Any aspect that is unaccounted for or is not
considered in the arrangement can lead to
The parking services provided to the
physicians in Baycare were protected under
the office leasing exception, because the lease
sufficiently referenced the parking benefits
and accounted for these costs in the compensation. If these components were missing
from the lease, the arrangement may not
have satisfied the Stark exception by failing
to specify the entirety of the arrangement.
Compliance personnel should look
beyond a written agreement when analyzing physician-hospital arrangements.
Anything provided to physicians, such as
free parking, should be referenced in the
written agreement and should satisfy an
Improper wRVU compensation arrangements
A recent settlement between the Department
of Justice (DOJ) and defendants Mercy
Hospital Springfield and Mercy Clinic
Springfield illustrate the risks of improper
work relative value unit (wRVU)-based
compensation arrangements. 6 Mercy Clinic
Springfield, an oncology infusion center,
entered into contractual arrangements with
physicians that contemplated the provision of a productivity bonus tied to the
physicians’ drug administration wRVUs.
However, these wRVUs were allegedly
calculated in a manner that was not based
on the physicians’ personally performed
services. Rather, the wRVUs were allegedly
inflated to enhance the physicians’ compensation to a particular amount to reward
and/or induce referrals.
The Mercy settlement illustrates that a
wRVU-based compensation structure that is
compliant in its written form can still violate
the Stark Law if improperly implemented.
Compensation for wRVUs that are not
actually performed can result in arrange-
ments that violate the Stark Law.
Internal monitoring and auditing activities should look beyond the agreement
and verify wRVUs or similar metrics used
in calculating physician compensation.
Compensation paid for referrals under the
guise of wRVUs or personally performed
services can lead to serious consequences,
particularly if it is found that the parties’ conduct was fraudulent.
New guidance on CMP Law in connection with
Stark Law overpayments
Recent updates to regulations implementing
the Civil Monetary Penalties (CMP) Law ( 42
U.S.C. §1320a-7a) indicate heightened liabilities and scrutiny for Stark Law violations. 7
The CMP Law permits the Office of Inspector
General (OIG) for the Department of Health
& Human Services to impose CMPs on individuals and entities for certain Stark Law
violations. The final rule indicates that the
OIG may increase its enforcement participation in connection with Stark Law violations.
Notably, the final rule indicates that
CMPs for untimely Stark Law self-disclosures
and refunds will be imposed differently as
compared to other types of self-disclosures.
CMPs can be imposed for failing to refund
overpayments on a “timely basis.” 8 For most
overpayment refunds, “timely basis” means
60 days from the date of identification (or the
due date of any corresponding cost report).
However, in connection with Stark Law self-disclosures, the OIG defines “timely basis” as
60 days from the time the prohibited amounts
As illustrated by the developments
discussed above, physician-hospital relationships must be carefully assessed for
compliance with the Stark Law, including