The statute has a specific exception for all financial relationships with certain "pre-paid plans" which protects arrangements with three types of organizations.
- Pre-Paid Plans: Health Maintenance Organizations ("HMO's") and Competitive Medical Plans ("CMP's") that contract directly with Medicare; any pre-paid organization operating under a Medicare demonstration project; and any federally qualified HMO.
The preamble to the regulations concede that these types of organizations often do not, by themselves, provide designated health services as that term is defined under the Stark law, but instead provide such services under arrangement with individual and entities who directly provide the service. Accordingly, HCFA is proposing to interpret this exception for pre-paid plans in a broad fashion to cover services arranged for by pre-paid plans and furnished to plan beneficiaries by outside providers and suppliers. Furthermore, HCFA has interpreted the Stark law as providing broad protection for demonstration projects involving pre-paid plans. It is worth noting that non-pre-paid demonstration projects do not come within the ambit of this exception.
The most significant area which the exceptions for pre-paid plans does not cover is managed care entities outside of the ones enumerated above. Accordingly, PPO's PHO's, IPA's and other organizations cannot benefit from the pre-paid plan exception, and, instead, must rely on existing exceptions under the Stark law. The proposed regulations, however, extend an invitation for further comments to determine whether or not other types of managed care organizations deserve additional protection under the law.
- Home Health Agencies The proposed regulations specifically state that Stark II applies to home health services that are provided by home health agencies. Accordingly, providers who are eligible for payment as home heath agencies are deemed to provide home health services and, therefore, come within the definition of a designated home health service under the Stark law. The proposed regulations also reconcile a long standing tension between the provisions of the Stark law and the Medicare statutory prohibitions against a physician certifying home health visits fi the physician has a "significant ownership interest" or "significant financial relationship" with the home health agency. The proposed regulations establish one standard under Stark law which permits no financial relationship, unless an exception under the Stark law applies.
- ERSD Providers and Facilities The proposed regulations establish further carve outs for end-stage renal disease ("ESRD") services. The final regulations under Stark I created an exception for any services from the definition of designated health services paid for pursuant to the ESRD composite rate. The proposed regulations further provide that ESRD equipment and supplies will not be considered DME and, thus, will not constitute a designated health service as DME. Furthermore, the regulations specifically except from the definition of outpatient prescription drugs, EPO and other drugs furnished as part of dialysis treatment for ESRD patients who dialyze at home or in a dialysis center. The proposed regulations also except from the definition of inpatient hospital services any dialysis furnished by a hospital that is not certified to provide ESRD services under Medicare. This exception is based on the assumption that there is not a risk of program or patient abuse because the ESRD services provided in the inpatient hospital setting would be provided only under emergency circumstances.
- Physical Therapy and Occupational Therapy Companies