AF Monogram

Health Care Alert – September 2007

Home > Media > Announcements > Health Care Alert – September 2007

Dear Clients and Friends:


We would like to take this opportunity to inform you of new developments which may affect your healthcare practice.




The third phase of final regulations implementing the Federal physician self-referral prohibition (commonly referred to as the “Stark Law”) was recently promulgated by the Centers for Medicare and Medicaid Services (“CMS”). The Stark Law prohibits healthcare providers from referring their Medicare and Medicaid patients for certain items, services and tests provided by businesses in which they or their immediate family members have a financial interest.


This third phase of rule making (Phase III) responds to public comments on the Phase II interim final rule published on March 26, 2004 in the Federal Register. The new rules do not establish any new exceptions to the self-referral prohibition, but rather make certain refinements that could permit, or in some cases require, restructuring of existing arrangements. The new regulations:

  • Provide enhanced flexibility in structuring non-abusive compensation arrangements. For example, the rules regarding physician recruitment and retention payments are expanded to permit recruitment of more physicians into extended areas when needed.
  • Provide relief for inadvertent violations of the self-referral prohibition under certain circumstances. For example, the rules permit parties that inadvertently exceed the limit on non-monetary compensation to continue to satisfy the requirements of the exception if the excess non-monetary compensation did not exceed 50 percent of the permitted amount and is repaid within 180 days of its receipt or the end of the calendar year, whichever is earlier.
  • Reduce the regulatory burden for compliance with certain exceptions. For example, the Phase III final rule eliminates the requirement that entities providing professional courtesy give written notice to an insurer of a reduction of any coinsurance obligation.
  • Clarify the agency’s interpretation of existing regulations. For example, the rule identifies which provisions in office space and equipment lease agreements may be amended during the initial and subsequent terms of the agreements.




Governor Spitzer recently signed legislation which provides additional managed care protections for patients and physicians in their dealings with managed care plans. The new law will do the following:

  • Provide greater assurance to physicians and hospitals that they will be paid by a health plan when such providers receive pre-authorization to provide a needed health care service.
  • Provide patients with a greater ability to obtain specialized out-of-network care by allowing patients to seek an independent external appeal when a health plan denies the patient’s request to seek such out-of-network care that the patient and the patient’s physician believe is “materially different” from the care that is available in-network; and
  • Require hospitals and health plans to continue to abide by the terms of their contract for two months following termination of the contract by either the hospital or the health plan, or for two months following the end of the contract term when it is non-renewed.




Governor Spitzer recently signed legislation which will require that physicians performing office-based surgical procedures may only do so if their office-based surgical (“OBS”) facility has been accredited. The new law defines OBS as “any surgical or other invasive procedure (excluding minimal procedures and procedures requiring minimal sedation) requiring moderate or deep sedation or general anesthesia and unsupplemented liposuction of greater than 500cc.” Under the new law, physicians would be required to report adverse events to the State Health Department’s Patient Safety Center within one business day of the occurrence of the adverse event. An adverse event is defined to mean: (i) a patient death within thirty days; (ii) an unplanned transfer to a hospital; (iii) an unscheduled hospital admission within seventy-two hours of the office based surgery, for longer than twenty-four hours or (iv) any other serious or life-threatening event. Our firm, along with the New York County Medical Society and the Medical Society of the State of New York, will be presenting a seminar on this important new statute on Thursday, September 20, 2007. For more information, please visit the Abrams Fensterman website at




As a result of recent court cases, no-fault insurers have increased their scrutiny of healthcare providers who submit claims under the State’s no-fault system. These carriers typically hold up all claims processing until the provider submits voluminous documentation proving that they were not “fraudulently incorporated” and that they are in compliance with the State’s prohibitions on the corporate practice of medicine and on “fee-splitting”. Often, the providers are required to submit to an examination under oath as well. Our firm has extensive experience in this area and will be conducting a seminar on this topic in November. Information about this upcoming seminar will be posted on the Abrams Fensterman website.




As of July 1, 2007, physicians and other healthcare practitioners are eligible to participate in the Physician Quality Reporting Initiative (PQRI), a quality reporting program through the Centers for Medicare and Medicaid Service (CMS). Under PQRI, eligible professionals who successfully report certain quality measures on claims for dates of services from July 1 to December 31, 2007 may earn a bonus payment of 1.5% of the total allowed charges for covered Medicare Physician Fee Schedule services during that same period, subject to a cap. PQRI reporting is based on 74 quality measures, which are designed to encourage quality improvement and avoid unnecessary costs.

Contact Us

Local Respect,
State-Wide Reach

For further information about our corporate and securities experience, please contact our law firm on Long Island at 516-328-2300, in Brooklyn at 718-215-5300, White Plains at 914-607-7010, Rochester at 585-218-9999 or Albany at 518-535-9477 to schedule an initial consultation.