Will the 113th Congress Dramatically Change Stark Law?

By: Kathleen Quiroz
Monday, October 7, 2013
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On Aug. 1, 2013, Representatives Jackie Speier, Jim McDermott (the ranking member of the House Committee on Ways and Means Subcommittee on Health) and Dina Titus introduced House Resolution (HR) 2914, the Promoting Integrity in Medicare Act of 2013.

This bill, should it become law, would make significant changes to the federal physician self-referral law, which is commonly referred to as the Stark Law. More specifically, this bill would largely prohibit physicians from referring their Medicare patients to any entity that performs advanced imaging, anatomic pathology, radiation therapy and/or physical therapy (which the resolution defines as “specified non-ancillary services”), with the exception of certain referrals to rural providers, if the physician or an immediate family member of the physician has any type of financial relationship with such an entity.

Unless an exception applies, the Stark Law currently prohibits a physician from referring his or her Medicare patients to any entity that performs any type of “designated health service” for which payment otherwise may be made under Medicare if the physician or an immediate family member of the physician has a financial relationship with that entity. Further, unless an exception applies, the Stark Law prohibits an entity that furnishes any type of designated health service from submitting a claim to Medicare or billing any individual or entity for services furnished pursuant to a prohibited referral.

The in-office ancillary services (IOAS) exception to the statute is one of the most important exceptions to the Stark Law’s self-referral prohibitions. In general, this exception allows a solo physician or group practice to provide specified designated health services in the physician’s or group’s office if certain conditions — intended to ensure that the services are truly ancillary to the medical services the physician or group provides — are satisfied. HR 2914 would amend the IOAS exception by excluding from the protection afforded by that exception all Medicare referrals for advanced imaging, anatomic pathology, radiation therapy and physical therapy services. HR 2914 would also make a similar amendment to the Stark Law exception for certain physicians’ services.

HR 2914 targets these specified non-ancillary services because, according to the authors of the bill, the key rationale for the IOAS exception is it permits physicians to provide ancillary services in their offices that they may better inform diagnoses and treatment decisions at the time of patients’ initial office visits (i.e., ancillary services such as routine clinical laboratory services and simple X-rays). The bill cites a 2010 Health Affairs study and a 2012 Health Affairs study for the proposition that specified non-ancillary services are “clearly not envisioned to be covered” by the IOAS exception because such services are rarely performed during the patient’s initial office visit. According to its authors, the purpose of the bill is to maintain the IOAS exception to the Stark Law and preserve its original intent by removing certain complex services from the exception, specifically advanced imaging, anatomic pathology, radiation therapy and physical therapy.

In addition to excluding specified non-ancillary services from the protections afforded by the Stark Law exceptions for IOAS and for certain physicians’ services, HR 2914 would also amend the law by significantly increasing the civil money penalties that could be assessed for prohibited referrals of specified non-ancillary services.

HR 2914 is currently supported by the American Clinical Laboratory Association, American College of Radiology, American Physical Therapy Association, American Society for Clinical Pathology, American Society for Radiation Oncology, Association for Quality Imaging, College of American Pathologists and Radiology Business Management Association.

If your practice performs advanced imaging, anatomic pathology, radiation therapy and/or physical therapy services, you should track the progress of HR 2914. This bill, should it become law, would apply to specified non-ancillary services effective the first day of the first month following the one-year anniversary of the bill’s enactment. Thus, if this bill should become law, your practice would have a relatively short time frame within which to unwind any arrangements through which it currently provides specified non-ancillary services.


Kathleen QuirozKathleen Quiroz is a member of the Health Law Practice Unit in the San Antonio office of Strasburger Price Oppenheimer Blend. Collectively, the group has 67 years of experience representing corporate, health care and life sciences clients. You can reach Quiroz at 210-250-6148.