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Washington Beat: The final word--almost--on self-referral


In the latest Stark law regulations, HCFA loosens the noose--a little.


Washington Beat

The final word—almost—on self-referral

In the latest Stark law regulations, HCFA loosens the noose—a little.

By Michael Pretzer, Washington Editor

The first legislation to limit a physician's ability to "self-refer" for health care services was passed in 1989. Since then, the Health Care Financing Administration has issued several sets of regulations to implement the 1989 law and related legislation that was enacted four years later. HCFA published regs of one sort or another in 1991, 1992, 1995, and 1998. Heaps of words in barely decipherable bureaucratese.

Each time, HCFA's effort was booed by physicians. Too oppressive. Too intrusive. Too confusing.

The final rule, issued last month, is a dramatic improvement, the government promises. Then-HHS Secretary Donna Shalala heralded it as "a common sense approach to the law." Internist Robert A. Berenson, who was HCFA's acting deputy administrator at the time, said that it "should allow physicians and health care businesses to stay competitive in a rapidly changing industry while protecting beneficiaries and taxpayers." Even Rep. Pete Stark (D-CA), the father of self-referral legislation and often a harsh critic of HCFA, indicated that "ethical providers will have no trouble complying with these new regulations."

Some in organized medicine, however, aren't convinced—at least not yet. The regs remain lengthy: a word-packed 109 pages in the Federal Register. And they're not exactly bedtime reading. Lawyers and regulatory experts are still wading through the verbiage. "I'd describe our initial reaction as cautious," says FP Michael Fleming, the managing senior partner of Family Doctors in Shreveport (LA) and a member of the American Academy of Family Physicians' board of directors. "Though physicians have never liked the basic idea of the Stark laws—with their underlying suggestion that we're cheating—the new regulations clarify some things that have been worrisome."

"HCFA definitely has made improvements," adds Aaron Krupp, a government affairs representative at the Medical Group Management Association. "But it's going to take a while to analyze the regs—and even longer to see how they play out in the real world."

A sampling of provisions that have received an initial positive reaction from organized medicine include:

Group practice definition.HCFA has become more open-minded about the types of organization that can be called a "group practice," who qualifies as a member of a group, and how members receive productivity bonuses and other compensation. (By being recognized as a group, a practice becomes eligible for certain exceptions to the Stark laws.)

"A common complaint about our January 1998 proposed regulation was that it would exclude many bona fide group practices, intrude too far into the business and financial operations of physician practices, and chill group practice integration that is crucial in an increasingly managed care environment," explains HCFA. "It's not our intent to micro-manage group practices or dictate their organization or operation."

Direct supervision of ancillary services.HCFA has dropped the requirement that in-office ancillary services be supervised by a physician. "Under the 1998 proposal," explains Robert J. Saner, a partner at Powers Pyles Sutter & Verville, and legal counsel for MGMA, "a practice that had a lab technician working at 6 o'clock at night to process samples that had been collected in the afternoon would have to have a physician present. And not just any physician, but a doctor who is member of the practice." Now, HCFA says, physicians may simply follow the various supervisory standards already set by Medicare and Medicaid.

Shared facilities. HCFA has revised its restrictions on practices sharing the use of a facility that provides health care services regulated by Stark laws. The new regs, according to HCFA, "will protect designated health services facilities, so long as the physicians or groups that share the facility also routinely provide their full range of services in the same building. Moreover, in certain circumstances, part-time practitioners would be permitted to share the DHS facility."

Doctor-hospital relations.HCFA has relaxed some of the rules that apply to arrangements made between physicians and hospitals. For example, under the new regs a practice is permitted to sell ancillary services to a hospital on a per-unit basis (x number of dollars for each X-ray, say), even though the practice's physicians are among those ordering services as they see patients in the hospital, says Saner.

Durable medical equipment. In his frequent criticism of the 1998 regs, Saner liked to describe the problem faced by a person with a sprained knee. "A patient could go to his orthopedist to have his throbbing knee X-rayed, diagnosed, and bandaged," says Saner. "But the physician couldn't send him home with so much as a cane or a pair of crutches. The patient would have to go elsewhere for those." Now, according to Saner, a physician can provide a patient with a cane, walker, crutches, or a folding wheelchair—though for some reason a motorized wheelchair is still forbidden.

Most of the regs issued in January won't go into effect for another year, and HCFA still has to publish more revisions to the 1998 regs. "We're 12 years into the Stark law, and we don't yet have a complete, final regulatory program," says Saner, sounding somewhat frustrated. "As much as physicians dislike this law, they still want finality."

HCFA will have the final word. Later.


Michael Pretzer. Washington Beat: The final word--almost--on self-referral. Medical Economics 2001;4:23.

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