Practice Management Alert

If your practice offers ancillary services such as in-office or affiliated labs and physical therapy, you should limit your liability by ensuring these referral relationships are appropriate under the new second phase of the Stark II rule.

The Stark regulations, also known as physician self-referral rules, are part of the federal government's broader campaign against healthcare fraud and abuse. The regulations are designed to make sure physicians don't inappropriately refer Medicare or Medicaid patients to healthcare organizations in which they have an ownership interest.

The Centers for Medicare & Medicaid Services (CMS) published interim final regulations governing physician referrals in the March 26 Federal Register. Stark's second phase, which represents CMS' efforts to establish "bright-line" rules as often as possible, covers the remaining statutory exceptions not covered in the first phase. The new rule will become effective July 24.

The new rule changes some of the standards and interpretations that the first Stark legislation instituted, says Wayne J. Miller, attorney with Compliance Law Group in Los Angeles. Although practices have been aware of Stark since it was first published several years ago, the long waiting period for final regulations may have resulted in referral relationships that no longer meet Stark standards, he says. And "those relationships are going to be scrutinized even more carefully now," Miller says.

In addition to governing ancillary service referrals, Stark clarifies when physicians who own multiple offices can offer both primary medical and ancillary (e.g., lab, x-ray, etc.) services.

What to do: Because billers are coding and preparing the claims that involve referral services, the Stark rule poses a compliance liability risk for the biller as well as the physician. "Billers have to be cognizant of where [referral] relationships exist," and if they are appropriate according to Stark, Miller says. Although you may not be responsible for implementing referral relationship changes, as a biller you should ensure that the responsible parties review the new rule and confirm your practice is in compliance, he says.