We are just over six months from the effective date of the final rule implementing changes to the regulations impacting Stark “group practices.” CMS delayed the effective date to January 1, 2022, to allow practices time to revise their compensation methodologies and contractual arrangements consistent with the regulations at § 411.352(i). Hall Render attorneys have prepared and will continue to prepare topic-specific alerts related to Stark reform. All of these relevant alerts can be found here. Our landing page will continue to be updated as new alerts are published.
The changes impact the manner in which group practices pool and distribute overall profits for “designated health services” (“DHS”). Independent and system-affiliated group practices should now review current profit-sharing plans to ensure any necessary changes can be adopted and implemented ahead of the effective date. Hall Render’s attorneys have extensive experience with physician group practice compensation plan review and design and can assist in the review and redesign of your compensation plans, including shares of overall profits and productivity bonuses.
A list of key regulatory clarifications is as follows:
- Size of Profit Share Pool. Group practices can pool DHS from either: (i) a subset of 5 or more physicians; or (ii) all physicians in the group practice.
- Selection of Pool Participants. Group practices have the flexibility to develop criteria and select pool participants so long as not directly related to referrals.
- Examples of potential selection criteria include grouping physicians with similar practice patterns, by practice location, years of experience or tenure with the group practice.
- Not all physicians have to participate and practices may utilize eligibility standards to determine whether a physician is eligible for a profit share, such as length of time with the group, ownership and/or employment status or FTE status (e.g., full-time or part-time).
- No Profit Pools by Service Line. CMS clarified that a group practice may not distribute profits from designated health services on a service-by-service basis. Rather, a group must aggregate: (i) the entire profits from the entire group; or (ii) the entire profits from any component of the group that consists of at least five (5) physicians.
- No Requirement to Distribute All Profits. A group practice may choose to retain some of the profits or distribute all of the profits through shares of overall profits paid to its physicians.
- Different Subgroups with Different Distribution Methodologies. A group practice need not treat all components of at least five (5) physicians the same with respect to the distribution of shares of overall profits from designated health services. However, each physician within the subgroup must have the same distribution methodology.
Practical Takeaways
The changes to the group practice rules are coming soon. Independent and system-affiliated group practices should start the process of evaluating their compensation plans and revenue allocations now to determine if they will remain compliant under the revised Stark Law as revisions may take time to implement!
If you have any questions or would like additional information about this topic, please contact:
- Erin Drummy at (317) 977-1414 or edrummy@wp.hallrender.com;
- Jenny Struck at (317) 429-3674 or jstruck@wp.hallrender.com;
- Joe Wolfe at (414) 721-0482 or jwolfe@wp.hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
