As we previously reported, on February 9, the U.S. Senate and House of Representatives approved the Bipartisan Budget Act of 2018 (the “Act”) and President Trump subsequently signed the bill into law. Section 50404 of the Act includes several amendments to the Stark Law. Specifically, Section 50404 endorses recent liberalizations of the Stark Law requirements that had been promulgated through CMS rulemaking and related interpretive commentary in 2015, as covered here.
The 2015 guidance provided that CMS would interpret the written agreement requirement of various key exceptions as potentially fulfilled through a “collection of documents” that collectively reflected the arrangement’s material terms, in lieu of a single formal contract. This newfound flexibility led to the withdrawal of numerous pending self-disclosures and had been validated by a district court when a medical director and medical center relied upon such guidance in defending a qui tam suit. The Act explicitly delegates to DHHS the authority to interpret the written agreement requirement of Stark exceptions, both implicitly endorsing the 2015 guidance from a policy perspective, and also foreclosing a scenario in which the DOJ might reject this key aspect of the 2015 CMS guidance.
Section 50404, also codifies ‘indefinite holdover,’ through which a party can rely on an exception, such as the lease exception or personal services exception, even if a formal written agreement has been expired on its face for more than six months, provided that the parties continue to observe the terms of the preceding arrangement and the arrangement otherwise continues to fulfill elements of the applicable exception, including the fair market value element.
Congress, in approving agency-driven liberalizations of the Stark Law, can be viewed as encouraging efforts underway to identify, through an interagency task force, further opportunities to reduce barriers imposed by the Stark Law on legitimate provider activities.