Some Providers Taking Advantage of Loophole in Stark Law
Many providers have been taking advantage of a loophole in a law intended to prevent physicians from self-referring Medicare beneficiaries to reap financial benefits, the Wall Street Journal reports (Carreyrou/Adamy, Wall Street Journal, 10/22).
The law, referred to as the Stark Law after former Rep. Pete Stark (D-Calif.), bans physicians from referring Medicare beneficiaries they are treating to entities in which they have a financial stake (Carreyrou, "Briefly," Wall Street Journal, 10/22).
The law includes an exemption for "in-office ancillary services" that originally was intended for routine procedures -- such as in-office blood tests -- to allow for more efficient care delivery (Wall Street Journal, 10/22). In particular, the exemption was created out of concerns about compromising integrated care delivery practices, such as the Cleveland Clinic (Adamy, "Washington Wire," Wall Street Journal, 10/22).
However, the Journal reports that advances in medical technology have expanded use of the exemption beyond the law's original intent. Some stakeholders have said the exemption has led to unnecessary tests and procedures by providers attempting to profit from Medicare reimbursements.
For example, Medicare billing records show that two providers at Florida-based 21st Century Oncology in 2012 received 21% of all Medicare reimbursements paid to pathologists and labs for one type of costly bladder-cancer test. The practice is under investigation by the HHS Office of Inspector General and U.S. attorney's office for the middle district of Florida for potential Medicare billing fraud. However, federal regulators "have largely not challenged" providers who have used the exemption, according to the Journal.
Providers who have made significant use of the exemption said that the tests are ordered for medical reasons and that such in-house tests and lab results help them to deliver better, more efficient care (Wall Street Journal, 10/22).
Some Urge Limiting Exemption
Meanwhile, some groups representing providers have urged limits to the exemption, "Briefly" reports. For example, the College of American Pathologists and the American Society for Radiation Oncology both have said the exemption incentivizes overuse of pathology and radiation therapy services. Further, the Obama administration and some lawmakers have proposed narrowing the exemption ("Briefly," Wall Street Journal, 10/22).
Stark said he was not sure if he would vote for the measure today, given that "the law [has gotten] to be as thick as a phonebook for all the exemptions" ("Washington Wire," Wall Street Journal, 10/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.