A Starkly Different Landscape – A Deep Dive Into CMS’ Recently Proposed Amendments to the Stark Law

K&L Gates LLP

K&L Gates LLP

On October 17, 2019, the Centers for Medicare & Medicaid Services (“CMS”) published a Notice of Proposed Rulemaking in the Federal Register (“Proposed Rule”), [1] modifying the regulations implementing the federal physician self-referral law (the “Stark Law”). [2] CMS indicates that the main purposes of the Proposed Rule are two-fold: (1) implementation of amendments to key definitions applicable throughout the Stark Law and updates to CMS’ policy positions, both aimed at modernizing and streamlining the Stark Law regulations as part of the Department of Health and Human Services’ recently launched “Regulatory Sprint to Coordinated Care”; and (2) amendments to the Stark Law in light of the general transition in health care from a volume-based to a value-based system.

This Alert focuses on the proposed definitions, new exceptions (other than those related to value-based arrangements), and significant policy clarifications included in the Proposed Rule. Many of these changes are intended to—and would—provide additional flexibility and reduce administrative burden to health care providers in structuring arrangements to comply with the Stark Law. Proposed changes related to value-based care proposals will be addressed in an upcoming K&L Gates Alert.

I. Proposed Amendments to Fundamental Terminology and Stark Law Requirements
Consistent with commenters’ requests, CMS has determined that clear, bright-line rules regarding terminology would ease the burden on providers attempting to comply with the Stark Law and enhance CMS’ enforcement capability. As such, CMS proposes to more clearly define certain key terms referenced in many Stark Law exceptions—specifically the definition of “fair market value,” commercial reasonableness, and the “volume or value” and the “other business generated” standards.

“Fair Market Value”
Most of the Stark Law exceptions relating to compensation include a requirement that the compensation be consistent with “fair market value.” CMS proposes to amend the definition of “fair market value” to more closely align the regulatory definition with the definition set forth in the Stark Law statute. In short, CMS proposes to interpret “fair market value” to relate to the value of like assets or services under like circumstances, consistent with the general market value of the subject transaction. [3] CMS indicates that “general market value” relates to the value of an asset or service to the actual, identified parties to a transaction that is set to occur within a specified timeframe. [4] Although CMS acknowledges that the amended definition of “fair market value” is merely reorganized for clarity, the Proposed Rule outlines a proposal to more substantively amend the definition of “general market value.” [5] Specifically, CMS proposes to equate “general market value” with the recognized meaning of the term in the valuation industry, which focuses on the price resulting from bona fide bargaining between the parties. Finally, CMS proposes to modify the definition of “fair market value” to remove the connection to the volume or value standard, noting that the fair market value requirement is a separate and distinct requirement.

“Commercially Reasonable”
CMS acknowledges the scarcity of guidance related to the concept of commercial reasonableness, despite the fact that it is a requirement of multiple Stark Law exceptions. In an attempt to provide further guidance, CMS proposes two alternative definitions of “commercially reasonable,” focusing either on furthering a legitimate business purpose or whether the arrangement makes commercial sense if entered into by reasonable parties (in similar type, size, scope, and specialty). [6] CMS states that the key determination is whether the arrangement makes sense as a means to accomplish the parties’ goals and that such determination should be made from the perspective of the particular parties involved.

CMS also emphasizes that the “commercial reasonableness” determination does not turn on whether the arrangement is profitable and highlights that compensation arrangements that do not result in profit for one or more of the parties may nonetheless be commercially reasonable. [7] In the Proposed Rule, CMS acknowledges comments explaining the importance and rationale of entering into arrangements that the parties understand in advance may not be profitable but that serve other important needs, such as community need; timely access to health care services; fulfillment of licensure or regulatory obligations, including those under the Emergency Medical Treatment and Labor Act; the provision of charity care; and the improvement of quality and health outcomes. CMS indicates that it finds these concerns to be compelling.

