How Stark II rules will affect your pay

Contract Language. By Steven M. Harris, AMNews contributor. Feb. 26, 2001.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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The Health Care Financing Administration, on Jan. 4, finally published the first of two phases of the long-awaited Stark II final regulations.

Stark II is the law that prohibits physicians from referring Medicare and Medicaid patients for certain designated health services -- including clinical laboratory services, physical and occupational therapy services, radiology services and inpatient and outpatient hospital services -- to any facility or entity with whom the referring physician (or an immediate family member) has any financial relationship, unless an exception set forth in the statute or regulations is satisfied.

In addition, Stark II prohibits the entity furnishing the service from billing for it if the referral is prohibited. Penalties for a violation of Stark II are harsh and include denial of payment, imposition of severe civil monetary penalties and exclusion from participation in the Medicare and Medicaid programs.

As complex as the final rules are, we could, but will not, devote most of the coming year's columns to physician referral issues. From time to time, however, we will highlight those areas of the regulations that relate specifically to important physician contracting concerns.

This month is one of those times.

We'll focus here on physician compensation and, in particular, the final rules' take on distributions of productivity bonuses and profit shares by physician practice groups to their individual practice physicians. Keep in mind that our discussion has primary relevance to employment and shareholder agreements. [...]