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CMS issues final regulations addressing physician referrals

Medical Staff Leader Connection, March 31, 2004

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CMS issued the second phase of its final regulations addressing physician referrals to entities with which they have financial relationships, known as Stark II, Phase II in the March 25, 2004, Federal Register.

The Stark Law, known as the physician self-referral law, prohibits physicians from referring Medicare and Medicaid patients for certain designated health services to entities with which the physician (or a member of the physician's immediate family) has a financial relationship, unless an exception applies. 

The law also bans an entity from billing for services provided as a result of a prohibited referral.

Phase II responds to comments CMS received on the first phase of the regulations. It also includes the remaining statutory exceptions not covered in Phase I and creates new regulatory exceptions for nonabusive financial relationships. 

Phase II contains 16 such exceptions, which are intended to outline financial regulations that do not pose fraud or abuse risks. They include provisions for services furnished under certain payment rates, professional courtesy, charitable donations, and anti-kickback safe harbors. CMS will accept comments for 90 days, and the final rule will go into effect in 120 days. 

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