Patient Referral Act Ethics

Stark Law (42 U.S.C. $ 1395nn), effective for referrals made after Dec. 31, 1994, states that if a physician (or an immediate family member of such physician) has a "financial relationship" with an entity, the physician may not make a refferal to that entity for the furnishing of "designated health services" for which payment is sought under Medicare and Medicaid. Nor may the entity present a claim or bill to any individual, third-party payer, or other entity for designated health services. The following services/items are defined as designated health services (enumerated by CPT codes):

    *  Clinical Laboratory services

    *  Physical therapy services, speech language pathology services

    *  Occupational therapy services

    *  Radiology or other diagnostic services, including magnetic resonance imaging (MRI) computed
        tomograghy (CT) scans and ultrasound services.

    *  Radiation therapy services and supplies

    *  Durable medical equipment and supplies

    *  Parenteral and enteral nutrients, equipment and supplies

    *  Prosthetics, orthotics, and prosthetic devices and supplies

    *  Home health services

    *  Outpatient prescription drugs

    *  Inpatient and outpatient hospital services

    *  Nuclear medicine services and supplies

All six elements of Stark must be present to implicate the statute. If all six elements are present, the referral will be protected only if an applicable exception applies. There are four general exceptions, two ownership/investment exceptions, and seven compensation exceptions.

Protential self-referral violations include:

    *  A physician refers all blood specimens to a clinical laboratory in which he has an ownership
        interest.

    *  A physician has a compensation arrangement (without a written agreement) with a diagnostic
        facility to which he or she refers radiation therapy patients.

In cases where the physician or a group practice has billed and collected for designated health services in violation of the Stark Law, the physician or group is required to refund such amounts on a timely basis. The Office Of Inspector General (OIG) also may impose upon any person a civil penality of up to $15,000 for each improper service provided by the person who knew, or should have known, the service was rendered in violation of the Stark Law; and up to $100,000 for each scheme to cirumvent the Stark Law.

Any physician or entity entering into an arrangement or scheme in violation of the self-referral ban may also be subject to an assessment of not more than twice the amount claimed for each designated health service rendered in violation of the ban, and may also be excluded from participation in all state and federal health care programs.

Section 6409 of PPACA requires self-disclosure protocols to be developed by the Center for Medicare & Medicaid Services (CMS). CMS' instructions must include the procedures for self-disclosure, the affect of self-disclosure on Corporate Integrity Agreements, and information regarding possible reductionin penalties for self-disclosure of Stark Law violations.

Because there is an increased likelihood that an enforcement agency may request records or perform a site visit at your practice, your practice will benefit greatly if you can identify these potential issues in advance and bring such conduct inot compliance with the law.

Christopher A Parrella J.D CHC, CPC CPCO is with the Health law off of Anthony C Vitale in Miami Fla. He is a member of AAPCs legal Advisory Board and can be reached at (305) 258-4500 or at cparrella@vitalehealthlaw.com