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A Review for Physicians, Consultants and Advisors
By Dr. David Edward Marcinko; MBA, CMP™
By Dr. Charles F. Fenton, III; FACFAS, Esq.
The Stark Amendment to the Omnibus Budget Reconciliation Act of 1989 was a step by the federal government to prohibit physicians from referring patients to entities in which they have a financial interest. Originally, the Stark amendment applied only to referral of Medicare patients to clinical laboratories in which the physician had a financial interest.
Stark I Provisions
The Stark Amendment provides that if a physician (including a family member) has a financial interest in a clinical laboratory, then he may not make a referral for clinical laboratory services if payment may be made under Medicare. A financial interest is an ownership interest, an investment interest, or a compensation arrangement.
Exceptions
There are certain exceptions to the Stark Amendment. For example; if a physician personally provides the service or if a physician or employee of a medical group, provides the services.
Safe Harbor Regulations
Like the Safe Harbor Regulations [SHRs], the Stark Amendment permits physician investment in large entities and provides an exception for rural providers. Under the Stark Amendment, large entities are defined as publicly traded entities with assets greater than $100 million.
But, there are certain other exceptions that are similar to the safe-harbor regulations. They include items such as provision for rental of office space, employment and service arrangements with hospitals, and certain service arrangements. These arrangements must be at arms-length and at fair market value.
Stark II
Stark II was passed in 1993 to modify and expand the Stark amendment. In particular, it acts to bring numerous other entities, besides clinical laboratories, within the prohibitions of the Stark amendment.
Stark III
The Federal Register notes that “Stark III” regulations went into effect on March 26, 2008.
Link: http://mamedicallaw.com/blog/2008/06/15/what-do-i-need-to-know-about-the-stark-iii-rules/
Assessment
Self-referral and over utilization may become less of a problem as managed care makes further in roads in medical practice control and quasi-subrogation. Future legislation is likely to address the concerns of the financial incentives towards under utilization of ancillary medical services.
Update
Docs and dollars: This one’s a twofer. The first is a hotly-discussed NEJM paper showing that urologists (not radiation oncologists, as we’ve covered earlier) owning a stake in radiation therapy equipment tend to recommend that equipment more often than docs without an ownership stake. The second is a less-publicized government report showing that surgeons with a stake in device distributors also recommend those devices more than other surgeons. This shouldn’t surprise anyone — doctors are human, after all. The Stark laws designed to prevent physician self-referral, for some reason, make an exception for the IMRT conflict-of-interest in the first paper. And I don’t think any legislation foresaw the physician-owned-distributorships in the second article.
-Austin Frakt PhD
Conclusion
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