Delays in writing the rules to enforce a 1993 physician self-referral law have group practices wondering how they can legally pay doctors based on productivity.
On Jan. 1, 1995, group practices wanting to serve Medicare patients will be barred from compensating physicians based on the volume or value of referrals to the clinic's laboratory services. The prohibition is part of a provision written into the 1993 budget deficit legislation and is commonly known as "Stark II" for its chief advocate, Rep. Fortney "Pete" Stark (D-Calif.).
The provision amends a self-referral law Mr. Stark sponsored in 1989 that barred physicians from referring Medicare patients to clinical lab service entities in which the doctors have a financial interest. But the original law exempted physicians in group practices.
Under Stark II, if groups do compensate their member physicians based directly or indirectly on referrals, they may no longer qualify for the group practice exemption. Group practices could be fined $15,000 for each service in violation of the law and be excluded from the Medicare program.
Stark II also extends self-referral prohibitions to Medicaid patients and 10 new services.
HCFA has yet to release regulations to enforce Stark II, although a proposed rule list may be out next spring. That lack of regulation has left group practices confused about how they can compensate physicians based on their productivity without running afoul of the law.
"There are no rules of the road to go by," said Brent Miller, government relations director for the American Group Practice Association.
"There are obviously a lot of gray areas," said Dana Lichtenberg, a health policy analyst with the American Society of Internal Medicine. "We don't know what to tell doctors until there's a final rule."
Attorney Larry Oday of the law firm Vinson & Elkins in Washington said HCFA officials told him in an October meeting that it would release a guidance document by the end of the year. The document would list those areas HCFA would enforce because they are clearly spelled out in the law.
"I resisted the urge to say it'll be a really short list," Mr. Oday said. "It'll be interesting to see what's on that list."
HCFA officials could not be reached for comment. An aide in Mr. Stark's office said he understood the regulations might be out in January, and took the physicians' and clinics' groups to task for their complaints of HCFA delays. "Quit making money when you refer patients," he said. "This desire for detailed regulations...it's distressing. They've seen this coming for a couple of years."
One gray area is whether clinics can pay their physicians for referrals of non-Medicare patients. Ms. Lichtenberg said the ASIM believes that is an allowable practice, but others interpret Stark II as applying to all referrals.
Furthermore, Stark II will complicate compensation formulas based on the personal services physicians in the group provide, which the law still allows.
In multispecialty groups, for instance, different specialties refer more patients for laboratory tests than others. But since the income from those lab services cannot be divided on the basis of referrals, developing a fair productivity compensation formula will be difficult.
"If you do it wrong, the cardiologist gets a windfall from the fact that the internist is a productive member of the group," Ms. Lichtenberg said.