September 12, 2016 Articles

Timeshare Arrangements Exception to Stark Law Offers Opportunities in Rural/Underserved Communities

Timeshare arrangements can facilitate part-time or periodic access to physicians who otherwise could not maintain a full-time practice in the community.

By Roger R. Clayton, Greg Rastatter, J. Tyler Robinson, and Amee Lakhani

Pursuant to the authority granted by the U.S. secretary of health and human services,the Centers for Medicare and Medicaid Services (CMS) recently enacted an amendment to the Federal Physician Self-Referral Law (Stark Law), which became effective January 1, 2016. The amendment adds much-needed flexibility for independent physicians who share office space and for hospitals that provide office space, equipment, personnel, supplies, and services to part-time, independent physicians on an “as-needed” basis. See 42 U.S.C. § 1395nn(b)(4); 42 C.F.R. § 411.350.

As a general matter, the Stark Law prohibits a physician from making referrals for certain designated health services (DHS) that are payable by Medicare to health-care entities with which the referring physician has a financial relationship, unless an exception applies. Contrary to the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), the Stark Law is a strict liability statute in that it does not require proof of intent. The penalties associated with a Stark Law violation include denial of reimbursement, the refund of reimbursement for past claims, fines of $15,000 per DHS claim, penalties of up to $100,000, exclusion from federal health-care insurance programs, and liability under the False Claims Act.

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