Beware of the Recruiting Prohibitions Under Stark II Law

BALTIMORE — The newest round of regulations implementing the Stark self-referral legislation has two provisions of particular interest to doctors: one on physician recruitment and the other on in-office ancillary services, several speakers said at a forum sponsored by the American Health Lawyers Association.

Physician recruitment “is clearly the biggest new exception,” said Kevin McAnaney, a lawyer in Washington. Under this phase of Stark II, which took effect in July, a hospital or federally qualified health center can pay to recruit a physician, provided that he or she is either a new physician or is relocating from outside the geographic area, defined as “the area comprised of the lowest number of contiguous zip codes from which the hospital draws at least 75% of its inpatients.”

The relocation provision applies to the doctors' offices, not their residences, and they must either move 25 or more miles away or have 75% new patients in their practice as a result of the move.

“Some people say that the only thing you have to do to meet the exception is meet one of the second two requirements—75% new patients or move 25 miles from the old location. [But] I think you have to move into the geographic service area and meet one of those tests,” he explained.

Baltimore lawyer Sanford Teplitzky agreed. “You have to recruit from outside the geographic area into the geographic area,” he said. For example, “the hospital can't get someone from outside and bring him to one of their satellite facilities that falls outside that [geographic area], even if there's a community need and a community benefit.”

Another important exception has to do with in-office ancillary services. Mr. McAnaney warned, however, that the exception applies to some services but it “does not cover most [durable medical equipment], enteral and parenteral nutrients, supplies, and equipment.”

He noted that under the regulation, “if the physician personally performs the services, it would not be [considered] a referral. What exactly that means remains to be fleshed out by [the Centers for Medicare and Medicaid Services], but I would not advise physicians to try to provide [durable medical equipment] personally.”

The language in the statute generally says that services eligible for the exception “are those which are integrally tied to the core practice of the physician,” Mr. Teplitzky said. “That's become fairly controversial. In some cases physicians have wanted to [include] things that normally they would never do, but would refer their patient to someone else for and they would provide the service or supplies and would bill for them.

“I believe this is an area that's going to be subject to some fair amount of scrutiny … of physicians who are trying to bring things into their practice that they would not ordinarily do, but they go out and hire a doctor as an independent contractor to come in so they could bill it through their service,” he continued.

To be eligible for the exception, the service also has to meet two other criteria, according to Mr. McAnaney:

▸ Supervision. “Basically, the service has to be performed by or supervised by the referring physician, another member of the group, or a physician in the group,” he said, noting that the supervision standard has been quite controversial in the past.

▸ Building. First, the building where the services are performed “has to be a [real structure]—no mobile equipment,” Mr. McAnaney said. Second, the services must be performed “in the same building where group practice is, basically has a full-time office there, open at least 35 hours per week, with the referring physician providing services 30 hours per week.”

If the physician practices in several offices and goes to a different one each day, “you could also provide services in the same building where the referring physician has an office that's open at least 8 hours per week and where the referring physician regularly practices there,” he continued.

Then there is the case where the practice has an office that's open 8 hours per week and a group physician regularly practices there at least 6 hours per week. But in that case, two additional tests must be met: The referring physician must be present to order the designated health services during the patient visit, or a group physician must actually be present when the designated health service is furnished.

On the billing side, “the requirement says services must be billed by the supervising physician, the group, or an entity 'wholly owned by such physician or group,'” Mr. McAnaney said. “The place where this sometimes raises some questions is there are more and more shared facilities or shared equipment in the same building. They still have to meet these requirements, so you have to make sure you can bill for the equipment and you meet those standards.”

BALTIMORE — The newest round of regulations implementing the Stark self-referral legislation has two provisions of particular interest to doctors: one on physician recruitment and the other on in-office ancillary services, several speakers said at a forum sponsored by the American Health Lawyers Association.

Physician recruitment “is clearly the biggest new exception,” said Kevin McAnaney, a lawyer in Washington. Under this phase of Stark II, which took effect in July, a hospital or federally qualified health center can pay to recruit a physician, provided that he or she is either a new physician or is relocating from outside the geographic area, defined as “the area comprised of the lowest number of contiguous zip codes from which the hospital draws at least 75% of its inpatients.”

The relocation provision applies to the doctors' offices, not their residences, and they must either move 25 or more miles away or have 75% new patients in their practice as a result of the move.

“Some people say that the only thing you have to do to meet the exception is meet one of the second two requirements—75% new patients or move 25 miles from the old location. [But] I think you have to move into the geographic service area and meet one of those tests,” he explained.

Baltimore lawyer Sanford Teplitzky agreed. “You have to recruit from outside the geographic area into the geographic area,” he said. For example, “the hospital can't get someone from outside and bring him to one of their satellite facilities that falls outside that [geographic area], even if there's a community need and a community benefit.”

Another important exception has to do with in-office ancillary services. Mr. McAnaney warned, however, that the exception applies to some services but it “does not cover most [durable medical equipment], enteral and parenteral nutrients, supplies, and equipment.”

He noted that under the regulation, “if the physician personally performs the services, it would not be [considered] a referral. What exactly that means remains to be fleshed out by [the Centers for Medicare and Medicaid Services], but I would not advise physicians to try to provide [durable medical equipment] personally.”

