Some provider groups are pressing HCFA to change provisions of proposed physician self-referral regulations that could affect medical groups and physician practice management companies.
They're getting a positive hearing on Capitol Hill, where the original author of the self-referral law is expressing a willingness to help providers eliminate "glitches" in the regulations or the enabling law itself.
The groups are objecting to how HCFA interpreted the "Stark II" self-referral law when developing its enforcement proposal. Authored by Rep. Fortney "Pete" Stark (D-Calif.), the law bars physicians from owning an interest in 11 types of healthcare facilities or services to which they refer Medicare or Medicaid patients.
The law defines such "self-referrals" as a violation of federal anti-kickback standards. The reasoning is that ownership interest in other healthcare facilities encourages doctors to send patients to those facilities to increase their return on investment.
Published last month in the Federal Register (Jan. 12, p. 6), HCFA's proposed rule for Stark II could bar certain transactions now used by PPMs and medical groups. Under the proposal, such organizations could be prohibited from using stock as part of a practice-purchase transaction if the companies are not yet publicly traded. An exemption would allow publicly held organizations to offer stock, and the doctor wouldn't be required to purchase the shares on the open market.
The requirements would stand in the way of a PPM that wants to use privately held stock to purchase a practice and make a public stock offering later.
Meanwhile, other physician organizations could be shackled by language that defines a group practice as an institution that centralizes decisionmaking and pools overhead expenses and revenues.
That language could prohibit referrals between members of "group practices without walls" and between multisite group practices that distribute overhead expenses and profits among sites as if each were an independent group.
Provider groups are developing their responses to the regulation. The government gave them until March 10 to comment. Although it's not clear whether a unified coalition will emerge, the Washington law firm of McDermott, Will & Emery has put the provisions affecting practice-management companies and group practices at the top of its agenda for possible change by HCFA, or if necessary, Congress. The firm will hold an organizing meeting Feb. 18 that may include the Medical Group Management Association.
Other groups, such as the American Hospital Association and the American Medical Association might wind up lobbying the issue on their own, sources said.
"To the extent that we can refocus energy on fraud and abuse, and away from the use of resources to administer a statute that's woefully complex, I think that's in the public interest," said Diane Millman, a partner with McDermott, Will & Emery.