BACKGROUND

The Stark Law restricts financial relationships between a physician and any entity that furnishes and bills Medicare for DHS (a DHS Entity), and many of the most commonly used Stark Law exceptions implicitly rely on DHS Entities to appropriately identify the DHS such entities furnish. Accordingly, it is important for Medicare providers and suppliers to stay up to date on what CMS considers DHS.

CMS annually publishes the Code List to specify certain categories of healthcare services that are considered DHS under the Stark Law. The Code List includes a subset of Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes that CMS considers DHS. This is the second year that CMS has elected to publish the annual update through its Code List website instead of publishing it in the Federal Register in connection with routine annual payment system updates (i.e., the Medicare Physician Fee Schedule rulemaking cycle). Comments on the Code List updates are due by December 29, 2023.

DIG DEEPER

The Stark Law strictly limits financial relationships between physicians and DHS Entities that furnish “designated health services.” More specifically, the Stark Law prohibits physicians from referring patients to an entity for DHS covered by Medicare if the physician (or one of his or her immediate family members) has a financial relationship with the DHS Entity, unless an exception applies. The Stark Law also prohibits the DHS Entity from billing Medicare or any other person or entity for improperly referred DHS. A “financial relationship” is defined broadly to include any direct or indirect ownership or investment interest, and any direct or indirect compensation arrangement. If a Medicare provider or supplier bills for DHS that does not comply with a Stark Law exception, the DHS Entity may be subject to significant civil penalties and exposure under the federal False Claims Act.

It is a critical element of Stark Law compliance for Medicare providers to know what codes and services are considered DHS. Many healthcare providers rely on Stark Law exceptions that require physicians to be compensated only for (or based on)those services that are not considered DHS or that otherwise require a provider to precisely identify the services furnished and billed by that provider that constitute DHS. These 10 categories of items and services are considered DHS under the Stark Law:

1. Clinical laboratory services
2. Physical and occupational therapy, and outpatient speech-language pathology (SLP) services (collectively, Outpatient Rehabilitation Services)
3. Radiology and certain other imaging services
4. Radiation therapy services and supplies
5. Durable medical equipment and supplies
6. Parenteral and enteral nutrients, equipment and supplies
7. Prosthetics, orthotics, and prosthetic devices and supplies
8. Home health services
9. Outpatient prescription drugs
10. Inpatient and outpatient hospital services

THE CODE LIST

Each category of DHS is defined by regulation. Helpfully, four DHS categories—clinical laboratory services, Outpatient Rehabilitation Services, radiology and other imaging services, and radiation therapy services and supplies—are defined by the Code List. However, the following categories of DHS are defined without regard to the Code List:

1. Durable medical equipment and supplies
2. Parenteral and enteral nutrients, equipment and supplies
3. Prosthetics, orthotics, and prosthetic devices and supplies
4. Home health services
5. Outpatient prescription drugs
6. Inpatient and outpatient hospital services

For those categories of DHS that are defined by way of reference to the Code List, if a particular CPT or HCPCS code is not listed on the Code List, the service is not DHS under the Stark Law. For DHS categories that are defined without regard to the Code List, providers must independently verify whether a particular CPT or HCPCS code falls within the applicable DHS regulatory definition.

While the Code List is helpful, it is not without its faults. In addition to identifying the CPT or HCPCS codes that are considered DHS within the four categories noted above, the Code List also includes details regarding the applicable codes that are eligible for use with the Stark Law exception for preventive screening tests and vaccines (found at 42 C.F.R. § 411.355(h)). Providers should also be aware that the Code List defines the majority of clinical laboratory services by way of reference to the 80000-series CPT codes only. Namely, instead of listing the codes individually as CMS does for the other DHS categories, providers are required to consult multiple other Medicare fee schedule files (including the Medicare Physician Fee Schedule and the Clinical Laboratory Fee Schedule files) to determine the CPT codes that fall within this series and are considered “clinical laboratory services” within the Stark Law’s regulatory definition. The Code List also explicitly lists certain lab services that are excluded from clinical laboratory services. These quirks mean that a simple cross-reference or comparison to the Code List is insufficient and generally incomplete. Finally, and as noted above, many healthcare providers do not realize that the Code List is not a comprehensive list of all codes that CMS considers DHS and that the Code List only covers four of the 10 DHS categories. As a result, providers often miss large swaths of DHS codes from the other six categories, or inappropriately flag excepted-DHS codes that are counterintuitively listed on the Code List.

CMS ADDED DRUG TEST CODES, COVID-19 CODES TO DHS LIST

In the latest iteration of the DHS Code List, most notably, CMS added certain laboratory services codes and updated the codes for certain COVID-19 services.

Specifically, CMS added definitive drug testing laboratory services to the Code List. As opposed to screening tests, definitive drug testing is used to identify a specific drug and quantity in a patient. These codes are generally used to confirm and identify the presence or absence of specific drugs in patients who are undergoing treatment for pain management or substance use disorders. The addition of these testing codes to the Code List could dramatically increase the quantity of DHS furnished by certain types of providers, particularly substance use disorder, pain management and behavioral health providers. This could also subject certain providers, in particular in the behavioral health space, to the Stark Law, in addition to changing the percentage of DHS furnished by such providers beginning in calendar year (CY) 2024.

COVID-19 vaccines and monoclonal antibody products are considered DHS and are included on the proposed Code List for 2024. However, in light of the expiration of certain public health programs related to COVID-19, CMS removed certain COVID-19 specimen collection and testing codes from the Code List. The COVID-19 vaccines and monoclonal antibody products remain eligible for the Stark Law exception for preventive screening tests and vaccines.

Finally, CMS made other minor edits and updates to the radiation therapy and radiology services included on the Code List. CMS’s summary of the changes can be reviewed here.

DHS CODE LIST PROCEDURAL CHANGES

Updates to the Code List for CYs 2022 and earlier were published in the Federal Register as an addendum to the annual Medicare Physician Fee Schedule final rule.

Beginning with the CY 2023 Code List, CMS is now only publishing updates to the Code List on its website (available at CMS List of DHS CPT/HCPCS Codes) near the end of each calendar year. CMS published the proposed 2024 Code List updates on November 28, 2023, and provided a scant 30-day period for healthcare providers to review and provide comments on the proposed changes.

In response to the updated publication methodology and 2023 Code List updates, CMS received zero comments. The complete lack of comments or other feedback on the Code List updates last year suggests that stakeholders may not be fully aware that CMS has changed its process, or that they do not have sufficient notice to provide meaningful responses. For additional insight on substantive changes made to the services that are considered DHS by way of inclusion on the Code List, please view our earlier analysis in this On the Subject.

TAKEAWAYS

Providers should ensure that they carefully review and analyze the services they furnish on a regular basis, which should include, but cannot be limited to, reviewing the Code List.

Separate from the Code List, there are annual updates to the CPT codes (published and maintained by the American Medical Association) and to the HCPCS code lists. As the CPT and HCPCS code sets are updated, retired and created, providers and practice administrators should be sure to review how these changes may affect which services furnished by providers are considered DHS. This requires consulting the regulatory definitions for the six categories of DHS that do not rely on the Code List.

Providers subject to the Stark Law should also review CMS’s annual update to the Code List. The final Code List for CY 2024 will be published in January. To the extent that providers have comments or concerns with respect to this revised publication process, they should consider submitting comments, even if such comments are not provided to CMS by the December 29, 2023, deadline. Comments may be submitted here.