New View on Stark II

The long-anticipated final version of the Stark Law regulations was released on January 4, 2001. Those who have waited almost three years to the day for the final version of the regulations will have to wait a little longer in order to see how the complete version of the final regulations will affect physician financial arrangements. The January 4, 2001 final rule (“Final Rule”) represents only “Phase I” of the promulgation of the final regulations. Because of the complexity and breadth of the Stark Law and the regulations, the Final Rule is being published in two phases.

It is important to note that Phase I will become effective on January 4, 2002, except for the regulation regarding physician certification of home health services and plans of treatment, which will become effective on February 5, 2001. The intent of the delayed effective date is to allow time to restructure arrangements to comply with the provisions of Phase I. Because Phase I contains substantial  changes to the January 8, 1998 proposed rule (“Proposed Rule”), HCFA issued the Final Rule with a 90-day comment period. Comments are due to HCFA by April 4, 2001. Phase II will be issued sometime after the close of the comment period, such that HCFA may incorporate any necessary changes to the Phase I rules.

Notwithstanding the fact that Phase I represents only a portion of the Final Rule, those who have waited will not be disappointed. Phase I provides for increased flexibility through numerous substantial
changes from the Proposed Rule. Most notably, the Final Rule provides greater flexibility in structuring financial arrangements with physicians. This memorandum provides a summary of some of the
significant changes and issues contained in Phase I.

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