CMS: Stock in a nonprofit physician group doesn't violate Stark rules

The first advisory opinion in seven years on a Stark subject other than specialty hospitals gives experts hope that more questions soon could be answered.

By Mike Norbut, AMNews staff. Oct. 10, 2005.

Stock held by physicians in a nonprofit, multispecialty group does not constitute ownership that would fall under physician self-referral regulations, the Centers for Medicare & Medicaid Services said in a recent advisory opinion.

But the August opinion, which answered a question posed by a medical group in a unique situation, was significant more for its timing than its substance, health care attorneys said.

It marked the first CMS Stark law ruling in seven years on an issue other than specialty hospitals.

Health lawyers believe it might be an indication that the agency will be more willing to rule on nonspecialty hospital questions in the future.

"The fact that it exists is big news," said health care lawyer William Maruca, a partner with Fox Rothschild LLP in Pittsburgh. "We've been waiting for this for years."

Physician groups and other health care organizations might have been sitting with questions for several years waiting for some indication that CMS would review their case in light of physician self-referral laws, attorneys said.

But with a response being a remote possibility, "people were saying, 'What's the point?' " said Brian Annulis, a health care attorney and partner with Katten Muchin Rosenman LLP in Chicago.

"CMS is now in a position to consider advisory opinions on Stark," he said. "I will take this as a positive sign that they are open for business."

The last nonspecialty hospital opinion, issued in November 1998, dealt with an in-office ancillary exception to the Stark law.