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The final Stark II regulations, issued in January by the U.S. Department of Health and Human Services, ease some restrictions on physician self-referrals contained in the original law. The final rule will be effective Jan. 4, 2002, one year after its publication in the Federal Register.
The final rule prohibits physicians from making referrals to most entities which physicians own in whole or in part. However, it permits physicians to refer to entities that compensate them, as long as the compensation paid to the physician is no more than would be paid to someone else who provides the same services but was not in a position to generate business for the entity.
The final rule expands the law’s exceptions for ancillary services provided in a physician’s office and allows exemptions to permit indirect compensation arrangements, and small, non-monetary gifts.
Phase I of the Stark rule, which was released Jan. 4, addresses definitions and exceptions that permit referrals within a medical practice. Phase II will not be issued until after the 90-day comment period on Phase I. Phase II of the regulations will address employment arrangements, personal services contracts, leases, and physician ownership interests in hospitals.
"We are pleased that [the Health Care Financing Administration] has included several important changes in the long-awaited final Stark II physician self-referral regulations. Few, if any, federal regulations affect the structure and operation of physician group practices to the extent of this regulation," says William F. Jessee, MD, CMPE, president and chief executive director of the Englewood, CO-based Medical Group Management Association.
The self-referral law prohibits physicians from referring Medicare patients to entities in which the doctors or their immediate family members have a financial relationship. The original law, enacted in 1989, prohibited doctors from referring a patient to a clinical laboratory with which he or she or an immediate family member had a financial relationship.
In 1995, Congress expanded the law to include physical therapy services, occupational therapy services, radiology services and supplies, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients, equipment and supplies, prosthetics, orthotics, and prosthetic devices and supplies; home health services, outpatient prescription drugs, and inpatient and outpatient hospital services.