Doctors warned about changes in Medicare referral rules

By JULIUS A. KARASH
The Kansas City Star

Health providers should review their financial relationships to avoid violating Medicare rules and a possible tightening of those rules, two Kansas City health-care lawyers said Wednesday.

“The government realizes everyone is chasing the same thing — money,� said Randal Schultz, head of Shughart Thomson & Kilroy’s national health-care law, insurance and compliance practice groups.

Schultz and Jennifer Marsh, who specializes in health-care business law, explained the latest Medicare regulatory developments to physician practice managers, hospital administrators and others attending a presentation at the InterContinental Kansas City at the Plaza hotel.

Marsh and Schultz reviewed “Stark II� regulations, named for Rep. Pete Stark, a California Democrat who sponsored the underlying legislation. The regulations prohibit physicians from referring Medicare patients to entities in which they or immediate family members have a financial stake. Specialty hospitals owned entirely by physicians are excluded from the rules.

Failure to comply with the rules can result in hefty fines and/or exclusion from Medicare.

“It’s going to be your responsibility to prove you’ve done nothing wrong,� Schultz told the audience.

Proposed revisions to the Stark II regulations include changes in how physician-controlled groups lease equipment to hospitals and other health providers. Such leases would have to be based on a flat fee, and equipment lease payments could no longer be tied to how often the equipment is used or revenue derived from using the equipment.

The federal Centers for Medicare & Medicaid Services is expected to rule on the changes by the end of the year. The revisions might take effect in January, Marsh said.

In the meantime, health providers face uncertainty about their future business ties. Schultz said CMS officials were discussing prohibiting any kind of financial relationship between a physician-owned entity and hospitals or other health providers.

“I don’t think it will go that far,� he said.
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