New Stark rules add third layer to physician self-referral restrictions

The regulations increase flexibility for doctors and facilities in some areas but remove some "bright-line" rules.

By David Glendinning, AMNews staff. Sept. 24, 2007.

Washington -- Physicians and health care facilities that have or want financial arrangements with each other are scrambling to contend with yet another installment in the federal rules against self-referral.

The Centers for Medicare & Medicaid Services on Aug. 27 unveiled the phase III, or final, version of the prohibitions known informally as the Stark II rules. The last major update to the regulations, the phase II interim final rule, was published more than three years ago. Under the statute, physicians cannot refer Medicare patients to facilities in which they have a financial interest unless the business arrangement meets one of a number of exceptions.

Attorneys who represent doctors and health facilities are busy poring over the latest release to determine what, if anything, their clients need to change about their business arrangements to avoid federal penalties.

In the final rule, CMS did not make any sweeping changes to the existing prohibitions. It contains no new exceptions for physicians, hospitals and others implementing business and referral arrangements. The agency did, however, revise and clarify the regulatory language in a number of areas in the hope of making compliance less burdensome.

"As guardians of the Medicare program, we must be mindful of the potential impact that physician conflicts of interest can have on the Medicare program and its beneficiaries," said Herb Kuhn, CMS acting deputy administrator. "The rule we released today strikes the proper balance between protecting patients and the program and providing needed flexibility to health care entities to ensure the provision of quality care to our beneficiaries without unnecessarily impeding nonabusive arrangements."