PHYSICIAN SELF-REFERRAL: HCFA ISSUES PROPOSED REGS

      The federal government has issued 405 pages of proposed
 regulations clarifying a 1993 law designed to "prohibit doctors
 from referring Medicare patients to outpatient services in which
 they have an economic interest," the Wall Street Journal reports. 
 Since the so-called "Stark II" law -- named after its sponsor,
 Democratic Rep. Pete Stark of California -- was enacted, it has
 "become a huge source of confusion in the health care industry"
 because "federal bureaucrats didn't promptly spell out how the
 law would be applied in various complex settings."  The delay led
 to erratic enforcement "and frustration on the part of health-
 fraud investigators, who aren't always sure what constitutes a
 Stark II violation."  
      PROPOSED RULES
      The new regulations should help make clear the complicated
 law, the Journal reports.  "They've tried to give order to what
 has been a hodge-podge of inconsistencies," said Alice Gosfield,
 a Philadelphia health care attorney.  Mary Grealy, senior
 Washington counsel at the American Hospital Association, said she
 believes the proposed regulations will make it easier "for
 physicians and hospitals to work together in integrated systems." 
 Under the proposed guidelines, doctors would be allowed to accept
 gifts valued under $50, "with an annual maximum of $300," if
 there was no "direct link to patient referrals."  In addition,
 "[p]ay arrangements consistent with 'fair market value' are
 permissible under Stark II" as long as "pay isn't tied to the
 volume or value of a doctor's referrals."  Orthopedists will be
 allowed to provide patients with crutches, "as long as the
 doctors don't profit from the transaction."
      NOT DONE YET
      The regulations will be available for public comment later
 this year, but it may be "two years before the review process is
 complete."  The AHA reportedly wants more guidance on "what
 hospitals can do to recruit young doctors after they finish their
 training."  Michael Peregrine, an attorney with Gardner, Carton &
 Douglas, said, "Of all the basic health care laws, this is the
 one that's least understood.  I welcome the additional guidance,
 but it's going to be a scramble to keep up with what it means"
 (Anders, 1/15).