Percentage-based pay arrangements get a year's reprieve

Concern among doctors spurs CMS to review that portion of the Stark II rules.

By Tanya Albert, AMNews staff. Dec. 24/31, 2001.

Hospitals and other medical institutions can continue to pay physicians who are independent contractors on a percentage basis without violating federal self-referral regulations, at least for the next year.

The Centers for Medicare & Medicaid Services in early December published a notice that delayed that portion of physician self-referral regulations that would prevent independent contract physicians from maintaining compensation arrangements in which their payment fluctuates based on a set percentage of the billings or collections. The regulations now won't take effect until Jan. 6, 2003. They were scheduled to take effect Jan. 4, 2002.

"If physicians have percentage-based arrangements, they don't have to restructure them between now and Jan. 4," said William H. Maruca, a health care lawyer with Kabala & Geeseman in Pittsburgh. "This is something that was controversial."

Although doctors have a one-year reprieve, percentage-based arrangements still need to be based on fair market value.

CMS published the first part of physician self-referral laws -- commonly known as Stark II -- in January 2001. The regulation was named after its congressional sponsor, Rep. Fortney "Pete" Stark (D, Calif.).

For the most part, physicians were pleased with the results. But doctors were concerned about several areas, including the rules governing percentage-based compensation, which is a common way to bill. [...]