The Stark Law, 42 U.S.C. 1395nn, places restrictions on lease arrangements between physician groups and hospitals for equipment owned by the physicians, leased to the hospitals and then used by the same physicians to treat patients at the hospital.\u00a0 Under the Stark Law, such leases are prohibited unless the arrangement complies with the equipment rental exception, 42 U.S.C. 1395nn(e)(1)(B).<\/p>\n
One requirement of the equipment rental exception, which is both statutory and regulatory (42 C.F.R. 411.357(b)),\u00a0is that the rental charges be “set in advance.”\u00a0 In a recent case from the D.C. Circuit Court of Appeals, Council for Urological Interests v. Burwell, <\/em>the court considered whether a “per-click” or “per-use” fee could be considered “set in advance” and otherwise meet the criteria for the exception.\u00a0 In an oddly constructed opinion, the court struck down\u00a0a regulatory\u00a0prohibition on per-click arrangements, but remanded under terms that would permit the restriction to be re-instated.<\/p>\n Specifically, the court considered 42 C.F.R. 411.357(b)(4)(ii)(B), which provides that an equipment lease does not\u00a0fall within\u00a0the exception if the rental charge formula is based on “per-unit of service rental charges”, where the services are provided to patients referred by the physician-lessor of the equipment.\u00a0 The court by-passed the Secretary’s argument that the per-unit restriction was\u00a0valid because\u00a0per-unit\u00a0rates\u00a0caused the total amount of the lease to fluctuate over the term based on volume and therefore did not meet the statutory “set in advance” requirement.\u00a0 The court found this explanation “bewildering” and refused to credit it.<\/p>\n The court nevertheless remanded the case to the district court “with instructions to remand to the Secretary” to consider “with more care than she exercised here” the rationale for the restriction.\u00a0 In particular, the Secretary is directed to consider whether the restriction is consistent with the 1993\u00a0House Conference Report that\u00a0states that “units of service rates<\/strong><\/em>” may not fluctuate during the contract period, not the lessor’s total rental income.<\/p>\n On remand, the Secretary will emphasize that the Conference Report does not supplant the language of the statute and does not limit other authority given to the Secretary to\u00a0issue regulations\u00a0“as needed to protect against program or patient abuse.”\u00a0 Providers are well-advised to move cautiously in this area, notwithstanding the opening\u00a0for per-click leases that this opinion creates.<\/p>\n","protected":false},"excerpt":{"rendered":" The Stark Law, 42 U.S.C. 1395nn, places restrictions on lease arrangements between physician groups and hospitals for equipment owned by the physicians, leased to the hospitals and then used by the same physicians to treat patients at the hospital.\u00a0 Under the Stark Law, such leases are prohibited unless the arrangement complies with the equipment rental … <\/p>\n