HCFA clarifies Stark II regulations for providers
Are you interpreting the policy correctly?
The 1995 Stark II law, named after the legislation’s sponsor, Rep. Fortney "Pete" Stark (D-CA), is one of the most difficult pieces of federal health care regulation to understand. These regulations dictate the extent to which physicians can refer Medicare or Medicaid patients to affiliated medical service centers owned by them or by an immediate family member.
The Jan. 9, 1998, issue of the Federal Register (pp. 1,659-1,728) contains proposed regulations implementing the 1995 Stark rules. HCFA will accept public comments on the proposed regulations until March 10. In many cases, the proposed regulatory language is taken verbatim from the Stark II statute, while in other areas there are clarifications for gray areas that have arisen since the statute was enacted. Beyond the proposed regulatory provisions, HCFA has provided interpretive commentary on many aspects of the law.
Before these proposed regulations were published, many groups relied on their own interpretation of the statute, in addition to the limited guidance offered by Stark I rules relating to clinical laboratory services, says attorney Robert J. Saner II, of Powers, Pyles, Sutter & Verville in Washington, DC, who has prepared an analysis of the rule for the Englewood, CO-based Medical Group Management Association.
When finalized, the Stark II rule will supersede the Stark I rules. However, providers should assume that the government will rely on interpretations of Stark II when it attempts to enforce statutory provisions relating to Stark legislation.
Categories of note included in Stark II are:
radiology services, including any diagnostic tests based on imaging or ultrasound technology, plus the professional competent of a radiology service within the designated service classification;
outpatient prescription drugs, including all Medicare drugs and biologicals, as well as those administered under a physician’s supervision if they can be obtained by prescription at a pharmacy;
physical therapy services covered by HCFA provided at a comprehensive outpatient rehabilitation facility.
The in-office exception of ancillary services is used by most group practices to protect designated services from Stark prosecution. Clarifications of this exception covered in Stark II are as follows:
• Crutches can be provided to patients, if they are sold at cost.
• Either the referring physician or a bona fide member physician of the group must supervise tests ordered by the practice and done by its employees. Independent contract physicians working at the practice do not qualify.
• Stark’s "location test," which prohibits patient services furnished in the same building in which the practice’s office is located, defines the same building as a physical structure with one address not multiple structures or other campus-based facilities connected by tunnels or walkways.
Additionally, the location rule says a group practice may have more than one building used for the centralized provision of services if that location services more than one of the group’s offices. Also, the Stark revisions state that a practice with multiple offices may centralize different services at different locations. For example, a practice may choose to centralize billing at one office and transcription at another office.
One of the key parts of the rule deals with the definition of what constitutes a group practice for the purposes of Stark II, notes Saner. HCFA’s definition will facilitate compliance for some groups and make it more difficult for others, he observes.
Independent contractors not part of the group
On the positive side, the rule clarifies that a group practice whose members are solo professional corporations rather than individual physicians is okay under Stark II. However, the regulation does not allow physicians who are independent contractors working out of the group’s office to be considered part of the group.
Here are some other requirements for qualifying as a group practice under Stark II:
• A group’s income and expenses must be distributed according to the methods adopted prior to the period they are earned or incurred.
• Income distribution must reflect a unified business. As such, groups that operate in a centralized manner and/or treat satellite offices or departments as individual profit centers may have trouble meeting this requirement, notes Saner.
• Productivity bonuses and profit sharing are allowed if there are no direct links to the volume or value of patient referrals.
As required by law, HCFA is also creating a Stark opinion process to answer provider questions and provide "meaningful" advice concerning referrals that may conflict with Stark prohibitions. HCFA hopes to turn these requests around within 90 days. Those seeking advisory opinions will be charged a $250 down payment per request, plus any subsequent costs by HCFA.
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