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The emerging consensus on the final Stark II regulations released Jan. 4 by the Health Care Financing Administration (HCFA) is that the agency came up with a good regulation for a bad law. "They have definitely made it a more manageable rule," asserts John Steiner, director of corporate compliance at the Cleveland Clinic Foundation. But other veteran observers voice concern about how the final rule is going to be implemented.
Providers have until Jan. 4, 2002, to comply with the portion of the final rule just published. The agency deferred the release of part of the regulation, but put no timetable on its completion.
"We don’t have the whole puzzle yet," says health care attorney Gregg Wallender of Hall Render in Indianapolis. "That makes it difficult to fully assess." He adds that, while he understands why a delay in the effective date for new requirements was warranted, it would have made sense to immediately broaden some of the requirements, such as medical staff incidental benefits. "Some of these things should be effective immediately, and we would have some very clear guidance on the books," he argues.
Most observers also were surprised by the agency’s decision to bifurcate the release of the final rule. Health care attorney Robert Homchick of Seattle-based Davis Wright, says his gut reaction is that the statute does not really lend itself to dealing with certain sections and definitions independent of the other exceptions and provisions.
That doesn’t mean the portion of the rule already released is likely to change noticeably following the comment period. In fact, Steiner points out that it is uncommon for HCFA to make any major changes in a final rule. "Barring grammatical errors that affect the actual meaning of the regulation, we are probably going to see this final rule as is," he predicts.
Bill Vaughn, a senior aide to Rep. Pete Stark (D-CA), the law’s author, says it is too early to know whether Congress will attempt to further amend the self-referral statutes. But he argues that HCFA "bent over backwards" to respond to the comments it received. "If this doesn’t please the critics, nothing will," asserts Vaughn.
Standing on the other side of that argument is the just-named head of the House Ways and Means Committee Rep. Bill Thomas (R-CA), who already has introduced legislation to strip the compensation portion of Stark II in its entirety.
While acknowledging that Thomas is a "very effective legislator," Vaughn says there is not much interest in this issue in the Senate, which is evenly divided between the two parties.
Moreover, self-referral is a notoriously difficult issue to lobby Congress on, Steiner says. He points to the extraordinary effort it took to educate legislators about self-referral when he was counsel at the Chicago-based American Hospital Association. In a busy tax-writing season, he predicts few congressional staffers are going to have much appetite to learn the nuances of Stark.
What’s unknown is how vigorously the Justice Department under the incoming Bush administration will be in prosecuting potential violations. Vaughn says Justice recently notified Stark’s office that 50 cases of potential Stark violations were under investigation. Recent predictions also have suggested that the area of self-referral will become ripe for whistle-blowers.
Steiner says that hospitals thinking about potential scenarios that may implicate Stark should consider the evolution of the law itself, which started with clinical laboratory services and then was expanded to include diagnostic services.
"If you are trying to structure priorities, it seems logical to me that you are talking about the home health items, which had [an early] effective date," he says. "Then you should look at clinical lab and diagnostic imaging, just to get something started."