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Comments due to CMS by September 27 on proposed changes to Stark Law advisory opinion process

April Kirkley September 5, 2019

In August 2019, the Centers for Medicare & Medicaid Services (“CMS”) released proposed changes to its Stark Law advisory opinion process. These proposed changes follow CMS’ June 2018 Request for Information regarding ways to address any undue impact and burden of the Stark Law.

Recognizing that only 30 advisory opinions have been issued in the past 20 years, CMS intends for these proposed changes to reduce limitations and restrictions that may be unnecessarily serving as an obstacle to a more robust advisory opinion process.

Anyone wanting to provide comments to CMS regarding its proposed changes must do so by September 27, 2019.

The proposed changes to the Stark Law advisory opinion process include the following.

Changing the scope of advisory opinion issues

Currently, CMS will not issue an advisory opinion if the request is not related to the named individual or entity; it is aware that the same or substantially the same course of action is under investigation or is the subject of a proceeding involving a government agency; or it believes that it cannot make an informed opinion without expending extensive resources.

CMS is proposing to change the scope of advisory opinions it issues by:

  • Rejecting advisory opinion requests that do not describe the arrangement at issue with sufficient detail for CMS to issue an opinion and the requestor has not timely responded to CMS’ request for additional information; and
  • Allowing CMS more discretion to determine, in consultation with the Office of Inspector General and Department of Justice, whether acceptance of an advisory opinion request that is “substantially the same” as an arrangement that is under investigation or subject to a proceeding is appropriate.

While CMS did not propose changes allowing it to accept advisory opinion requests that include questions regarding hypothetical fact patterns or general interpretation, it is soliciting comments on whether CMS should do so in the future.

Reducing the timeframe for obtaining advisory opinions

In its 1998 advisory opinion rule, CMS adopted a 90-day timeframe for responding to most advisory opinion requests but also reserved the right to respond within a reasonable timeframe for those requests involving complex legal issues or complicated fact patterns.

Under the proposed changes to the rule, CMS would establish a 60-day timeframe for issuing advisory opinions.  The 60-day timeframe would commence when CMS formally accepts the request for an opinion and would be paused during any time periods when the requestor is revising the request or obtaining additional information.

CMS is also requesting comments on whether it should include an expedited review option.

Reducing the burden of the certification requirement

Although the current rules state that certification statements for corporate requestors must be signed by the company’s chief executive officer, CMS is proposing to clarify the rule by allowing the request to be signed by any officer that is authorized to act on behalf of the requestor.

In addition, CMS is requesting comments on whether the certification requirement should be eliminated in its entirety given that the law already prohibits providing materially false statements in matters within the jurisdiction of a federal agency.

Revising the fee structure for obtaining advisory opinions

Requestors of CMS opinions must currently pay an initial fee of $250 and any additional costs that exceed the initial fee payment.

CMS is requesting comments on whether it should eliminate the initial fee and has proposed to adopt an hourly fee of $220 for the preparation of the advisory opinion.  In addition, CMS has proposed an hourly fee of $440 for expedited requests in which the requestor would like a response within 30 days.

Permitting non-requestor third-parties to rely on an advisory opinion

Previously, CMS has stated that advisory opinions may be relied upon only by the specific requestors of the opinion. However, CMS is now proposing to permit non-requesting parties to the specific arrangement involved in the request to also rely on the advisory opinion and to not pursue sanctions against any third parties that are parties to an arrangement that CMS determines is indistinguishable in all material aspects from an arrangement that was the subject of an advisory opinion.

In addition, CMS has proposed to recognize that third parties may reasonably rely on an advisory opinions as non-binding guidance for the application of the Stark Law.

Other proposed changes

Although CMS has not previously rescinded any of its opinions, it is soliciting comments on whether CMS should be limited in its ability to do so. Specifically, CMS is considering whether it should be limited to rescinding its opinions only when there is a material regulatory change that impacts the conclusion of the opinion or when a party wants to have the agency reconsider a negative advisory opinion in light of new facts or law.

CMS is also seeking additional comments on the procedure for submitting advisory opinion requests to further improve the efficiency of the review process.

April Kirkley is a member of Thompson Coburn’s Health Care group.