“Volume or Value” and “Other Business Generated” Standard
CMS proposed adding multiple new special rules, clarifying what it means for compensation to “take into account the volume or value of referrals or other business generated,” which, if finalized, will supersede all previous regulatory guidance regarding the Stark Law’s volume or value standard. In the Proposed Rule, CMS explains that the proposed approach would define exactly when compensation will be considered to take into account the volume or value of referrals or other business generated between the parties. In particular, CMS proposes that compensation in a relationship between a physician and entity will only be considered to take into account the volume or value of referrals or other business generated when the compensation formula includes referrals or other business generated as a variable and the amount of the compensation correlates with the number or value of the referrals to the entity or the generation of other business for the entity. [8]

CMS further proposes to clarify its prior guidance acknowledging that fixed-rate compensation may still take into account the volume or value of referrals or other business generated. [9] In this regard, CMS gives the example that even a fixed annual salary or an unvarying per-unit rate of compensation would have been determined in a manner that takes into account the volume or value of referrals or other business generated by a physician if the parties utilize a predetermined tiered approach to compensation under which the volume or value of a physician’s prior referrals act as the basis for determining the fixed compensation amount over the duration of the arrangement. CMS suggests that without a “predetermined, direct positive or negative correlation” between the volume or value of the physician’s prior referrals or other business previously generated for the entity, and the exact, prospective rate of compensation to be paid over the entire duration of the arrangement, such a fixed compensation rate would not violate the volume or value standard or the other business generated standard. The Proposed Rule also proposes to update the volume or value standard, including removing the modifier “directly or indirectly” (given CMS’s belief that such a modifier is implicit in the volume or value standard).

Of note, the Proposed Rule responds to commenters’ questions regarding the application of findings in the July 2, 2015 opinion of the U.S. Court of Appeals for the Fourth Circuit in United States ex rel. Drakeford v. Tuomey Healthcare System, Inc., related to whether compensation takes into account the value or volume of referrals or other business generated specifically in regard to productivity bonuses. In the Proposed Rule, CMS reaffirms its prior position regarding the value or volume standard, noting that productivity bonuses will not be considered to have taken into account the volume or value of the physician’s referrals solely because corresponding hospital services are billed each time the physician personally performs a service, as long as the requirements of the applicable Stark Law exception are met. [11]

II. Proposed New Stark Law Exceptions
In addition to the new Stark Law exceptions related to value-based care covered in a forthcoming Alert, the Proposed Rule sets forth two new exceptions related to limited compensation to a physician for items or services provided and donations of cybersecurity technology. Similar to the changes outlined above, both exceptions demonstrate that CMS intends to add more flexibility to the current regulations.

  • Limited Compensation to a Physician. CMS elaborates upon numerous non-abusive arrangements disclosed through the CMS Voluntary Self-Referral Disclosure Protocol (“SRDP”) under which a limited amount of remuneration was paid by an entity to a physician in exchange for the physician’s bona fide provision of items and services to the entity, but which arrangement did not satisfy the technical requirements of an applicable Stark Law exception because the arrangement was not memorialized in writing, in advance. Accordingly, CMS has proposed revising the Stark Law regulations to add a new exception that permits the provision of limited remuneration to a physician, even in the absence of a written documentation of the arrangement or in the event compensation is not set in advance. The proposed new exception for limited remuneration to a physician would be set forth at 42 C.F.R. § 411.357(z) (“Limited Remuneration Exception”) and would protect remuneration for the provision of items or services provided by the physician to the entity that does not exceed an annual limit of $3,500 per calendar year (as adjusted for inflation), to the extent additional requirements are met. While the proposed Limited Remuneration Exception would require that the arrangement be commercially reasonable, not exceed fair market value, and not be determined in any manner that takes into account the volume or value of referrals or other business generated by the physician, notably, the proposed new exception does not require a signed writing between the parties. The Limited Remuneration Exception would also protect certain office space or equipment rentals, to the extent that the rental compensation is not determined using certain percentage-based compensation formulas or per-unit of service compensation formulas. The proposed exception would not be applicable to payments from an entity to a physician’s immediate family member.

Further, in the Proposed Rule, CMS acknowledges that the proposed Limited Remuneration Exception could be used in conjunction with other exceptions to protect an arrangement during the course of a calendar year, suggesting that the parties may piecemeal Stark Law exceptions applicable at different periods during a compensation arrangement in order to shorten an applicable period of disallowance.

