HCFA warns of further delays to Stark II regs
HCFA warns of further delays to Stark II regs
Top agency official outlines coming changes in mammoth final self-referral regulations
The Health Care Financing Administration (HCFA) confirmed last week that the final regulation for the Stark II self-referral law is churning its way through the agency’s final clearance process, but there are still no fixed time lines. HCFA’s Joanne Sinsheimer, a health insurance specialist who is spearheading the agency’s effort, warned health care providers June 20 they can expect a massive document and said they should brace for the possibility of further delays.
"We hope and expect that we will be able to publish [the regulations] by the time summer is over," Sinsheimer told an audience at the American Health Lawyers Association’s conference in Washington, DC. But even after HCFA completes its internal clearance process, the Office of Management and Budget (OMB) still has to OK the mammoth regulation before it is published.
That may not be an easy task. The end of the fiscal year is a busy time, Sinsheimer cautions. "Even though we like to think that the document has lots of clear bright lines, it is going to be a long document," she asserts. That makes it likely that it won’t be the first order of business for many OMB reviewers, she adds.
The Stark II regulations are the last piece of the self-referral puzzle. Final Stark I regulations were published in August 1995. According to Sinsheimer, the final Stark II rule will respond "in great depth" to the thousands of comments the agency received on its proposed rule published in January 1998.
Here is a rundown of key changes and modifications that providers can expect:
s Entity definition. According to health care attorney Gregg Wallander of the Indianapolis-based firm Hall, Render, one of the most complex parts of the proposed rule concerns the term "entity." "It would seem fairly simple," he says. "But it becomes a very difficult analysis when you involve multiple entities."
Sinsheimer says HCFA was "educated" in this area through the comment process. But she says the term "entity" is still going to be a problem because it involves both ownership and compensation. "That is when it gets more complex," she asserts. "Does the entity that is providing services even know that the physician has an ownership or compensation relationship?" In the final regulation, she says HCFA tried to make that "an easier test."
- Referrals. After the question of what constitutes an entity, Wallander says the issue of what a referral is may be the most difficult and complex. For example, there is a difference between a referral and a consultation, with a referral being almost any request for any item or service, including the establishment of a plan of care.
There are also three types of "protected physicians" — radiologists, radiation oncologists and pathologists — who are excluded as long as they are engaged pursuant to a bona fide consultation. "But don’t rely on one of those folks telling you that everything they do is a consultation," Wallander warns. "I have found more than once that that is not the case." He also points out that the original physician must remain engaged in order for these specialty physicians to be exempted.
The agency’s definition of 11 designated health services is yet another murky area. "HCFA’s interpretation is very broad and necessitates a thorough analysis of the services involved in every physician’s referrals," Wallander asserts. He adds that there is some guidance from HCFA that if a designated health service is merely incidental or peripheral it will not be included. But he says the hypothetical example of bypass surgery in the proposed regulation is difficult to understand in the hospital setting. "My feeling is that the broader interpretation is the safer way to go at this point," he asserts.
"We probably should have used a different example," Sinsheimer admits, "because when you are in a hospital, everything the hospital bills for is going to be a hospital service, which is a designated health service." But she contends that HCFA now has "a better understanding," especially in the area of radiology, and says hospitals can expect to see a more lucid explanation.
She also contends that it does not always matter if the service is a designated health service. "What matters more is if we deal less intrusively with how group practices share their money," she adds. "We recognize that we were very intrusive and we are trying to do a better job."
- Ownership and compensation. According to Wallander, the compensation portion of the proposed rule has been very taxing. For example, he says there has been considerable pressure on HCFA to revise its position on compensation to eliminate incidental benefits such as free parking and meals. Sinsheimer concedes that point. "I think we did clearly make mistakes when it came to small items such as parking," she asserts. "In the final rule, we are going to take these into account."
Wallander also notes that in the proposed rule, the term "remuneration" excludes the furnishing of certain items, devices, or supplies used solely to order or communicate the results of tests or procedures for the entity. But he says hospitals frequently encounter problems when they attempt to link their information systems with physicians’ offices.
Sinsheimer would only say HCFA has been grappling with how to handle things that hospitals do for their own benefit rather than for the benefit of physicians.
- Outpatient hospital services. Wallander argues that the outpatient hospital services section of Stark II would be an ideal place for HCFA to carve out "non-abusive services" such as lithotripsy. He says hospitals, especially in rural areas, frequently face situations where a physician-owned entity may be the only entity that offers a service to a particular hospital.
Sinsheimer reports that of the 12,800 comments received by the agency, the second-largest number addressed physicians who had ownership interest in lithotripsy. She says this service is similar to cardiac cath labs and vascular labs. In those cases, doctors own these entities and services are provided under arrangement to the hospital and billed as the facility portion of the services.
"What we tried to do is come up with something that is appropriate where doctors can own these items and refer to them," she reports. But she adds that a recent Health and Human Services Office of Inspector General report showed that when physicians own this service, they charge hospitals $300 to $600 more per use than if nonphysicians owned the service.
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