Proposed Amendments to the Stark Law Regulations Would Require Restructuring Many Common Hospital-Physician Arrangements

On July 2, 2007, The Centers for Medicare and Medicaid Services (“CMS”) delivered to the Office of the Federal Register its proposed Medicare Physician Fee Schedule payment update for Fiscal Year 2008 (the “Proposed 2008 MPFS Update”). Among the many payment changes, CMS proposed a number of significant amendments to the current Stark law regulations and sought comments on other changes to the Stark law regulations that it is considering but has not yet proposed. These amendments, if adopted in the final physician payment update, which is generally published in the fall, would constitute the most sweeping changes to the Stark law regulations that CMS has made to date outside of the dedicated Stark law rulemaking process. The breadth of such proposed changes is somewhat surprising given that Phase III of the Stark II regulations is expected to be released before the end of March 2008.

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