The Miller Health Law Bulletin

COMPLIANCE CORNER: STARK AND FRAUD AND ABUSE NEWS

Stark and Imaging Services. The influential Medicare Payment Advisory Commission (“MedPAC”), in its March 2005 report to Congress, has made several recommendations to amend the Stark law in connection with imaging services. First, MedPAC recommends that nuclear medicine, including PET scanning, be added to the list of Starkcovered “designated health services.” Second, MedPAC recommends closing a perceived loophole in Stark that permits physicians to own businesses that derive a substantial proportion of their revenue from providing Starkcovered services to providers (such as imaging centers) who, in turn, bill Medicare for those services. In our view, such arrangements are already addressed by the Stark Phase II regulations in the definition of and potential exception for “indirect compensation arrangements.” In general, MedPAC is very concerned about what it believes to be “rapid growth in the volume and intensity of diagnostic imaging services paid under Medicare’s physician fee schedule.” To review the MedPAC report go to www.medpac.gov/publications/congressional_reports/Mar05_Entirereport.pdf.
New OIG Advisory Opinions.

• Fee for Specimen Collection. In Advisory Opinion 05-08, issued on June 8, 2005, the Office of Inspector General (“OIG”) concluded that providing free blood drawing supplies to physicians and paying them $3-6 for collecting blood specimens could violate the federal anti-kickback law. The OIG viewed these financial benefits as likely being paid in exchange for the physicians’ referrals. Advisory Opinion 05-08 can be viewed at www.oig.hhs.gov/fraud/docs/advisoryopinions/2005/ao0508.pdf.

• Gain-Sharing. Between January and February 2005, the OIG issued six separate advisory opinions approving various “gain sharing” arrangements between hospitals and physicians. All of the arrangements reviewed involved either cardiologists or cardiac surgeons. Briefly, in a gain sharing arrangement, the hospital shares with the participating physicians a portion of the savings arising from the physicians’ implementation of cost reduction measures in connection with various procedures.

• Contractual Joint Ventures. In December 2004, the OIG issued
Advisory Opinion 04-17 concerning a so-called “contractual joint venture” arrangement for the provision of lab services. The OIG concluded that the proposed arrangement could violate the federal anti-kickback law even if each contractual element of the arrangement satisfied a “safe harbor.”