Becker's ASC Review

22 TRANSACTIONS e "payments by a physician" exception CMS has recently confirmed, through self-referral disclosure protocol submissions, that the "payments by a physician" exception under the Stark law may apply more broadly than many physicians have believed. is exception generally allows a physician to pay FMV for items or services without triggering Stark law, and it's appealing because it can be less rigid than other exceptions. e major practical guardrails: • It applies only when the physician is the one paying (not receiving compensation). • It cannot be used as a substitute for office space rental arrangements that are governed by other Stark exceptions. • FMV still matters, and providers still need documentation strong enough to withstand scrutiny. CMS also created a separate timeshare exception to address scenarios where physicians use space without leasing it in a traditional way, which matters because providers must decide which exception best fits the facts. e in-office ancillary services exception is is one of the most commonly used exceptions because it lets physician groups provide some DHS in-house. It hinges on three big factors: 1. Supervision: DHS must be furnished under the appropriate level of physician supervision, oen the referring physician or another group physician, depending on the service. 2. Location: DHS must be provided in the group's office or a centralized location used for patient care, not a stand-alone referral center. 3. Billing: DHS must be billed by the physician, the group or a wholly owned entity, not a third-party billing structure. To apply the exception, the organization must also meet Stark's technical group practice definition, including integration and the "substantially all" test of at least 75% of patient-care services personally furnished by member physicians. Compensation methodologies must also avoid directly paying physicians based on the volume and value of DHS referrals, even if profit-sharing and productivity pay are allowed within certain structures. 2026's non-monetary compensation update For 2026, DHS entities, including hospitals, ASCs, physician groups and others, may provide non-monetary compensation to physicians up to an aggregate annual cap of $535 per physician, as long as it: • doesn't account for the volume/value of referrals or other business generated, and • isn't solicited by the physician, including via staff acting on the physician's behalf. Key operational points: • It's an annual aggregate cap (total of all qualifying items/services over the year). • Cash and cash equivalents, such as gi cards, do not qualify. • If the cap is exceeded inadvertently, there's a limited "return" cure if the excess is no more than 50% of the cap and the excess is returned within the required timeframe, but the cure can only be used once every three years for the same physician. Physician-owned hospital guidance In March 2025, CMS issued a favorable advisory opinion for a physician-owned hospital seeking to relocate and add an emergency department, concluding it would still qualify for the "whole hospital" exception, based largely on continuity factors, including unchanged ownership and key operational identifiers, and no substantial change to core capacity. Stark law and ASCs ASCs sit in a different place than hospitals and imaging centers under Stark law, but that doesn't mean there's no fraud-and-abuse risk. • Anti-Kickback Statute risk is oen the primary exposure area for ASCs: remuneration tied to referrals is prohibited, and investment must not be offered based on referral volume or business generated. • Stark may not apply to ASCs in the same way as it does to DHS entities like hospitals, but ancillary arrangements and compensation structures can still create Stark issues when they touch DHS referrals or referral-linked compensation outside the ASC context. Practical guardrails in ASC transactions and ownership structures commonly include: • FMV pricing for ownership interests • Avoiding inflated purchase prices, especially for controlling interests • Avoiding discounted sales tied to referrals • Profit distributions aligned with ownership, not volume or value of referrals • Using independent third-party valuations to support FMV Reducing risk: how to respond to Stark allegations To lower risk and strengthen defensibility, providers should prioritize: • Inventory all ownership and compensation relationships tied to DHS referrals, direct and indirect. • Maintain a real compliance program: policies, training, due diligence and recurring risk assessments. • Audit DHS billing and coding, compensation models and referral-related documentation. • Map each arrangement to a specific Stark exception and keep the evidence. • Build airtight documentation: signed agreements, FMV support and appraisals where appropriate. • When allegations arise, focus the defense on the facts (timing, causation, analytics, contract terms). • Fix and disclose issues quickly when appropriate, including SRDP use and permitted retroactive corrections in limited circumstances. Enforcement: "quiet" doesn't mean safe Even when Stark-specific headlines slow, compliance risk remains because Stark issues oen surface through broader enforcement channels, particularly False Claims Act investigations and whistleblower suits. Recent Department of Justice reporting shows high FCA activity overall, which matters because Stark theories can be bundled into FCA allegations depending on the claims and relationships at issue. n

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