On November 20, 2020, the Centers for Medicare & Medicaid Services’ (CMS) issued a fact sheet and final rule to modernize and clarify regulations that interpret and implement the physician self-referral law.  The intent of the final rule is to balance the reduction of unnecessary physician burden with the goal of removing a physician’s financial self-interest from the patient care decision-making process. The changes adopted by this rule follow CMS’ proposed rule and coordinate with a peer-rule issued by the Health and Human Services’ Office of Inspector General (OIG).

This final rule establishes exceptions to the physician self-referral law for certain value-based and other compensation arrangements and for donations of cybersecurity technology and amends the exiting exception for electronic health records (EHRs).  It also provides helpful guidance for physicians and others whose financial relationships are governed by the physician self-referral statute and regulations.

Final Rule Provisions

• Value-Based Arrangements – establishes exceptions to the physician self-referral law for certain value-based compensation arrangements between or among physicians, providers, and suppliers and finalizes the terms and definitions necessary to apply this new exception
• Limited Remuneration Arrangements – establishes a new exception for certain arrangements under which a physician receives limited remuneration for items or services actually provided by the physician
• Cybersecurity Technology and Services (CT&S) – establishes a new exception for donations of CT&S
• Electronic Health Records (EHRs) – amends the existing exception for EHR items and services
• Guidance – provides critically necessary guidance for physicians and health care providers and suppliers whose financial relationships are governed by the physician self-referral statute and regulations (e.g., how to determine if compensation meets the requirement of fair market value)
• Designated Health Services – revises the definition to state that a service is not a designated health service if the furnishing of the service does not increase the amount of Medicare’s payment to the hospital under any of the following prospective payment systems: (i) Acute Care Hospital; (ii) Inpatient Rehabilitation Facility; (iii) Inpatient Psychiatric Facility; or (iv) Long-Term Care Hospital

The final rule is scheduled to be published in the Federal Register on December 2, 2020 and unless otherwise specified, the effective date of provisions in this final rule is January 19, 2021.