CMS is seeking comments as to the appropriateness of the $3,500 limit, as well as comments regarding whether the applicability of the exception should be limited to services personally performed by the physician or items personally provided by the physician.

  • Donation of Cybersecurity Technology and Related Services. The Proposed Rule sets forth an additional exception to the Stark Law at 42 C.F.R. § 411.357(bb) to allow for and protect the donation of certain cybersecurity technology and related services, other than hardware (“Cybersecurity Exception”). CMS explains that it is proposing this additional Cybersecurity Exception at the request of commenters, as well as in recognition of the increased cost and need for cybersecurity technology. The proposed Cybersecurity Exception would protect certain nonmonetary donated technology or services that are necessary and predominantly used to implement, maintain, or reestablish cybersecurity, provided that any donation of services is nonmonetary and the donation does not include multi-use technology that is not predominantly used for cybersecurity. Further, the proposed Cybersecurity Exception would require that the donor must not condition the amount of, or eligibility for, cybersecurity donations on referrals or other business generated by the physician, and the recipient may not make the receipt of a cybersecurity donation, or the amount or nature of the donation, a condition of continuing to do business with the donor. The new proposed Cybersecurity Exception would require that the arrangement is documented in a writing that identifies the parties to the arrangement, the timeframe and value of the donations to be made, and further describes the technology and services to be provided over the course of the arrangement. If applicable, the writing must also describe any financial responsibility for the cost of the cybersecurity technology and related services that is shared by the recipient. [12]

In the alternative, CMS outlines two proposals that would allow for hardware donations in the new exception, with the first alternative proposal covering specific, stand-alone hardware that is necessary for cybersecurity and only serves cybersecurity purposes (for example, a two-factor authentication dongle). The second alternative proposal would permit entities to donate a broader range of cybersecurity technology, including hardware, provided that specified requirements are satisfied, including that a donor must determine that the hardware “is reasonably necessary based on cybersecurity risk assessments of its own organization and the potential recipient.” [13]

III. Significant Proposed Amendments and Policy Clarifications
The Proposed Rule outlines a variety of proposed amendments and policy clarifications that are intended to provide additional flexibility to health care providers and reduced regulatory burden. If the proposals outlined in the Proposed Rule are finalized as proposed, health care providers will likely realize significant flexibility in navigating the technical requirements of the Stark Law.

  • Additional Flexibility Related to the Signature and Writing Requirements. CMS has reconsidered its position regarding temporary noncompliance with the signature and writing requirements of various Stark Law exceptions. CMS previously clarified in its 2016 rulemaking that the writing requirement included in many Stark Law exceptions may be satisfied with a collection of contemporaneous documents evidencing the course of conduct and, further, that the failure to obtain signatures on such written agreements would not result in noncompliance if the parties obtained missing signatures within 90 days. In the Proposed Rule, CMS proposes a further amendment to the regulatory text to state that the writing requirement or the signature requirement would be deemed to be satisfied if: (1) the compensation arrangement satisfies all other requirements of an applicable exception, and (2) the parties obtain the required writing or signature within 90 consecutive calendar days following the date on which the arrangement failed to satisfy the applicable exception. [14] This change would allow providers to rely on a 90-day grace period if an arrangement was neither in writing or signed at the outset. CMS clarifies that this policy does not change its position on the requirement that compensation be “set in advance”; however, it has changed its position insofar as CMS now clarifies that it is not necessary that the parties reduce the compensation to writing for the compensation to be considered “set in advance.” [15]
  • Definition Revisions

o “DHS” Definition – In response to some confusion over whether certain services, such as consulting services, provided to hospital inpatients constitute designated health services (“DHS”), CMS clarifies that services provided by a hospital to an inpatient do not constitute DHS if the furnishing of the service does not affect the amount of the Medicare payment to the hospital under the Acute Care Hospital Inpatient Prospective Payment System (“IPPS”). [16]

o “Physician” Definition – CMS proposes to update the regulatory definition of “physician” to cross-reference Section 1861(r) of the Social Security Act. [17] This edit does not result in any substantive change to the definition.

