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Nuclear medicine submits to Stark

Radiology Administrator's Compliance and Reimbursement Insider, June 1, 2006

Follow these tips to ensure your facility’s compliance to DHS additions

Cross the t’s and dot the i’s on any physician/nuclear imaging agreements before the year of the dog lets loose its last yelp.

Come January 1, 2007, nuclear imaging falls within the realm of designated health services (DHS) and the purview of the Stark law.

Nuclear new to ‘designated’ scene

From the outset, the Stark law included radiation therapy services and supplies and radiology and other imaging services as DHS, says Mark Langdon, a healthcare lawyer with Arent Fox in Washington, DC.

CMS excluded nuclear medicine when it initially adopted Stark regulations on the grounds that nuclear medicine was neither radiology nor radiation therapy.

However, since its arrival on the diagnostic imaging scene, nuclear imaging—especially PET—has grown quickly. Pointing to the exploding costs of healthcare and increasing use of diagnostic imaging, CMS says it has reason enough to add nuclear imaging to the DHS ranks.

“We believe our proposal . . . is consistent with the intent of Congress to . . . prohibit physicians from selecting treatment modalities based on financial incentives,” the agency wrote in its August 2005 proposed rule.

“Some [people] had a sense that one day nuclear medicine’s Stark law reprieve would come to an end,” says Langdon. “Those people don’t have to worry. For everyone else—everyone who took CMS at its word—this is a big deal.”

Stark Law primer

The federal physician self-referral (i.e., Stark) law focuses on the financial relationship between physicians, their families, and certain entities that provide specific services called DHS. The Stark law applies only to Medicare and Medicaid DHS.

Critics of physician ownership of healthcare facilities charge that, when direct financial interest motivates physician referrals, severe healthcare consequences can result.

Stark essentially establishes the following two basic prohibitions to counteract physician referrals based on financial returns:

1. The referral prohibition. For certain types of services, a physician may not refer a Medicare or Medicaid beneficiary for DHS to a healthcare entity with which the physician—or one of his or her immediate family members—has a financial relationship.

2. The billing prohibition. A healthcare entity may not bill for improperly referred DHS, unless an exception applies.

Even if a physician, provider, or supplier does not intentionally violate the Stark law’s provisions, he or she is still responsible (it is a strict liability statute), and the penalties can be steep.

Potential outcomes of violations include

  • denial of payment, or a requirement to refund payments resulting from an impermissible referral
  • civil monetary penalties of up to $15,000 for each impermissible referral
  • possible exclusion from the Medicare and Medicaid programs

    Compliant choices

    Finding a way to resolve potential Stark law problems “isn’t as simple as personalizing a sample agreement,” says Langdon.

    Nevertheless, noncompliant healthcare facilities that service Medicare or Medicaid patients have essentially two choices—divest their interests in nuclear-imaging services or restructure arrangements to meet one of the several exceptions available under Stark, he says.

    And because radiology facilities are equally liable under the Stark law, administrators should make sure that they don’t receive undue attention from Stark-susceptible physician practices. However, “divestment could mean reorganizing your whole business model and could be devastating to the business overall,” Langdon says.

    Exception to the rules

    However, there are legislation loopholes. Most physicians and radiology administrators know Stark’s in-office exception well.

    For example, some cardiologists bought nuclear cameras and operated them through their practices, in their offices, and with their staff to make sure that they were part of the Stark in-office exception even though it might not have been necessary at the time, Langdon says.

    The in-office exception began as a way for doctors in a private office to receive reimbursement for all of the incidental acts that occur during the course of a day, says Alice G. Gosfield of Alice G. Gosfield & Associates, PC, in Philadelphia.

    “Essentially, in an office where you have one doctor and one nurse running around like one-armed paper-hangers, you needed something like this to ensure proper reimbursement,” she says.

    But this initial intention went by the wayside over the years, graduating into a way for physicians to achieve higher reimbursement by owning additional equipment. “[Stark loopholes are] one of the great confounding things of the world,” says Gosfield.

    The other exceptions include facilities located in rural settings, the personal services exception, and the space and equipment rental exceptions, says Langdon. If properly structured, the rental exceptions might allow physicians or physician groups to jointly own equipment and lease it to a third-party (e.g., a hospital or radiology group). However, the government eyes these agreements carefully, so don’t enter into them lightly, he says.

    How to survive Stark Law changes

    Calling nuclear imaging a DHS may seem like a no-brainer to many, but it also seems to run counter to the consistent position that CMS has taken over the years.

    Some physicians and associations sought to persuade the government to not reverse its prior stance or exempt preexisting facilities from any new restrictions, but the government rejected these options.

    As it stands now, those involved in questionable arrangements have only until 2007 to show compliance with the Stark law.

    Editor’s note: This story includes material from The Compliance Officer’s Handbook, published by HCPro, Inc., 2006. Visit www.hcmarketplace.com.

    Insider sources

    Alice G. Gosfield, Esq., Alice G. Gosfield & Associates, 2309 Delancey Place, Philadelphia, PA 19103, 215/735-2384; Agosfield@gosfield.com.

    Mark Langdon, Arent Fox, 1050 Connecticut Avenue, NW, Washington, DC 20036-5339, 202/857-6026; langdon.mark@arentfox.com.

    Diane Millman, Powers Pyles Sutter & Verville, PC, 1875 Eye Street, NW, 12th Floor, Washington, DC 20006, 202/466-6550; diane.millman@ppsv.com.

    Sample contract audit program

    To ensure that your hospital’s contracts with radiologists and imaging centers comply with Stark and the anti-kickback statute, follow this six-step audit procedure:

    1. Obtain the contract. Verify first whether the radiologist and a proper hospital authority have signed the contract.

    2. Verify that counsel has reviewed all contracts. Confirm that your hospital’s legal counsel has approved all contracts to ensure that administrators negotiate all contracts within the hospital’s protocols.

    3. Identify the payment rate. Make sure that your legal counsel verifies that the hourly rate for duties performed is reasonable.

    4. Identify an evaluation process. Ensure that your organization has clear standards of performance or a review process to verify that the radiologist is doing his or her job, says John McGinty, senior consultant with The Greeley Company, a division of HCPro, Inc., in Marblehead, MA.

    5. Review payments. Ensure that the imaging organization pays radiologists and technicians appropriately. Run a check-disbursement report from the accounts payable department for all payments to physicians and physician groups. Review a sample of physician payments and verify that these payments comply with the contract.

    6. Assess gifts. Ensure that your organization has a code of conduct that lists the types of gifts that employees may accept from patients and others. Ensure that everyone completes an annual conflict-of-interest statement.

    Track all gifts in your compliance department. Auditors should review an accounts-payable disbursement report to identify payments coded to expense accounts for gifts and marketing. Follow up on questionable items to determine the nature of the transactions.

    Insider source

    John McGinty, senior consultant, The Greeley Company, a division of HCPro, Inc., Marblehead, MA 01945.

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