Miller Health Law Group on Stark and Fraud Abuse News, HIPAA Update, Medicare Developments, Malpractice Insurance Claims, and Imaging Joint Ventures

Stark Law Enforcement. In what could be a sign of a significant new enforcement tactic, in December 2002, the Department of Justice and Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) reached a $6 million settlement with a South Dakota hospital and oncology group in a whistle-blower lawsuit alleging Stark law and anti-kickback statute violations. The lawsuit claimed that the Stark and anti-kickback laws were violated because the hospital provided the oncology group (which referred patients to the hospital) with office space, goods and services at below fair market value rates. The government contended that claims submitted by the hospital pursuant to illegal referrals from the oncology group constituted false claims. Stark Phase “II” Rules. Phase I of the final Stark rules became effective January 4, 2002. The Phase II final rules are to cover important areas not covered by the Phase I rules including specific ownership interest and compensation arrangement exceptions, reporting requirements, sanctions and the Stark law’s application to the Medicaid program.

In the November 20, 2002 Federal Register, the Centers for Medicare and Medicaid Services (“CMS”) indicates that the Phase II final rules will be published by July 1, 2003. Historically, promised deadlines have not been met; but there is always a first time. New List of “Designated Health Services.” The Stark law regulates referrals of “designated health services” (“DHS”), which does not include all Medicare-covered services. The list of DHS has been updated effective January 1, 2003. The updated list of CPT and HCPCS codes can be found at in Addendum E. Lithotripsy Is Not a DHS. A federal district court recently ruled that lithotripsy services do not constitute DHS and, therefore, are not subject to the Stark law’s prohibitions. The court agreed with the position of the American Lithotripsy Society (“ALS”) and the Urology Society of America who argued that Congress did not intend to include lithotripsy as a DHS if the lithotripsy facility is physician owned and services are billed “under arrangements” by a hospital. On January 3, 2003 the federal government withdrew its appeal of the Court’s decision thereby making it final. More information on the case is available at the ALS’s website at

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