o “Referral” Definition – CMS uses the Proposed Rule as an opportunity to clarify its longstanding policy that hospital payments to physicians “for the benefit of receiving the physician’s referrals” may not be protected by any exception to the Stark Law, because such referrals are not “items or services” for which payment can be made under Medicare. [18]

o “Remuneration” Definition – CMS proposes certain changes to the definition of remuneration to clarify the “used solely” requirement for certain items and devices carved out of the definition. Under the Stark Law statute, the provision of items, devices, or supplies to physicians that are “used solely” to collect, transport, process, or store specimens for the entity providing such items, or to order or communicate the results of tests for the providing entity, are not considered “remuneration” under the Stark Law. [19] Under the current regulatory text, surgical items, devices, and supplies are specifically excluded from the “used solely” carve-out, [20] based on CMS’ prior belief that reusable surgical items, devices, and supplies may have value to physicians unrelated to specimen collection and could therefore not meet the “used solely” test. [21] CMS proposes removing the current regulatory language that stipulates that the carve-out to the definition of “remuneration” does not apply to surgical items, devices, or supplies. [22] If finalized, this change will permit surgical items, devices, and supplies to be analyzed under the “used solely” test and potentially excluded from the definition of “remuneration.” Further, CMS clarifies that it understands that certain items, devices, or supplies could theoretically be used for numerous purposes outside of the statutory purposes; however, CMS notes that the relevant inquiry is where the furnished item was in fact used only for one of the statutory purposes. [23]

o “Isolated Financial Transaction” Definition – CMS proposes to add a new definition of “isolated financial transaction” to clarify that the exception for isolated financial transactions does not extend to payments for multiple occasions of services provided over an extended period of time, even if there is only a single payment made for such services. [24] Instead, CMS reiterates its position that the Stark Law exception for isolated financial transactions is intended to protect single events, such as a one-time sale of property or a sale of practice that occurs in a single transaction.

  • Eliminating the Period of Disallowance Rules. In the Proposed Rule, CMS proposes to remove its previous bright-line guidelines regarding the establishment of periods of disallowance (“PODs”) and instead notes that each POD must be analyzed on a case-by-case basis, based on the unique facts and circumstances of each financial relationship. [25] CMS further clarifies that there is a potential that no POD is created in the event that technical errors are identified and corrected during the term of an arrangement; for example, if payments were made inconsistently with the terms of a written agreement were identified and corrected during the term of the arrangement. [26] CMS believes this policy is indicative of normal business practices and encourages effective compliance programs that actively monitor ongoing financial relationships and compliance with the Stark Law. This change will likely give providers additional flexibility when determining the duration of PODs.
  • Office Space and Equipment Rentals. In regard to leases of office space and rentals of equipment, CMS clarifies that the “exclusive use” requirement in each exception only requires that the lessor is excluded from using the space or equipment. [27] Accordingly, where a space or equipment is leased to multiple individuals, assuming all other elements of the relevant Stark Law exceptions are met, each of the leases would be compliant so long as the lessor remains excluded from use of the space or equipment.

Further, in a departure from its previous position, CMS proposes to revise the Stark Law exception for fair market value compensation arrangements at 42 C.F.R. § 411.357(l) (“FMV Exception”) to allow office space rental in the scope of the exception. CMS explains that through SRDP disclosures, it has seen legitimate office lease arrangements that could not satisfy either of the Stark Law exceptions for office space rentals or timeshare arrangements. [28] In light of the proposed expansion to the scope of the FMV Exception, CMS also proposes to amend that exception to prohibit certain percentage-based compensation and per-unit of service compensation formulas with respect to the determination of rental charges for office space, consistent with the exception for office space rentals.

