On October 17, 2019, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule to update and clarify certain aspects of the federal physician self-referral law (“Stark Law”). On the same date, the Office of Inspector General (“OIG”) also issued a proposed rule to update the federal anti-kickback statute and civil monetary penalties law, as part of the Department of Health and Human Services’ “Regulatory Sprint to Coordinated Care,” which aims to reduce regulatory barriers, facilitate the transition to value based care and promote care coordination.  This Client Alert provides a brief summary of both proposed rules.

Stark Law Proposed Rule.

Generally, the Stark Law prohibits a physician from making referrals for certain “designated health services” (“DHS”) payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity performing the service, unless a Stark Law exception is satisfied.  The Stark Law also prohibits persons/entities from submitting claims to Medicare for services provided pursuant to a prohibited referral.  The Stark Law is a “strict liability” law, such that no intent to violate the Stark Law is necessary for the government to prove a violation.

If adopted, the proposed rule would create new exceptions to the Stark Law for value-based arrangements, as well as for donations of certain cybersecurity technology. There are three separate value-based care exceptions, each of which has unique requirements.  Of note, the new value-based exceptions would not prohibit remuneration that takes into account the volume or value of a physician’s referrals, but they would prohibit remuneration conditioned on referrals of patients who are not included in the target population, or business that is not covered by the value-based arrangement.

The proposed rule also, among other updates and clarifications, proposes to revise certain standards and concepts that are common to many Stark law exceptions, including: (i) the “set in advance” standard; (ii) the “fair market value” standard; (iii) the “commercially reasonable” standard; and (iv) the “volume or value of referrals” and “other business generated” standards. Each of these standards is critically important to providers seeking to comply with a Stark Law exception, and if adopted, the revisions should ease the burden of compliance.

CMS also proposed to revise (i) the “group practice” regulations by, among other changes, revising the definition of overall profits and restructuring certain aspects of the special rule for productivity bonuses and profit sharing; and (ii) the special rules on compensation arrangements, by extending the current 90 day period to document and sign a compensation arrangement, provided all other requirements of an exception are satisfied.

This summary is not intended to capture all of the proposed revisions to the Stark Law, which are nuanced and complex. We strongly encourage anyone who would like additional information to contact the GW attorney with whom you normally work.  Comments to the proposed rule are due by December 31, 2019.

Anti-Kickback/CMPL Proposed Rule.

The OIG’s proposed rule would revise safe harbors to (i) the federal anti-kickback statute, which makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration (i.e., virtually anything of value) to induce or reward the referral of business reimbursable by a Federal health care program; and (ii) the beneficiary inducement provision of the civil monetary penalties law, which provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or State healthcare program beneficiary that the person knows, or should know, is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a State healthcare program.  If adopted, the proposed rule would create a number of new safe harbors, and modify existing safe harbors, in an attempt to promote coordinated patient care and foster improved quality, efficiency and outcomes.

In the proposed rule, the OIG created new anti-kickback safe harbors for: (i) remuneration exchanged between or among eligible participants in a value-based arrangement that fosters better coordinated and managed patient care; (ii) certain tools and support furnished to patients to improve quality, health outcomes and efficiency; (iii) remuneration provided in connection with a CMS-sponsored model, which should reduce the need for separate and distinct fraud and abuse waivers for new CMS-sponsored models; and (iv) donations of cybersecurity technology and services. These new safe harbors, if implemented, should provide greater flexibility to providers.

In addition, the rule proposes to modify existing safe harbors in order to: (i) add protections to the existing safe harbor for electronic health records items and services for certain cybersecurity technology, update provisions regarding interoperability, and remove the sunset date; (ii) modify the existing safe harbor for personal services and management contracts by adding flexibility with regard to outcomes-based payments and part-time arrangements; (iii) revise the definition of “warranty” and provide protection for bundled warranties for one or more items and related services; (iv) modify the local transportation safe harbor to expand and modify mileage limits for rural areas and for transportation for patients discharged from inpatient facilities; and (v) codify the statutory exception to the definition of “remuneration” related to Accountable Care Organization Beneficiary Incentive Programs for the Medicare Shared Savings Program.

