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Under Stark III, an independent contractor physician must furnish patient care services for the group prac- tice under a direct contractual arrangement with the group, and not between the group practice and another entity, such as staffing entity.

Four exceptions currently permit these types of arrangements: the office space exception, the equipment lease exception, the fair market value exception and the indirect compensation arrangement exception.

Among these revisions are allowing indefinite holdovers in two notable exceptions to the Stark law: (1) personal services arrangements and (2) rental (i.e., leases) of equipment and office space. Such “holdover” allowances had previously been limited to six (6) months by regulation.

Certain outpatient prescription drugs identified on HCFA's website (updated annually) that are EPO and other dialysis-related drugs and are administered in or by an ESRD facility are exceptions to the Stark law prohibition.

The final rulemaking identifies exceptions based upon three levels of risk: value-based arrangements with full financial risk; value-based arrangements with meaningful downside financial risk; or any value-based arrangement, without regard to the level of risk, provided specified requirements are met.

The personal services exception is one of the most widely utilized Stark Law Exception. Specifically, this exception is typically utilized when a health system contracts with an individual physician as an independent contractor or with an entire group.

Commercially Reasonable – Many Stark exceptions require payment to be “commercially reasonable” even when referrals are made between physician and health care entity. Under Stark, payment and services must both be commercially reasonable.

Period of Disallowance: The "period of disallowance" is the period of time during which a physician may not make referrals for designated health services to an entity and the entity may not bill Medicare for the referred designated health services due to a Stark violation.