  • Unrelated to DHS. In a noteworthy change, CMS proposes to broaden the applicability of the Stark Law exception for remuneration provided by a hospital to a physician that is unrelated to the furnishing of DHS (“Unrelated to DHS Exception”). [29] Under the proposed changes to the regulatory text, CMS would incorporate patient care services as the touchstone for determining when remuneration is related to the provision of health care services. CMS notes that payments to a physician for call coverage, medical director services, or utilization review relate closely to the furnishing of DHS and patient care and would be excluded from the scope of the Unrelated to DHS Exception. In contrast, remuneration for administrative services pertaining solely to the business operations of a hospital, such as stipends or meals provided to a physician in exchange for services on a governing board, may be protected under this exception. [30] In the example of remuneration for administrative services pertaining to the business operations of a hospital, CMS notes that the relevant inquiry is whether the services are also provided by non-physicians, and whether the payments for such services are on the same terms whether or not the individual is a physician.
  • Expanded EHR Donation Exception. CMS proposes to extend the scope and application of the current EHR donation exception at 42 C.F.R. § 411.357(w) (“EHR Exception”) indefinitely by removing the sunset provision in the existing regulation. The Proposed Rule also proposes to amend the deeming provision in the EHR Exception regarding interoperability, add prohibitions on the donor engaging in information blocking, and amend the scope of the EHR exception to clarify that donations of certain cybersecurity software and services are allowable and protected. Further, CMS sets forth proposed amendments to the definitions of “interoperable” and “electronic health record,” each intended to align the terminology in the EHR Exception with the 21st Century Cures Act. [31]
  • Requirements With Directed Referral Provisions. In light of its proposed interpretation of the “volume or value” standard, CMS intends to reiterate the importance of the special rule on compensation related to directed referral requirements. CMS proposes to amend the applicable Stark Law exceptions to which the special rule applies to include an express requirement that, if any compensation paid to the physician is conditioned on the physician’s referrals, the compensation arrangement must also comply with the special rule. [32]
  • Group Practice Profit Shares and Productivity Bonuses. CMS proposes to add flexibility to a group practice’s distribution of payments that the group receives that are related to a physician’s participation in a value-based arrangement. To encourage physicians to participate in value-based care models, CMS proposes to amend the regulations so that DHS profits that are directly attributable to a physician’s participation in a value-based enterprise would be deemed not to directly take into account the volume or value of the physician’s referrals. This proposal would allow a group practice to directly distribute to a physician in the group the DHS profits furnished by the group that are derived from the physician’s participation in a value-based enterprise, without jeopardizing the group’s ability to qualify as a group practice.

CMS also proposes to amend the definition of “overall profits” to clarify that the profits derived from all DHS must be aggregated and distributed, noting that a physician practice that wishes to qualify as a group practice could not distribute DHS profits on a service-by-service basis. [33] The Proposed Rule further includes a proposed revision to the deeming provision related to the physician’s total patient encounters or RVUs to state that a productivity bonus will be deemed not to take into account the volume or value of a physician’s referrals if the bonus is based on the physician’s personally performed patient encounters or RVUs.