Finally, the proposed rule would amend the definition of “remuneration” in the civil monetary penalties law interpreting and incorporating a new statutory exception to the prohibition on beneficiary inducements for “telehealth technologies” furnished to certain in-home dialysis patients. The modifications are intended to facilitate arrangements that do not pose a significant risk of fraud and abuse, while improving efficiency and outcomes.

Comments to the OIG’s proposed rule are due 75 days from the date of publication of the Notice of Proposed Rulemaking in the Federal Register, or by December 31, 2019.

Click Here to download the Legal Alert.

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The proposed changes, once finalized, may create opportunities for providers to enter into new arrangements or require revisions to existing arrangements.  If you have any questions about this alert, please contact the Garfunkel Wild attorney with whom you regularly work.


In September 2019, the U.S. Department of Health & Human Services, Office of Inspector General (“OIG”) published a “Data Brief” regarding State oversight of Ambulatory Surgery Centers (“ASCs”).   The Data Brief focused on the responsibility of the States to survey those ASCs: (1) that are not accredited by third party accreditation agencies (“Non-Deemed Status ASCs”); and (2) about which serious complaints are received, regardless of whether the ASC is accredited.

Although the purpose of the Data Brief is to summarize State compliance with their survey obligations, the findings illuminate issues for ASCs to consider, including the following:

  • The category of the Conditions of Coverage (“CfC”) with the most deficiencies between FY 2013 – FY 2017 was Infection Control with Infection Control findings being approximately one-fifth of all deficiencies. In other words, States cited more than half (55%) of all Non-Deemed Status ASCs with one or more Infection Control deficiencies.
  • The categories with the most deficiencies after Infection Control were: Pharmaceutical Services, Environment, Patient Rights and Patient Admission, Assessment and Discharge.
  • 77% of Non-Deemed Status ASCs had at least one deficiency during survey and 25% had serious deficiencies.
  • Between FY 2013 – FY 2017, there were a fairly limited number of complaints nationwide, with complaints regarding less than 4% of ASCs. Nevertheless, accredited ASCs should keep in mind that they may be surveyed by the States for complaints in the same manner as Non-Deemed Status ASCs.

A complete copy of the Data Brief can be found out at: https://oig.hhs.gov/oei/reports/oei-01-15-00400.pdf

Click Here to download the Legal Alert.

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Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work. For information regarding surveys and, in particular, compliance with Infection Control CfCs, please join us at Garfunkel Wild’s ASC and HealthCare Management Symposium. For additional information, visit our website at nymetroasc.com or call 516-393-2294


On September 4, 2019, DOH published a Notice of Proposed Rulemaking that implements a New York Court of Appeal’s ruling striking down the so called “soft cap” limitations and affirming the “hard cap” limitations on executive compensation. In particular, a covered provider is prohibited from compensating a covered executive in an amount greater than $199,000 per year using solely State Funds, unless a waiver is obtained.  [https://regs.health.ny.gov/sites/default/files/proposed-regulations/Limits%20on%20Executive%20Compensation.pdf]

In October, 2018 Garfunkel Wild, P.C. issued a Client Alert of the decision of the New York Court of Appeals striking down the “soft cap” and affirming the “hard cap” limitations on executive compensation under NYS regulations that implemented Executive Order # 38 (“EO 38”). [See prior GW Alert – https://www.garfunkelwild.com/wp-content/2018/ALERTS/court-of-appeals-affirms-lower-courts-decision-striking-down-soft-cap-on-exec-comp.pdf]. Specifically, the Court upheld the regulations on covered providers, such as hospitals licensed under Article 28 of the Public Health Law, which imposed limits on administrative expenses and executive compensation to the extent funded by “State Funds” – the so-called “hard cap”.  This applied to funds in the State budget for State funded program services, e.g., Cystic Fibrosis Program, Early Intervention Program or “state-authorized payments”, which include funds that are distributed by or disbursed upon a New York State agency’s approval, e.g., Medicaid payments.  However, the Court invalidated the regulations which placed limitations  on the covered provider’s use of non-State Funds in funding executive compensation, e.g., private funds, payments from commercial payors, etc. – the so-called “soft cap”.


