Miller Health Law Group on Stark and Fraud and Abuse News, HIPAA Update, Medicare Developments, and Managed Care News

“Final” Stark Rules Effective In January. Phase I of the final Stark rules, which were released January 2001, become effective on January 4, 2002. Therefore, physicians and other affected providers have a very short time remaining to comply. Phase II of the final rules, which contain certain modifications to the Phase I rules, may be released early net year.

• Stark Law Enforcement. Although the general Stark law prohibitions have been in effect since 1995, there has been little, if any, reported enforcement activity. That lull appears to have now ended. On August 15, 2001, the U.S. Attorney in Massachusetts announced a settlement with a Boston-area medical group for violation of the Stark law. The case was brought to the government’s attention by a whistle blower. The Stark violation involved the medical group’s compensation formula that paid physicians directly based upon the value of their in-office referrals for laboratory services. The medical group agreed to pay a $230,000 fine to settle the case.

• “September 11” and Compliance Enforcement. With the FBI and other federal agencies devoting unprecedented resources to antiterrorism efforts, some people have predicted that the pace of government enforcement activity against physicians and other providers will slow. Federal officials have specifically warned providers against making such an assumption. In a recent statement, a Department of Justice (“DOJ”) attorney stated that “___________ out fraud in the health care system is one of the DOJ’s top priorities.” Providers should also consider that a recent report prepared by the group Taxpayers Against Fraud, which found that the federal government has recovered $8 for every $1 spent pursing False Claims Act cases. In Fiscal Year 2000, whistle blower cases generated 80% of civil fraud recoveries. Continued vigorous prosecution of suspected fraud and abuse violation, therefore, should be expected.

• OIG’s 2002 Work Plan. For a glimpse of the compliance areas that the Office of Inspector General (“OIG”) of the Department of Health and Human Services plans to focus on in 2002, go to the Web at

• Focus on Drug Studies. The federal government increasingly views clinical trials and drug studies as having high fraud and abuse potential. Accordingly, government enforcement activity is expected to increase in this area. The focus is likely to include billing Medicare for services which are being paid for by the drug study sponsor; billing Medicare for procedures using experimental drugs or devices; principal investigators not adequately supervising the work being done; undisclosed fees for enrolling patients in clinical trials; and falsifying results of clinical trials.

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