  • Payments by a Physician. CMS has reconsidered its position regarding the exception for payments by a physician for certain compensation arrangements. Historically, this exception to the Stark Law has excepted payments made by a physician for certain items and services so long as another regulatory exception did not apply. [34] In response to comments arguing that restricting the exception to circumstances where no other exception applies is unreasonably narrow, CMS proposes to remove references to other regulatory exceptions. CMS anticipates that this change would generally allow parties to rely on this exception to protect any fair market value payments by a physician to an entity for items or services furnished, even if another regulatory exception may be applicable. However, CMS clarifies that this exception would not be applicable to cash or cash equivalents, or for arrangements for the rental of office space or equipment, given that CMS does not consider cash or cash equivalents, or office space, to be either an “item” or a “service.” [35]
  • Recruitment Agreements. CMS proposes amending its previous position regarding recruitment agreements between hospitals and physicians who join existing physician practices. While its prior policy was that each of the hospital, physician, and employing physician practice were required to sign a recruitment agreement, CMS now clarifies that if the physician practice receives no financial benefit from the recruitment arrangement, it is no longer required to sign the recruitment agreement. [36] However, CMS believes that the signature of the physician practice would continue to be required when remuneration is retained by the practice.
  • Assistance to Compensate a NPP. CMS has also reconsidered its position regarding remuneration provided by a hospital to a physician to compensate a non-physician practitioner (“NPP”) to provide patient care services. As currently codified, the exception requires that the NPP has not been employed or otherwise engaged to provide patient care services by a physician or physician organization located in the geographic area served by the hospital within the last year. [37] To clarify confusion as to whether certain patient care services provided by an individual prior to becoming an NPP (for example, in the capacity of a registered nurse) would preclude the individual from fitting within the exception, CMS proposes to revise the regulatory text to specify that patient care services performed by an individual who is not an NPP at the time would not be included in this restriction (for example, if employed as a registered nurse prior to becoming a nurse practitioner). Further, the Proposed Rule aims to clarify the timing of these arrangements through a proposed amendment to the regulatory text requiring that the compensation arrangement between the hospital, federally qualified health center, or rural health clinic and the physician must commence before the physician enters into the compensation arrangement with the NPP. [38]
  • Decoupling Stark and Federal AKS. Consistent with one of the overall themes of the Proposed Rule to streamline and remove unnecessary regulatory language, CMS is proposing to recalibrate the scope of the Stark Law regulatory exceptions to eliminate the requirements pertaining to compliance with the federal anti-kickback statute (“federal AKS”) and federal and state laws governing billing and claims submission. [39] CMS notes that such intermingling is unnecessary, particularly as CMS is unaware of any instance in which noncompliance with the Stark Law turned solely on a violation of the federal AKS or other laws governing billing or claims submission, as an arrangement that would violate such laws would typically also violate one or more separate requirements of an exception to the Stark Law.
  • Ownership and Investment Interests. CMS proposes to modify 42 C.F.R. § 411.354(b) to exclude titular ownership or investment interests from the definition of an ownership and investment interest under the Stark Law, consistent with prior guidance that individuals with a mere titular ownership or investment interest do not stand in the shoes of the physician organization for purposes of determining compensation arrangements. [40] Further, CMS solicits comments on whether additional language should be included regarding employee stock ownership programs (each, an “ESOP”), including for example, whether it is necessary to restrict the number or scope of entities owned by an ESOP that would not be considered an ownership or investment interest of its physician employees. [41]

IV. Conclusion
As described in this Alert, these long-awaited proposed amendments and the policy clarifications are significant and wide-ranging in their scope and may potentially impact a multitude of arrangements between institutional health care providers and physicians.

Comments on the Proposed Rule are due by December 31, 2019. Hospitals and other health care providers impacted by Stark Law requirements should consider whether to submit comments to CMS on the Proposed Rule. K&L Gates’ health care practice and public policy and law practice regularly facilitate stakeholder engagement with federal regulatory agencies, including through the development and submission of public comments. In addition, we routinely assist health systems, hospitals, and other providers and suppliers with legal advice regarding Stark Law and federal AKS compliance, including provider contracting, transactional due diligence, internal compliance reviews and submission of SRDPs, and general strategic considerations.


