ACR Overview of the CMS Phase III Stark Regulation
Generally, the new Phase III Stark regulation from the Centers for Medicare and Medicaid Services (CMS) contains moderate technical changes, including the ownership and compensation exceptions. CMS codified many of its positions on referral arrangements that existed in prior Stark rules and the compliance documents of the Health and Human Services Office of the Inspector General (OIG). This is a final rule that takes effect December 4, 2007; therefore, there is no public comment period.
Below are some highlights regarding radiology and radiation oncology:
* CMS did not change anything in the health services category of “radiology and certain other imaging services,” which is the universe of radiology and imaging services that the Stark law covers. CMS rejected calls to exempt the following from the Designated Health Services (DHS) category: 1) ophthalmic A-scans and 2) CT scans taken within six weeks after a prostate brachytherapy to confirm isotope placement. Therefore, those studies will stay within the covered radiology/imaging category. Any physician who self-refers regarding those services has to meet an exception or cannot submit a bill to Medicare.
* Because CMS regards interventional radiology as inherently surgical, it will not exclude ancillary testing from the Stark definition of “referral” if it is necessary for IVR procedures and performed according to a consultation (e.g., angiography, biopsy, stenting, embolization). CMS concedes that some diagnostic imaging services might meet the carve-out from DHS known as, “radiology and certain other imaging” — but only if the services are integral to performing a nonradiological medical procedure or performed immediately after the procedure to confirm an item inserted during the procedure.
* The “consultation” carve-out for radiation oncologists from the Stark “referral” zone only protects: 1) Radiation oncology services that a radiation oncologist (RO) personally performs or 2) services that an RO in the same group practice supervises. Phase III revealed no changes compared with Phase II, but it reinforced that an RO in the same group can supervise radiation therapy.
* CMS declined to expand the “consultation” provision to allow “walk-in” patients who happen to visit a radiologist’s or RO’s office for DHS. According to CMS, those self-referrals, even by patients, could lead to abuse. In Medicare’s view, accepting “walk-in” self-referred patients goes beyond Congress’ intent to protect only those situations in which radiologists or radiation oncologists merely implement what another physician has recommended.
* CMS recognizes that not excluding “walk-ins” from “referrals” exposes radiologists and ROs to Stark, so it encourages physicians to reference the in-office ancillary services exception. Back in Phase II, CMS lightened the in-office criteria, noting that radiologists and ROs provide DHS most of the time to their patients. Now, radiologists and ROs only have to provide a lower threshold of “some” (rather than “substantial”) unrelated DHS in their group practices to meet the in-office exception.
* Hospital-employed radiologists who receive an order for diagnostic imaging and then direct other radiologists employed by that hospital to perform the services cannot meet “consultation” criteria. Instead, CMS believes that in those cases, the hospital should be able to bill via a reassignment (thus, the hospital becomes the DHS entity). The hospital and the radiologists could structure the arrangement to meet Stark’s exception for referrals under bona fide employment arrangements.
* Intra-family urban referrals from “Physician Spouse A” to “Radiologist Spouse B” will not get special treatment from CMS. Stark protects intra-family referrals in a rural area if no DHS entity is available within 25 miles to provide the DHS timely services, given the patient’s condition. Some people also asked CMS to protect intra-family referrals in an urban setting where radiology groups have exclusive arrangements with a group member who is married to a referrer. But CMS stood fast. Just because a radiologist husband would personally perform all of his OB/GYN wife’s ultrasound referrals does not, in Medicare’s opinion, remove the risk of potential abuse. If groups can’t meet the rural exception for intra-family referrals, they will have to send the referral to another group to perform and bill for the service. Or they could have another physician in the group (other than the family member) do so.
* CMS will study the leasing arrangements it outlined in the 2008 Medicare Physician Fee Schedule (MPFS) proposed rule. It quoted MedPAC’s 2005 Report to Congress on suspect arrangements in which referrers own leasing or staffing entities that provide items/services to entities (hospitals/imaging centers) that furnish DHS. Since the referrers themselves don’t submit claims to Medicare, they have avoided running afoul of Stark. CMS admits in Phase III that these deals can put profit over patients, and they will address these types of arrangements in a separate rulemaking.
* CMS also categorized “under arrangements” and “stand in the shoes” deals as “compensation arrangements” that will be subject to Stark restrictions. This could affect many hospital-physician ventures because they will now be analyzed as direct compensation arrangements. For instance, lease arrangements among hospitals, groups, and independent contractor radiologists that take into account referrals or other business that the group generates will not enjoy Stark protection as an “indirect compensation arrangement.” Instead, they will be required to meet another Stark exception, unless they met the indirect compensation requirements as of the September 5, 2007 publication date of this Phase III rule. In the latter case, those arrangements don’t have to be amended during the original term of the arrangement or the current renewal term in effect as of September 5, 2007.
This Phase III regulation does not affect the in-office and other self-referral changes that CMS proposed in the MPFS. If CMS adopts those sweeping changes mentioned in the MPFS (which are separate from those discussed above), the entire Stark playbook could change significantly.
