on the entity submitting the claim to establish that the service was not furnished pursuant to a prohibited referral.