On June 12, 2015, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision in the Council for Urological Interests v. Burwell case that could have a significant impact on the regulatory prohibition on per-click equipment leases under the Federal Stark Law. The regulation in question prohibits equipment leases that charge a hospital for each use of the equipment, or a “per-click” use, and the regulation instead requires a pre-determined monthly or yearly payment for such leases. In its decision, the Court held that the U.S. Department of Health and Human Services (HHS) had unreasonably interpreted the Stark Law in writing this regulation.
Under the Stark Law, if an arrangement in which a physician has a financial relationship with an entity meets one of the statutory or regulatory exceptions to the law, that arrangement will not violate the law. One of the statutory exceptions to the Stark Law covers the rental of equipment, and states that payment made from a lessee of equipment to the equipment lessor is not a prohibited compensation arrangement, so long as the rental charges do not take into account the volume or value of referrals. HHS did not view per-click lease arrangements as falling under this exception, as HHS viewed rental charges based on equipment use as potentially varying based on referrals. Thus, equipment leases could not be based on the amount of use of the equipment, and still comply with regulatory requirements.
Now, HHS must consider whether the ban on per-click equipment leases is consistent with the Stark Law. If HHS determines that the ban is consistent with the Stark Law, it will likely write a similar regulation which would require payment amounts under equipment leases to be set in advance, rather than varying based on the amount of use of the equipment. It is possible, however, that HHS may not re-draft the regulation, in which case the regulatory per-click prohibitions would no longer be in effect. If this were the case, providers would be able to have a lease under which payment varied based on the amount of use of the equipment. The final effects of this decision remain to be seen. The outcome of the evaluation of this regulation and the Stark Law could have a significant impact on the healthcare industry, and especially on physicians.
