Congress busy rewriting Stark’s self-referral’ laws

Hospitals and physicians seeking to establish joint ventures without violating Medicare’s myriad "self-referral" laws soon may get some much-needed relief. Aides to Rep. Bill Thomas (R-CA), who heads up the pivotal House Ways and Means Health Subcommittee, say he is working on legislation that would entirely remove the section of Stark II dealing with compensation arrangements.

That would be a major break for hospitals and physicians seeking joint venture opportunities, according to Mary Grealy, counsel for the Chicago-based American Hospital Association (AHA). It would not only allow more flexibility in the arrangements between hospitals and physicians but also simplify compliance activities, Grealy says. She adds that federal regulators instead should rely on the antikickback statute, which "requires at least some finding of intent" on the part of the provider.

Senior congressional aides say efforts to simplify Medicare "self-referral" laws gathered steam last month shortly after the House Ways and Means Health Subcommittee grilled top HCFA officials over the complexity of the existing statutes as well as the agency’s failure to issue a final rule for Stark II. Those laws, passed in 1993, extended the "self-referral" prohibitions to hospitals, home health agencies and numerous other providers.

There is now a broad consensus in Congress that major changes are needed. A senior aide to the law’s original author, Rep. Pete Stark (D-CA), says Stark himself is ready to see parts of his namesake revised and, in some cases, eliminated.

"I think this might be the year we do see some revision," predicts Grealy. But less certain is the vehicle for those revisions. Amendments to Stark could be attached to a bill that makes changes in the Balanced Budget Act of 1997 or one that proposes a Medicare reform package. But neither of those bills is certain.

Grealy says any legislation dealing with fraud and abuse will be high profile and require bipartisan support. Ironically, the need for that bipartisan support probably also means the Stark laws will not be repealed in their entirety.

Brent Miller, director of government affairs at the Medical Group Management Association, is optimistic about the chances of revising Stark this year. But he cautions that if those changes are not passed, there is little chance they will be passed next year during an election year. "And that means it probably won’t happen for a long time," he says.