November 2007

The much awaited 2008 Medicare Physician Fee Schedule has finally been formally published in the Federal Register (click here to read it).  The proposed Fee Schedule published in June of 2007, included a number of proposed changes to the Stark regulations as well as certain regulatory changes to the diagnostic testing rules and IDTF conditions of participation.  As is usually the case with CMS regulations, the final Fee Schedule includes some good news and some bad news.

With respect to the proposed revisions to the Stark regulations, the good news is that CMS elected not to finalize the proposed regulations in the Fee Schedule. The bad news is that CMS intends to issue additional Stark regulations pursuant to a separate rulemaking. So, be on the lookout more Stark regs (perhaps we should call them Phase IV).  Among other things, however, the final Fee Schedule:

  • Imposes an anti-markup restriction on the technical components (TCs) and professional components (PCs) of diagnostic tests (other than clinical lab tests) that are ordered by the billing supplier, if the TC or PC is purchased by the billing supplier, or the TC or PC is performed outside of the office of the billing supplier;
  • Imposes additional requirements on independent diagnostic testing facilities; and
  • Requires that persons furnishing physical and occupational therapy services to people with Medicare meet licensing, registration, or certification requirements in the state in which they practice, and that they complete an approved educational program for the discipline in which they practice.

The implications of these changes, particularly the anti-markup provisions, are expected to be far reaching.  Check back in the coming days for more discussion of how these changes are likely affect your practice.



Earlier this week, a number of major orthopedic medical device companies, as part of an anti-kickback settlement agreement, began posting on their websites the names of physicians to whom the companies have paid consulting fees.  Now, as a perfect example of why this "transparency" is a danger to all physicians, a Michigan newspaper is reporting that one of the companies, Smith and Nephew, incorrectly identified a physician on its website.  Apparently the physician in question does not and never had a consulting relationship with the company.  A spokesman for Smith & Nephew blamed the mix up on some kind of sorting error.    

Several weeks ago I posted an entry on this blog about a major federal anti-kickback settlement agreement entered into by the five largest orthopedic device companies: Zimmer Inc., Depuy Orthopaedics, Inc., Smith & Nephew Inc., Biomet Orthopedics, Inc., and Stryker Orthopedics, Inc.  At the heart of the government’s allegations in the case were consulting fees paid to physicians which the government alleged were kickbacks intended to induce the physicians to use the companies’ products.  One of the key components of that settlement was that the companies are required to disclose the name of each consultant and what they have been paid on each company’s website.  The companies have now begun posting this information and it is, to the say the least, quite interesting.

According to an article published today by the Center for Science in the Public Interest, almost 50 orthopedic surgeons each earned over $1 million a year in consulting fees and royalties from the five companies subject to the settlement, and many of the surgeons are affiliated with top institutions. 

Physician consulting arrangements with pharmaceutical and device manufacturers are nothing new and are not necessarily illegal.  In fact, many of these arrangements are quite necessary to the development of new and innovative drugs and devices.  However, payments for "phantom" consulting services or which are in excess of fair market value for the consulting services may, if intended to induce the consultant to recommend and/or use the particular company’s products, violate the federal anti-kickback statute.  

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