Sign in Subscribe
Health care industry

Confusion Surrounds Health Care Financing Administration's Ban on Physician Referrals

Strategic Insights

— 2 min read

The Health Care Financing Administration's (HCFA) ban on physician referrals has left many in the medical community confused, particularly with regards to what constitutes a referral and whether physicians can refer patients to shared medical facilities. While the ban, known as Stark II, prohibits referrals to facilities owned by a physician or their family, a guidance memo from HCFA has done little to clarify the issue. As a result, medical groups and advocacy organizations are seeking clarity on the new law, which applies to referrals made to both Medicare and Medicaid programs and includes 11 designated health services.

Key Takeaways:

  • The Stark II ban prohibits physicians from referring patients to facilities in which they or their family members have a financial interest, effective as of January 1.
  • The HCFA guidance memo, intended to help physicians understand the new law, has been deemed "useless" by some experts, with only "modestly helpful" information provided.
  • The AMA and other physician groups are seeking guidance on shared facilities, such as labs owned jointly by two or more physicians or group practices, and whether they are subject to the ban.
  • HCFA expects to publish final rules on Stark I, the clinical lab ban, by the end of February and proposed rules on Stark II by September.
  • The law prohibits physicians from self-referring to clinical labs, but allows in-office services, raising questions about the applicability of this exception to shared facilities.
  • Compliance audits for all designated health services will begin once Stark I final rules are published, with penalties of up to $100,000 per scheme for circumvention and up to $15,000 per service for prohibited referrals.
  • HCFA plans to send a survey to entities that have billed Medicare for designated services in the past year, requiring them to provide information on doctors with ownership or investment interests.
  • The law defines financial relationships and prohibited activities, including arrangements in which physicians pay entities for items and services, and provides brief summaries of allowed exceptions.

Statistics:

  • $15,000: maximum fine per service for prohibited referrals
  • $100,000: maximum penalty per scheme for circumvention
  • 11: number of designated health services subject to the ban
  • 1: January, the effective date of the Stark II ban
  • 2: number of solo physicians or group practices that may share a lab
  • end of February: expected publication date of HCFA's final rules on Stark I
  • September: expected publication date of proposed rules on Stark II

Sources:

  • WASHINGTON -- (exact source not specified, however this paragraph is likely from Washington Post or another similar source)
  • "guidance memo" from Health Care Financing Administration (HCFA)
  • Robert Saner II, partner with Powers, Pyles, Sutter & Verville (exact source not specified, however this paragraph is likely from an interview with Saner)
  • AMA (American Medical Association) (exact source not specified, however this paragraph is likely from a statement or press release from the AMA)
  • Department of Health and Human Services (exact source not specified, however this paragraph is likely from a government report or press release)

Read more