To the probable delight of his traditional physician foils, Rep. Fortney "Pete" Stark (D-Calif.) is considering rolling back or changing some portions of the physician self-referral law that bears his name.
Stark is talking with Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee, about clarifying aspects of the so-called "Stark II" law. Stark is the panel's ranking Democrat.
The first Stark law, passed in 1989, focused on prohibiting physicians from referring patients to clinical laboratories in which they had a financial interest.
The follow-up law, passed in 1993, bars physicians from referring Medicare and Medicaid patients for 10 types of healthcare services that would benefit the doctors financially, or referring patients to facilities in which the doctors have an ownership interest. It also prohibits a number of physician compensation arrangements. For example, a heart surgeon could not pay an internist for referral of a patient to the surgeon for a lucrative procedure.
Physician groups, including the American Medical Association and the American Medical Group Association, are pushing for changes.
Thomas' office has circulated an informal proposal that would eliminate the parts of Stark II that prohibit compensation arrangements. The remaining Stark II provisions would apply only to physicians' ownership or financial interests in healthcare facilities.
HCFA issued proposed regulations implementing the law in January 1998 but has never made them final.
Despite the lack of final rules, the law's passage led to what physicians call a "chilling effect" on innovative integration of services. But law enforcement officials, including the chief counsel to HHS' inspector general, say the law has cut questionable joint ventures between physicians and other organizations.
Healthcare attorneys, frustrated by the law and its 400 pages of proposed regulations, would welcome change as a "huge improvement," said Larry Oday, an attorney in the Washington office of Vinson & Elkins who is familiar with the Stark proposal. "It would eliminate 98% of the problems with Stark II," Oday said.
Stark wants a more moderate change. One of his aides said both Stark and HHS' inspector general's office want to keep the prohibition on compensation arrangements but might scrap all the exceptions in favor of one blanket exception called a "fair market value" provision, which would likely permit a compensation arrangement if the physician is paid fair market value for the service rendered.
A final proposal is still weeks away.