Changes to laws regarding physician self-referrals may be coming

Stark's Law regulates physician self-referrals for Medicare and Medicaid patients. A self-referral involves a physician recommending to a patient a facility or type of treatment in which a doctor or his or her immediate family member owns a financial interest. The government, therefore, built regulations in order to prevent Medicare and Medicaid patients from paying extra for services they may not need.

According to some members of Congress, however, the current law is not saving enough in taxpayer money and some physicians and clinics are taking advantage of exceptions built into Stark's Law.

Certain services can avoid Stark's Law because of the law's in-office ancillary services exception (IOASE). IOASE exceptions have increased in recent years. Government Accountability Office reports have examined the self-referral "problem." All three of the reports conducted so far have found a "significant and inappropriate increase" in referrals when a physician begins to self-refer, raising the cost of care for patients with government benefits.

On Aug. 1 Representative Jackie Spier (D-Cal.) introduced legislation into the House of Representatives (HR 2914) that would eliminate the Stark Law exceptions for several services. These include:

  • Advanced diagnostic imaging
  • Anatomic pathology
  • Radiation therapy
  • Physical therapy

These services are generally not performed at the time of the patient's first office visit, which is the reason they will be carved out of Stark's Law exceptions. The bill, titled the Promoting Integrity in Medicare Act of 2013, claims that eliminating these exceptions could save taxpayers hundreds of millions of dollars. The U.S. Government Accountability Office reported that doctors who have a financial interest or investments in radiation treatments and centers are more likely to refer those services and centers to their patients than physicians with no such financial interest in the matter.

PIMA also increases the penalties applicable to referrals for specified non-ancillary services.

The legislation requires federal authorities to review and enforce compliance with PIMA's new prohibitions. The bill, if passed, would not apply to certain groups. PIMA would not apply to rural providers of the healthcare services named, for example. Certain physician groups may also continue to provide integrated services. However, physicians must still comply with Stark's Law restrictions even if they are fully compliant with Medicare's anti-markup rule. That rule, section 1842(n)(1) of the Social Security Act, sets a payment limitation on certain diagnostic tests with the billing physician.

Physicians should consult with an attorney

Federal laws regarding payment and patient recommendations funded by Medicaid and Medicare can be complicated. Physicians with questions or concerns regarding federal regulations and compliance should speak with an experienced healthcare law attorney.