The soft cap prohibited executive compensation in excess of $199,000 from State Funds and non-State Funds unless (i) the compensation was within the 75th percentile of comparable providers and (ii) the compensation was approved by the provider’s governing board, including at least two independent directors.  The proposed regulations delete the soft cap prohibition and these comparability data and governing board approval requirements.

The hard cap continues to apply to “covered executives” (generally defined as a compensated director, trustee, managing partner or officer, or key employee), whose salary and benefits, in whole or in part, is considered administrative expenses and exceeds $199,000 during the reporting period. If there are more than 10 key employees who meet this definition, the covered provider need only report the highest compensated top 10 key employees

Covered providers that are subject to the hard cap are required to obtain a waiver in order to compensate their covered executives in an amount greater than $199,000. It is our understanding that few, if any covered providers, have used the waiver process.  Given the proposed change in the regulations, this waiver process may be more prevalent and an agency’s timely processing of waiver applications may be an issue.  Presumably, if a covered provider has sufficient non-State Funds to fund executive compensation, a waiver will not be necessary. However, the covered provider must have sufficient controls in place to document that non-State Funds are sufficient to fund executive compensation.

Of course, covered providers are still required to submit an EO 38 Disclosure Form for each covered reporting year.

Lastly, although the proposed regulations eliminate the use of and approval by the governing board of data to show that executive compensation was within the 75th percentile of comparable providers, we recommend the continued use of comparability data and governing board approval by charitable organizations in meeting their obligations under the Internal Revenue Code for executive compensation and by other covered providers to support a waiver application.

We look forward to comments that will be submitted by interested parties in response to the proposed regulations and to the Department’s responses to such comments.

Click Here to download the Legal Alert.

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If you have any questions about this alert, please contact the Garfunkel Wild attorney with whom you regularly work.


Partner/Director Scott Higgins facilitated the transfer of 28 skilled nursing facilities with a combined value in excess of $450 million located in 8 states with an associated financing of over $240 million.


Thirty-Four Garfunkel Wild attorneys were selected by their peers for inclusion in 2019 New York Metro Super Lawyers, and 2019 New York Metro Rising Stars.

Super Lawyers and Rising Stars recognize attorneys who exhibit excellence in the practice of law rated by a high-degree of peer recognition and professional achievement.

The following Garfunkel Wild attorneys were named 2019 New York Metro Super Lawyers:

  • Jeffry Adest – Health Care Law
  • Suzanne M. Avena – Environmental Law
  • Greg E. Bloom – Health Care Law
  • Andrew E. Blustein – Health Care Law
  • Jeffrey S. Brown – Health Care Law
  • Barry B. Cepelewicz, M.D., Esq. – Health Care Law
  • Kevin G. Donoghue – General Litigation
  • Judith A. Eisen – Health Care Law
  • Peter M. Hoffman – Health Care Law
  • Michael J. Keane – Business Litigation Law
  • Eve Green Koopersmith – Elder Law
  • Lauren M. Levine – General Litigation
  • Sean P. Leyden – Real Estate Law
  • Doris L. Martin – Estate Planning & Probate
  • John G. Martin – White Collar Crime
  • Marianne Monroy – Employment & Labor Law
  • Salvatore Puccio – Employment Litigation
  • Leonard M. Rosenberg – General Litigation
  • Debra A. Silverman –  Health Care Law
  • Justin M. Vogel – Business Litigation
  • Burton S. Weston –     Bankruptcy Law
  • Robert Andrew Wild – Health Care Law
  • Hayden S. Wool – Health Care Law
  • Andrew L. Zwerling – General Litigation

The following Garfunkel Wild attorneys were named 2019 New York Metro Rising Stars:

  • Carmen E. Jule – Health Care Law
  • Michael (Mickey) Keane, Jr. – Business Litigation Law
  • Jessica F. Sonpal – Health Care Law
  • Dayna B. Tann – General Litigation