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Stark III

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Stark III is Stark II, Phase III of the physician self-referral prohibition. This regulation provides further clarifications and modifications to Stark II, Phase II, especially regarding physicians in group practice and the relationships between physicians and hospitals. The centers for Medicare and Medicaid services provided a partial listing of Phase III changes in the final rule published in the federal register of September 5, 2007. 

Notable changes:

  • Eliminates the safe harbor proposed in Phase II within the fair market value definition for physician compensation
  • Considers a physician to “stand in the shoes” of a physician organization of which he or she is a member
  • Clarifies that an independent contractor physician is a “physician in a group practice” when under a contractual arrangement directly with the group practice and is performing services in the group practice’s facilities
  • Permits group practices to impose certain practice restrictions on recruited physicians
  • Clarifies that group practices can determine productivity bonuses by directly taking into account the volume and value of items and services that are provided “incident to” the physicians’ professional services, in certain circumstances
  • Adds a 45-minute transportation time test as an alternative to the 25-mile rule to the intra-family rural referrals exception
  • Adds a holdover provision in the exception for personal service arrangements
  • Clarifies that a “rural area,” a location not included in the metropolitan statistical areas (MSA), may be a micropolitan area
  • Expands the geographic area into which a rural hospital may recruit a physician
  • Permits a more generous income guarantee under certain circumstances in the case of a physician who is recruited to replace a deceased, retiring, or relocating physician
  • Revises the non-monetary compensation exception to allow physicians to repay certain excess non-monetary compensation within the same calendar year to preserve compliance
  • Allows an entity with a formal medical staff to provide one local medical staff appreciation event per year
  • Clarifies that a hospital may list a physician’s name on its website or in advertisements as a medical staff incidental benefit but physician payments for referral services must be within both an exception and an Anti-Kickback safe harbor
  • Adds a written certification option as an alternative to the requirement for a bonafide written offer under the exception for retention payments in underserved areas
  • Expands the exception for retention payments in underserved areas to permit retention payments to be made in the case of a physician who certifies that he or she has a bonafide opportunity for future employment and the arrangement satisfies all other conditions of the exception