[1] Medicare Program, Modernizing and Clarifying the Physician Self-Referral Regulations, 84 Fed. Reg. 55,766 (proposed Oct. 17, 2019).
[2] 42 U.S.C. 1395nn; 42 C.FR. 411.350 et seq.
[3] With respect to the rental of equipment, CMS proposes “fair market value” to mean the value, in an arm’s-length transaction with like parties and under like circumstances, of rental property for general commercial purposes (not taking into account its intended use), consistent with the general market value of the subject transaction. With respect to the rental of office space, CMS intends “fair market value” to mean the value in an arm’s-length transaction, with like parties and under like circumstances, of rental property for general commercial purposes (not taking into account its intended use), without adjustment to reflect the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor where the lessor is a potential source of patient referrals to the lessee and consistent with the general market value of the subject transaction. Proposed Rule at 55,797.
[4] Id. at 55,796–55,797.
[5] Id. at 55,978 (commenting that the current definition of “general market value” is “unconnected to the recognized valuation principle of ‘market value’ and itself may be the driver of valuation industry policy and procedure.”).
[6] Id. at 55,790.
[7] Id.
[8] Id. at 55,793. CMS clarifies that the under policy proposed at § 411.354(d)(5)(i)(A), “compensation from an entity to a physician (or immediate family member of the physician) takes into account the volume or value of referrals only if the formula used to calculate the physician’s (or immediate family member’s) compensation includes the physician’s referrals to the entity as a variable, resulting in an increase or decrease in the physician’s (or immediate family member’s) compensation that positively correlates with the number or value of the physician’s referrals to the entity.” Proposed Rule at 55,793.
[9] CMS has proposed language at 42 C.F.R. § 411.354(d)(5)(i)(B), (ii)(B), (d)(6)(i)(B), and (ii)(B).
[10] Proposed Rule at 55,794.
[11] A recent decision by the U.S. Court of Appeals for the Third Circuit relied upon a similar interpretation of the Stark Law’s “volume or value” test as the Fourth Circuit set forth in the Tuomey case. In United States ex rel. J. William Bookwalter, III, M.D. v. UPMC, the court allowed relators to proceed to discovery based simply on the correlation between the amount of the productivity-based compensation paid to the surgeons by UPMC and the volume of the surgeons’ referrals for inpatient hospital services.
[12] Proposed Rule at 55,833.
[13] Id. at 55,834.
[14] Id. at 55,814.
[15] Id. at 55,815. Instead, CMS states that records of a consistent rate of payment over the course of an arrangement, informal communications via email or text, internal notes to file, similar payments between the parties from prior arrangements, generally applicable fee schedules, or other documents recording similar payments to or from similarly situated physicians for similar items or services may be sufficient to establish that the amount of the compensation or formula for calculating such compensation was in fact set in advance.
[16] Id. at 55,805. The Proposed Rule sets forth the example of an outside consulting specialist ordering an x-ray for a patient who is already admitted to a hospital, noting that unless the x-ray results in an outlier payment, the x-ray would not affect the payment received by the hospital for the patient, because the hospital is paid based on the established diagnosis-related group. CMS acknowledges that its proposed clarification is limited to the IPPS and requests comments regarding whether this concept should be similarly extended to analogous services provided by hospitals that are not paid under the IPPS. Id.
[17] Id.
[18] Id. at 55,806.
[19] Section 1877(h)(1)(c)(ii) of the Social Security Act.
[20] 42 C.F.R. § 411.351.
[21] Proposed Rule at 55,806.
[22] Id. at 55,807. CMS explains that the agency has reconsidered its position on these items, and it is no longer convinced that the mere fact that certain items, devices, or supplies are routinely used as part of a surgical procedure means the item is not “used solely” for one of the six purposes identified by statute.
[23] Id. To illustrate the issue, CMS notes that a specimen lockbox could theoretically be used for several purposes (e.g., storing unused supplies, acting as a doorstop, etc.). However, if the specimen box is not used for outside purposes and is, in fact, used only for one or more of the statutory purposes, then the furnishing of the specimen lockbox would not be considered remuneration.
[24] Id. at 55,808.
[25] Id. at 55,809.
[26] CMS provides the example of a hospital that realizes that it had been overpaying a physician with whom it contracted for medical director services as a result of an unintended administrative error for the first six months of a one-year contract with the physician. The Proposed Rule indicates that, provided the arrangement otherwise fit within the an applicable exception, if the error is identified and promptly corrected within the one-year term of the contract, the Stark Law has not been violated.
[27] Proposed Rule at 55,815.
[28] Id. at 55,820.
[29] Id. at 55,818.
[30] Id.
[31] Pub. L. No. 114-255 (Dec. 13, 2016).
[32] Proposed Rule at 55,795–55,796.
[33] The Proposed Rule provides an example that a group practice may not “distribute the profits from clinical laboratory services to one subset of its physicians or using a particular methodology and distribute the profits from diagnostic imaging to a different subset of its physicians (or the same subset of its physicians but using a different methodology).” Proposed Rule at 55,801.
[34] 42 C.F.R. § 411.357(i).
[35] Proposed Rule at 55,820.
[36] Id. at 55,816. For example, a physician practice may not be required to sign the agreement in instances where the hospital provides remuneration directly to the recruited physician; the hospital provides remuneration to the physician practice, but the practice passes through all received remuneration to the recruited physician; or if the recruited physician joins the practice after the income guarantee but before the physician’s community service repayment obligation is completed. Id.
[37] 42 C.F.R. § 411.357(x)(1)(v)(B).
[38] Proposed Rule at 55,827.
[39] Id. at 55,803.
[40] Id. at 55,811.
[41] Id. at 55,812.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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