The language in the statute generally says that services eligible for the exception “are those which are integrally tied to the core practice of the physician,” Mr. Teplitzky said. “That's become fairly controversial. In some cases physicians have wanted to [include] things that normally they would never do, but would refer their patient to someone else for and they would provide the service or supplies and would bill for them.

“I believe this is an area that's going to be subject to some fair amount of scrutiny … of physicians who are trying to bring things into their practice that they would not ordinarily do, but they go out and hire a doctor as an independent contractor to come in so they could bill it through their service,” he continued.

To be eligible for the exception, the service also has to meet two other criteria, according to Mr. McAnaney:

▸ Supervision. “Basically, the service has to be performed by or supervised by the referring physician, another member of the group, or a physician in the group,” he said, noting that the supervision standard has been quite controversial in the past.

▸ Building. First, the building where the services are performed “has to be a [real structure]—no mobile equipment,” Mr. McAnaney said. Second, the services must be performed “in the same building where group practice is, basically has a full-time office there, open at least 35 hours per week, with the referring physician providing services 30 hours per week.”

If the physician practices in several offices and goes to a different one each day, “you could also provide services in the same building where the referring physician has an office that's open at least 8 hours per week and where the referring physician regularly practices there,” he continued.

Then there is the case where the practice has an office that's open 8 hours per week and a group physician regularly practices there at least 6 hours per week. But in that case, two additional tests must be met: The referring physician must be present to order the designated health services during the patient visit, or a group physician must actually be present when the designated health service is furnished.

On the billing side, “the requirement says services must be billed by the supervising physician, the group, or an entity 'wholly owned by such physician or group,'” Mr. McAnaney said. “The place where this sometimes raises some questions is there are more and more shared facilities or shared equipment in the same building. They still have to meet these requirements, so you have to make sure you can bill for the equipment and you meet those standards.”

BALTIMORE — The newest round of regulations implementing the Stark self-referral legislation has two provisions of particular interest to doctors: one on physician recruitment and the other on in-office ancillary services, several speakers said at a forum sponsored by the American Health Lawyers Association.

Physician recruitment “is clearly the biggest new exception,” said Kevin McAnaney, a lawyer in Washington. Under this phase of Stark II, which took effect in July, a hospital or federally qualified health center can pay to recruit a physician, provided that he or she is either a new physician or is relocating from outside the geographic area, defined as “the area comprised of the lowest number of contiguous zip codes from which the hospital draws at least 75% of its inpatients.”

The relocation provision applies to the doctors' offices, not their residences, and they must either move 25 or more miles away or have 75% new patients in their practice as a result of the move.

“Some people say that the only thing you have to do to meet the exception is meet one of the second two requirements—75% new patients or move 25 miles from the old location. [But] I think you have to move into the geographic service area and meet one of those tests,” he explained.

Baltimore lawyer Sanford Teplitzky agreed. “You have to recruit from outside the geographic area into the geographic area,” he said. For example, “the hospital can't get someone from outside and bring him to one of their satellite facilities that falls outside that [geographic area], even if there's a community need and a community benefit.”

Another important exception has to do with in-office ancillary services. Mr. McAnaney warned, however, that the exception applies to some services but it “does not cover most [durable medical equipment], enteral and parenteral nutrients, supplies, and equipment.”

He noted that under the regulation, “if the physician personally performs the services, it would not be [considered] a referral. What exactly that means remains to be fleshed out by [the Centers for Medicare and Medicaid Services], but I would not advise physicians to try to provide [durable medical equipment] personally.”

The language in the statute generally says that services eligible for the exception “are those which are integrally tied to the core practice of the physician,” Mr. Teplitzky said. “That's become fairly controversial. In some cases physicians have wanted to [include] things that normally they would never do, but would refer their patient to someone else for and they would provide the service or supplies and would bill for them.

“I believe this is an area that's going to be subject to some fair amount of scrutiny … of physicians who are trying to bring things into their practice that they would not ordinarily do, but they go out and hire a doctor as an independent contractor to come in so they could bill it through their service,” he continued.

To be eligible for the exception, the service also has to meet two other criteria, according to Mr. McAnaney:

▸ Supervision. “Basically, the service has to be performed by or supervised by the referring physician, another member of the group, or a physician in the group,” he said, noting that the supervision standard has been quite controversial in the past.

▸ Building. First, the building where the services are performed “has to be a [real structure]—no mobile equipment,” Mr. McAnaney said. Second, the services must be performed “in the same building where group practice is, basically has a full-time office there, open at least 35 hours per week, with the referring physician providing services 30 hours per week.”

If the physician practices in several offices and goes to a different one each day, “you could also provide services in the same building where the referring physician has an office that's open at least 8 hours per week and where the referring physician regularly practices there,” he continued.

Then there is the case where the practice has an office that's open 8 hours per week and a group physician regularly practices there at least 6 hours per week. But in that case, two additional tests must be met: The referring physician must be present to order the designated health services during the patient visit, or a group physician must actually be present when the designated health service is furnished.

On the billing side, “the requirement says services must be billed by the supervising physician, the group, or an entity 'wholly owned by such physician or group,'” Mr. McAnaney said. “The place where this sometimes raises some questions is there are more and more shared facilities or shared equipment in the same building. They still have to meet these requirements, so you have to make sure you can bill for the equipment and you meet those standards.”