On July 7 CMS issued a proposed rule reaffirming its position that the Stark Law prohibits “per-click” rent payments when the lessor is the one referring the patients to the lessee for the “click,” e.g., the test or procedure.  Say, for example, a physician leases an X-ray machine to an imaging center.  CMS has long said Stark prohibits allowing the physician’s rent income to go up or down based on how often he refers patients to the center for X-rays.

So if this is a long-standing position, why did CMS propose it again?  Because last year the D.C. Circuit Court ruled that the agency’s reasoning, as expressed in the prior rule, was flawed.  CMS had based its position on House Conference Report language specifically addressing per-click arrangements, and the court ruled that CMS had misread that particular language.

But the court stated that under other provisions of the law, CMS had the authority to ban per-click arrangements if it chose to.  The court remanded the matter to CMS for further consideration.  Council for Urological Interests v. Burwell, 790 F.3d 212 (D.C. Cir. 2015).

The July 7 proposed rule reflects that further consideration.  In the rule CMS points to general provisions granting it flexibility to add conditions as needed to prevent abuse.   Invoking that authority, the agency now states that the per-click limitation is necessary because the banned arrangements risk overutilization, patient steering and other anti-competitive effects, reduction in quality and outcomes, and increased Medicare costs.

The proposed rule is RIN: 0938-AS81.