Medicare Compliance & Reimbursement

What therapists need to do to succeed under the rehab-unfriendly regulation.

Phase II of the Stark regs are a stark disappointment for rehab providers.
 
The Centers for Medicare & Medicaid Services published the interim final rule on physicians' referrals to health care entities with which they have financial relationships in the March 26 Federal Register (see article "Docs Can Have Copmpensation Deals Under Stark"). In Phase I of the rule, the government had created an "in-office ancillary exception," which gave physicians the green light to refer patients to physical therapy offered within their group practice, as long as they meet certain criteria.

The rehab industry asked CMS to tighten the in-office ancillary exception to make it more difficult for physicians to refer to their own clinics, thereby taking referrals away from other therapy providers.

Rehab providers also appealed to CMS to increase supervision requirements and limit incident-to services, but changing those rules is beyond the agency's jurisdiction, says attorney Karen Dunlop with Sidley Austin Brown & Wood in Chicago.

The government's response: Sorry, folks, the regs will stand as written. That means physicians will be able to provide PT within their group practice, as long as they meet the definition of a group practice (i.e., they're fully integrated and operating as a group), explains attorney Bob Ramsey with Buchanan Ingersoll in Pittsburgh.

"So you could have a situation where orthopedic surgeons decide to provide PT in their practice, and they essentially have a captive referral base," Ramsey notes.

In Stark II, the government has "opened the highway to abuse by giving physicians a road map to what they need to do to qualify to provide these services," charges Michael Weinper, CEO of the Physical Therapy Providers' Network in Calabasas, CA.

The Phase II regs have in fact broadened the in-office ancillary services exception "to the point that it doesn't have to be in the same office anymore, it just has to be in the same building," Weinper points out. And the "building" only needs to be opened 8 hours a week, and the physician only has to provide services there for 6 hours a week to qualify, he continues. That means, in theory, a physician could have multiple locations at which to provide PT.

"Physicians have anticipated the regs would go this way, because they've already been setting up these arrangements," according to Weinper. "They're proliferating as we speak."

Act now: Although the reg probably won't be changed anytime soon, "it's inherently important that providers convey to CMS their dismay over the regulation, citing specific instances of abuse," Weinper insists. It's important to lay the foundation now if there's to be any hope of changing the rules in the future, he says.

Strategy: In the meantime, rehab providers worried about referrals slipping away should "find ways to diversify [their] practice," Weinper suggests. They should make sure their success is not dependent on orthopedic referrals, he urges.

While there will likely be a moderate reduction in referrals, it probably won't be drastic, Weinper predicts. That's because many therapists provide services that can't be offered in a physician's office -- and these services could well become independent therapy providers' lifeblood.

Heads up: Providers can submit comments on the interim final rule until June 24. The rule takes effect June 26.