January 21, 2016

QUESTION:        We have an e-mail exchange with a referring physician that clearly describes the services that the physician is to perform and the amount that the hospital is to pay the physician for those services. However, we cannot locate a written agreement. Do we have a Stark problem?

ANSWER:           No, thanks to the new Stark Regulations that went into effect on January 1, 2016. These regulations were promulgated as part of Medicare’s 2016 Physicians’ Fee Schedule. In these regulations, CMS stated that, based in large part on what CMS has learned from voluntary self-disclosures, CMS wanted to clarify the terms that are required in order to satisfy the Stark writing requirement that is included in many of the compensation arrangement exceptions.

CMS first stated that “in most instances, a single written document memorializing the key facts of an arrangement provides the surest and most straightforward means of establishing compliance with the applicable exception.” However, CMS then made it clear that this is not the only means of complying with the Stark writing requirement, stating: “CMS’ existing policy is that a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties, may satisfy the writing requirement of the exceptions for compensation arrangements that require a writing.”

CMS then listed a number of examples that will comply with the writing requirement that included, but are not limited to: board minutes or other documents authorizing payment for specified services; written communications between the parties “including hard copy and electronic communication”; time sheets; fee schedules for specified services; check requests or invoices identifying items or services provided and the rate of compensation; or accounts payable or receivable records documenting the date and rate of payment and the reason for the payment.

Therefore, your e-mail exchange will satisfy the Stark writing requirement and the electronic signatures in the e-mail will satisfy that the arrangement must be signed by both parties (see the Federal Electronic Records and Signatures in Commerce Act).

The new rules are not intended to undo hospital compliance efforts and an effective compliance process remains an essential component of any health care organization. However, the new Stark rules will allow the parties to place substance over form when determining compliance with an applicable Stark exception.