WASHINGTONNew Medicare regulations governing
self-referrals by physicians will go into effect on Jan. 4, 2002. The first
version of the final rule was announced early in January; a second
"fine-tuned" version will be released later this year.
The new Health Care Financing Administration (HCFA) regulations
bar physicians, with some exceptions, from referring Medicare patients for
certain health care services to entities with which the physicians or their
immediate family members have a financial relationship.
However, the final rule generally permits physicians to refer
to entities with which they have a compensation relationship, as long as the
compensation paid to the physician is no more than would be paid to someone who
provided the same services but was not in a position to generate business for
HCFA received more than 13,000 comments about the rules, which
it originally proposed in 1998. Because the new rules vary so much from those
it first proposed, HCFA gave the public until April 4 to provide additional
comments. These comments, as well as comments on some provisions not dealt with
in the regulations released in January, will be considered in the second phase
of the final rule.
Congress passed its initial ban on physician self-referral in
1989, which is generally known as Stark I after its sponsor, Rep. Fortney
"Pete" Stark (D-Calif).
The new rules will implement Stark II, a law that became
effective in 1995 and expended Stark I to cover 10 other ser-vices. These
service include physical and occupational therapy; home health services;
radiation therapy services and supplies; and prosthetics, orthotics, and
prosthetic devices and supplies.
Physicians who violate the law can be denied or forced to
refund Medicare payments and could face civil fines.
"We believe this statute is a powerful deterrent to fraud
and abuse," said June Gibbs Brown, inspector general of the Department of
Health and Human Services (HHS).
The new self-referral rule provides for certain exceptions. For
example, it expands the law’s exceptions "for services provided in a
physician’s office and for services provided by managed care plans,"
In addition, the rule allows exceptions to permit certain
indirect compensation arrangements, to allow small nonmonetary gifts, and to
protect financial arrangements between academic medical centers and their
facilities if certain criteria are met.
Compared with the proposed rule, the new version substantially
reduces the potential financial liability of hospitals and other facilities,
"if they neither knew nor had reason to suspect that they had an indirect
financial relationship with a referring physician."