Understanding the maze of Stark II regulations
The recent release of advisory opinions by the OIG regarding the Stark II physician self-referral laws have some experts wondering if, finally, the government will get down to codifying a final set of workable regulations. Best estimates, however, are that final regs are still a year away. In the meantime, many group practices continue to struggle to understand how Stark II applies to them. Here are some key areas covered by the regulations that your practice needs to address:
1. Referrals by hospital physicians to hospital-owned home health agencies are forbidden if the physician has any partial ownership. Generally, under the Stark II rules, physicians with an ownership interest in a hospital cannot refer patients to a hospital-based home health agency if they have any financial relationship (through ownership in the hospital or otherwise) with the home health agency, says Edward Kornreich, JD, a health care specialist with Proskauer Rose LLP in New York City.
As a result, many physicians and hospitals may need to consider spinning off their home care services operations to avoid possible violations.
2. A group's legal structure is important. A medical group must be organized as a single legal entity. But it may not be an aggregation of individual docs holding themselves out to the public as a group practice, or experts.
3. Physicians who are members of the group must furnish at least 75% of the group's patient care services. These services must be billed under a billing number assigned to the group. For purposes of this rule, HCFA assumes group physicians work a standard 40-hour week.
However, in a departure from Stark I, HCFA claims that patient encounters with physicians who are independent contractors don't count toward the 75% requirement, says Kornreich.
4. Physicians considered members of your group must meet the "full range of services" requirement. According to Stark II, to be a group member, a physician also must furnish the group with "substantially the full range of services which the physician routinely provides, including medical care, consultation, diagnosis, or treatment, through the joint use of shared office space, facilities, equipment and personnel."
5. Watch how your group's billing number is used. A group can have more than one billing number as long as the additional number has been assigned to the group. A billing agent or management services organization can bill using a number assigned to a group practice, but only under certain conditions. Most notably, a billing agent's compensation agreement "cannot be tied to the amounts billed or collected," he says.
6. You must have a "previously determined" method for distributing group costs and revenue. According to HCFA, "previously determined" means "determined prior to the time period the group has earned the income or incurred the cost." Group practice physician payments may be made based on services personally rendered, but not on referrals. The same applies to any physician incentive payment plans.
7. A practice must distribute its overhead, expenses, and income according to methods that would be used by a unified business. "This means the group must have a centralized decision-making process, pool of expense, and revenues," says Kornreich. "It also means its revenue distribution system cannot be based on each satellite office operating as if it were a separate enterprise."
8. While certain productivity bonuses are acceptable, others are not. Stark's group practice definition provides that members of the group cannot receive compensation based on the volume or value of their own referrals. However, physicians are allowed to receive a share of overall profits of the group or a productivity bonus.
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