When does an entity “perform” DHS? : StarkAnswers
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When does an entity “perform” DHS?

by Alan Rumph on 06/16/11

I thought it fittingly ironic to begin StarkAnswers with an issue on which there remains no answer—at least in the absolute sense of the term. In the 2009 Inpatient Prospective Payment System rulemaking, CMS broadened the definition of an “entity” that “furnishes” DHS (and to which physician referrals are regulated under Stark) to include an entity that “performs” the DHS. (Prior to the amendment, only the entity billing the DHS was deemed to furnish it.) As most folks know, the purpose and one effect of this change was generally to prohibit referring physicians from owning interests in entities that provide services (other than lithotripsy) “under arrangement” to hospitals. The change and some of its implications are discussed in Nina Youngstrom’s article in the Report on Medicare Compliance, which is available here. (Anyone who’s missed the connection between Stark and sex, see p.2 of the article—sorry, couldn’t resist.)

CMS subsequently solicited comments on whether it should further define “perform,” and if so how. Many have asked me what CMS ultimately decided. Although the decision did not appear in a formal rulemaking, CMS did make a decision—not to provide further guidance on “perform”—as it spelled out on its Stark Web page.

One interesting potential wrinkle is that, with the expansion of “entity,” CMS did not make conforming changes to the teeth of Stark—the billing and payment denial provisions of 42 C.F.R.  §411.353(b) and (c). Those provisions can now be read a number of ways, some surprisingly favorable, where the performing and billing entities are different. Although I would never advocate ignoring the 2009 IPPS change in planning a transaction, in a litigation/enforcement context . . . . With acknowledgement and thanks to Rob Keenan and Brad Tully for noodling the issue over with me way back when.

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