In July 2015, CMS released proposals to provide several new Stark Law exceptions and to clarify issues regarding existing exceptions.  Over the next few days, I will post comment on what I consider the most significant new exceptions and clarifications.  The full text of these proposal and CMS comments and explanations is available at:

New Timeshare Exception

CMS acknowledges that arrangements for the use of another provider’s premises, equipment, personnel, items, supplies or services by physicians who, for various legitimate reasons, do not require or are not interested in a traditional office space lease arrangement could be appropriate.  Under timeshare arrangements, a hospital or local physician practice may ask a specialist from a neighboring community to provide the services in space owned by the hospital or practice on a limited or as-needed basis.  CMS believes timeshare arrangements that include the use of office space can be structured in a way that does not pose a risk of program or patient abuse.

Therefore, CMS has proposed a new exception at 42 C.F.R. § 411.357(y) that would protect timeshare arrangements that meet certain criteria, including:

  1. The arrangement is set out in writing, signed by the parties, and specifies the premises, equipment, personnel, items, supplies and services covered by the arrangement;
  2. The arrangement is between a hospital or physician organization (licensor) and a physician (licensee) for the use of the licensor’s premises, equipment, personnel, items, supplies, or services;
  3. The licensed premises, equipment, personnel, items, supplies, and services are used predominantly to furnish evaluation and management services to patients of the licensee;
  4. The equipment covered by the arrangement, if any is: (i) located in the office suite where the physician performs evaluation and management services, (ii) used only to furnish DHS that is incidental to the physician’s evaluation and management services and furnished at the time of such evaluation and management services, and (iii) not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment (other than equipment used to perform CLIA-waived laboratory tests).
  5. The arrangement is not conditioned on the licensee’s referral of patients to the licensor;
  6. The compensation over the term of the arrangement is set in advance, consistent with fair market value, and not determined in a manner that takes into account (directly or indirectly) the volume or value of referrals or other business generated between the parties;
  7. The arrangement would be commercially reasonable even if no referrals were made between the parties;
  8. The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act) or any federal or state law or regulation governing billing or claims submission; and

The proposed exception would apply only to timeshare arrangements where the licensor is a hospital or physician organization; it would not protect arrangements where the licensor is another type of DHS entity.