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2018 Bipartisan Budget Act Revises Stark Law

In February’s newsletter, CCLB reported that the Bipartisan Budget Act of 2018 (the “Act”), signed into law by President Trump on February 9, 2018, modified the Civil Monetary Penalties Law and the Anti-Kickback Statute by increasing certain fines and penalties for violations of those statutes. The Act also amended the federal Stark Law in several important respects. Section 50505 of the Act, which is entitled “Modernizing the Application of the Stark Rule under Medicare,” effectively codified several relatively recent regulations from the Centers for Medicare and Medicaid Services (“CMS”), which make it easier for healthcare providers to meet certain exceptions under the Stark Law.

The federal Stark Law, codified at 42 U.S.C. § 1395nn, generally prohibits a physician from making referrals for certain designated health services (DHS) to entities with which the referring physician (or an immediate family member of the referring physician) has a financial relationship, absent the presence of certain limited exceptions. The Stark Law also prohibits the entity receiving such a referral from submitting claims for any such services to Medicare or Medicaid. Importantly, the Stark Law is a strict liability statute, meaning a person can be found liable for violating the law even if that person acted completely innocently, without any bad intent.

There are a number of statutory and regulatory exceptions to the Stark Law, many of which require the arrangement in question to be in writing and signed by the parties. Until recently, even if an arrangement met all of the other criteria for an applicable Stark Law exception, but was simply not in a single, signed writing, that arrangement would not fall under a Stark Law exception and, therefore, could be found to be violative of the Stark Law. These violations are often referred to as “technical violations.”

The 2018 Act officially codified regulatory language released by CMS in 2016 that the writing requirement can be satisfied “by a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties involved.” In other words, even if there is no single, signed, written agreement, if the terms of the arrangement can be shown through a collection of separate documents, the Stark Law’s writing requirement can be satisfied. Similarly, the Act also codified 2016 regulatory language from CMS that loosens the Stark Law’s signature requirement by providing that, if the parties to an arrangement do not obtain the required signatures before an arrangement becomes effective, they have 90 consecutive calendar days to do so, so long as all of the other criteria for the applicable Stark exception are met.

Finally, the Act also codified regulatory language from CMS by permitting holdover leases for office space, equipment rental, and personal services arrangements, each of which is the subject of a Stark Law exception. Specifically, the Act clarifies that an expired lease or personal services arrangement may indefinitely meet the applicable Stark Law exception if the immediately preceding arrangement (a) expired after a term of at least one year, (b) met all of the requirements of the exception when it expired, (c) continues on the same terms and conditions as the immediately-precedent arrangement, and (d) continues to satisfy the conditions of the applicable Stark Law exception.

The attorneys at CCLB represent healthcare providers of all types and sizes in connection with a wide-variety of regulatory and compliance matters, including those involving the Stark Law and Anti-Kickback Statute. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue, please contact us at (404) 262-6505 or sgrubman@cclblaw.com.