Miller Health Law Group on Stark Law Update, Recent Managed Care Developments, Restrictive Covenants, HIPAA and Arbitration Agreements

Public Comment Period Extended. Because of the significant number of comments received, the original 90-day public comment period on the Phase I “final” Stark rules was extended 60 days until June 4, 2001.

Shared Facilities Ok’d. The Phase I final rules make it possible under certain circumstances for physicians who are not in the same medical group to share facilities, such as a lab or x-ray, if the physicians practice in the “same building.” This may offer physicians a way to reduce their expenses for these ancillary services while capturing an additional, much needed revenue source. However, Medicare and Stark physician supervision rules for these ancillary services may make it difficult to share x-ray or other imaging unless the physicians practice in the same office suite.

Stark Explained. Jeremy Miller has made or will make presentations explaining the final Stark rules to the Los Angeles, Orange County and Northern California chapters of the Medical Group Management Association and to the California Society for Healthcare Attorneys. Jeremy has also been interviewed by and quoted in the American Medical News and the Physician Practice Compliance Alert on the final Stark rules. Please contact us if you would like a free copy of Jeremy’s speech materials.

Stark Compliance Is Not Enough. When considering any referral relationship it is important to remember that the Stark law is only one of a number of federal and state anti-kickback and patient referral laws that must be complied with.

Recent Managed Care Developments
Reporting Under Provider Solvency Regulations Has Begun. On March 22, 2001, the California Department of Managed Health Care’s emergency regulations became effective. These regulations, among other things, require quarterly reporting by “risk bearing provider organizations” (“RBPOs”) of financial statements, verification of IBNRs, and maintenance of positive Tangible Net Equity and positive working capital. The regulations are intended to ensure that RBPOs have the ability to meet the contractual obligations they have undertaken. RBPOs include Page 2 HEALTH LAW BULLETIN July 2001 independent practice associations (“IPAs”) and medical groups which have capitated contracts with health plans. RBPOs maintaining their financial records on a calender year basis were required to make their initial quarterly submission for 2001 by May 15, 2001. The reporting forms and additional information are available on the DMHC’s website (

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