Many physicians I speak with are still surprised to learn that the federal Stark statute imposes restrictions on income division within group practices.  These restrictions only apply to profits generated from any of the Stark “designated health services” and only those that are covered by Medicare and Medicaid (including managed care), but if your group

In what would undoubtedly be a devastating blow to many medical practices that rely on the Stark in-office ancillary services exception (which allows physicians to refer within their practices for Stark services), President Obama’s proposed FY 2014 would seek to eliminate the exception for physical therapy, radiation therapy and advanced imaging such as CT and

ACA requires that, with respect to referrals for magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), and any other Stark designated health services (DHS) specified by the Secretary of HHS, a referring physician must inform the patient in writing at the time of the referral that the patient may obtain the service from a person other than the referring physician.
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Among its many provisions, the newly signed Patient Protection and Affordable Care Act has imposed a new requirement on physicians who rely on the Stark "In-Office Ancillary Services" exception.  Physicians who refer patients for CT, MRI or PET (or other Stark services as designated by the Secretary of HHS) that will be provided by the referring physician’s practice

A recent whistleblower case out of the federal 3rd Circuit in Pennsylvania highlights some of the dangers in not properly documenting financial relationships between physicians and hospitals. Specifically, in US ex. rel. Kosenske v. Carlisle HMA, Inc., a Qui Tam lawsuit brought by the former member of an anesthesia group, the 3rd Circuit Court of Appeals reversed a US District Court’s summary judgment in favor of the defendant hospital and anesthesia group.

The anesthesia group in question had a written exclusive contract with the hospital for anesthesia services but, subsequent to entering into the exclusive agreement, began providing pain management services at the hospital’s freestanding pain center. The hospital did not charge the anesthesia group rent for use of the space in the pain center and the qui tam relator claimed that the arrangements failed to meet the Stark exception for personal service arrangements (and therefore that claims for services referred by the anesthesia group’s physicians to the hospital were in violation of the federal False Claim Act).


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For those of you who have not been watching your Stark radar screen closely, be aware that CMS recently made a number of substantial changes to the Stark self-referral regulations that may affect your practice arrangements. Some of these changes will not take effect until October 1, 2009, but others changes will take effect on October 1, 2008. Key changes include (but are not limited to the following:

1.  “Stand-in-the shoes” Relationships – Under current regulations, physicians who refer to a Stark entity with which they have a financial relationship will be deemed to “stand in the shoes” (i.e., be treated as if they had the same compensation arrangements) of their physician organizations (e.g., their medical practice entity). CMS has clarified that, Effective October 1, 2008, this rule only applies to physicians who have an ownership interest in the physician organization – not physicians who are only employees, independent contractors or whose ownership interest is only titular.

2.  Services Furnished “Under Arrangements” — CMS has in the past expressed concern over “under arrangements” ventures where a physician supplies items and services to a hospital for which the hospital bills the Medicare program and pays the physician fee. To address this concern, CMS has revised the definition of the term “entity” for purposes of the Stark prohibitions to the person or entity that actually performs a Stark services as well as the entity that causes a claim for the Stark service to be submitted to the Medicare program. This change will take effect on October 1, 2009.


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