In an unusual display of unity, hospitals have joined physicians in supporting a bill that would dilute a 6-year-old physician self-referral law by eliminating the ban on compensation arrangements between doctors and healthcare organizations.
The so-called Stark II law, which built on a narrow 1989 self-referral law, bars physicians from referring Medicare and Medicaid patients to facilities in which they have an ownership interest.
Stark II, passed by Congress in 1993, also prohibits some compensation arrangements that revolve around referrals. For example, a heart surgeon could not pay an internist for referring a patient to him or her for a complex medical procedure.
The bill, proposed last week by Rep. William Thomas (R-Calif.), would repeal the ban on compensation arrangements, to the delight of providers. It would not change the self-referral prohibition.
Thomas said he introduced the bill because the law is too complicated to enforce. HCFA still has not written final regulations implementing the law. In January 1998, HCFA issued proposed regulations that called for numerous exceptions to the compensation ban.
Thomas' bill has the support of the American Medical Association, the American Medical Group Association and the Medical Group Management Association.
The American Hospital Association and the Federation of American Health Systems, which represents for-profit hospitals, also support the bill. They said their members would rather spend time and money on patient care than on attorneys' fees.
But the Stark law's author and namesake, outspoken fraud-fighter Rep. Fortney "Pete" Stark (D-Calif.), blasted Thomas' effort and unveiled his own, more modest attempt to clarify the law.
"The Thomas bill will return us to the days of massive patient abuse by unscrupulous doctors," Stark said in a written statement.
Stark's bill would replace all the exceptions to the compensation ban with a "fair market value" standard, permitting compensation arrangements that require fair payments for services rendered.
In a related development last week, a bill that would allow individual physicians to jointly negotiate with health plans picked up additional co-sponsors but doesn't appear to be any closer to a preliminary vote.
A spokesman for Rep. Thomas Campbell (R-Calif.), who is the chief proponent of the legislation, said Campbell has 143 co-sponsors, including the majority of the House Judiciary Committee.