The Centers for Medicare & Medicaid Services (CMS) issued a rare advisory opinion (CMS-AO-2017-1) under the Stark Law (Section 1877 of the Social Security Act, codified at 42 U.S.C. § 1395) earlier this fall, addressing a proposed arrangement under which a web-based diagnostic testing portal sought to provide referring physicians with free alerts related to test results.

At issue was whether the operator of a free web-based portal for ordering and reporting the results of diagnostic tests could start providing pop-up notifications to the physician-users (who referred designated health services to the operator of the portal) concerning potential issues with the results, or whether such alerts constitute remuneration to the physicians that gives rise to a compensation arrangement under the Stark Law. The alerts could recommend follow-up testing, repeat, or additional testing, based on industry-standard peer-reviewed guidelines (e.g., a recommendation that the results warrant follow-up testing in 90 days). The alerts would be limited to issues related to the particular test results reported by a physician, and would not include general clinical recommendations, drug interaction warnings, or any other information not directly tied to the particular test ordered. Additionally, the requestor certified that information furnished in the alerts (other than patient-specific information) is already available in the public domain without cost to physicians and others, that the physicians would be permitted to turn off the alerts at their discretion, and that physicians would be required to individually select a follow-up test based on an alert (i.e., a physician would not be able to “select all” where multiple follow-up or recommended tests are identified by an alert).

CMS first reviewed the definition of remuneration under the Stark Law, and noted that there is a statutory exception to that definition for “the provision of items, devices, or supplies that are used solely to—(I) collect, transport, process, or store specimens for the entity providing the device or services, or (II) order or communicate the results of tests or procedures for such entity.”  CMS noted that it interprets the word “solely” as used in that exception to mean that donated items must be used for the purposes listed in the statute, and that an item or device would not meet this exception if it were used for any other purpose(s).

CMS determined that the laboratory alerts would not constitute remuneration to the referring physicians, and thus would not establish a compensation arrangement subject to the Stark Law, because the alerts would be used solely in connection with the ordering and communicating of specific test results, and would provide the physician with an enhanced test result to assist the physician in determining the appropriate follow-up clinical steps for a particular patient. CMS notes that “an essential consideration in our analysis” is that because the alerts can implicitly encourage physicians to order additional tests from the operator of the testing portal, it is essential that safeguards are in place to prevent against the alerts being used to promote overutilization or medically unnecessary or duplicative testing.

Among other safeguards, CMS identified the fact that the alerts would provide peer-reviewed information that is available free of charge from other sources, that a physician could turn off the alerts at his/her discretion, and that a physician could not select multiple additional tests at once via a “select-all” feature, as important to CMS’s approval of the arrangement.  CMS therefore concluded that the arrangement would not result in remuneration to the referring physicians and therefore would not establish a compensation arrangement for purposes of the Stark Law.