Stark Reality on Louisiana Medical News

Stark Reality

By: CINDY SANDERS

Multi-Specialty Practices Anxiously Await MedPac Recommendations for Imaging

Over the past few years, there has been a gradual chipping away of allowed reimbursements for imaging. Tightening Stark regulations have largely been driven by concern over the rising costs of advanced diagnostic imaging and soaring utilization rates.

Now, the Medicare Patient Advisory Committee (MedPac) has set its sights on addressing changes to the Stark in-office exception, which would deeply impact multi-specialty practices that own diagnostic imaging systems. Unless an exception is in place, the Stark Law prohibits a physician from referring a patient for imaging and other designated health services (DHS) in which the physician has some ownership or compensation relationship. Although MedPac has no authority to implement changes to the Medicare reimbursement structure or Stark regulations, the independent organization serves as a neutral advisor to Congress and the Centers for Medicare & Medicaid Services (CMS), and MedPac recommendations carry a lot of weight in the nation’s capital.

“There have been a number of independent studies, both by the government and outside researchers, that show a patient is more likely to receive diagnostic tests — imaging, as well as laboratory tests — if the referring or ordering physician owns the imaging equipment or diagnostic equipment,” noted Daniel F. Gottlieb, Esq., a partner in the Chicago office of McDermott, Will & Emery LLP. The lawyer, who is part of the international firm’s health industry advisory practice group, has written a number of articles for industry publications on this topic and specializes in advising clients on Stark and other Medicare compliance issues. “The imaging industry has had somewhat of a target on its back for awhile now.”

There are several ideas on the table to reign in spending and over utilization. MedPac probably won’t come out with a firm statement on their recommended path until much later in the year. However, there are three alternatives being carefully weighed at this point.

“The first option is to exclude advanced imaging — PET, MRI and CT — from the in-office exception, and that would be the most drastic response,” noted Gottlieb.

Currently, groups that own imaging equipment can bill for studies conducted in their office. An orthopedic surgeon in a group is allowed to refer a patient to a radiologist in the practice, who then supervises and interprets the scan. If, however, MedPac’s most stringent recommendations are adopted, imaging studies that require advance scheduling or preparation by the patient would no longer be a reimbursable option under Medicare. In this scenario, a simple X-ray could probably still be performed, but the advanced imaging options would be prohibited.

“The result would be that multi-specialty practices couldn’t self-refer Medicare patients for those services excluded from the in-office exception,” Gottlieb continued. He added that while the practices could still own the expensive equipment, this measure would eliminate a large user population. Furthermore, some states have “mini Stark” laws that could potentially apply Stark regulations to other payers.

A step down from this option would be to ramp up requirements for clinical integration. However, Gottlieb said MedPac hasn’t defined “clinical integration” at this point. One approach to defining clinical integration would be to require each physician in the group to provide a ‘substantial’ portion of their service through the group. One number that has been thrown around a good bit is that 75 percent of a physician’s workload would need to come through the group practice.

“That would mean a multi-specialty group couldn’t contract with a radiologist on a part-time basis of less than 75 percent time,” he explained.

The least punitive option is a basic reduction in payment rates for self-referred imaging services. In this scenario, the in-office exception would remain in place for imaging services, but reimbursements would be lower for studies generated by the group practice in comparison to those conducted by referral from an outside source with no financial ties to the practice. In addition, MedPac could recommend a payment reduction only for advanced imaging and other imaging modalities that require prior scheduling or preparation by the patient.

Like many issues, there are conflicting objectives to be weighed. “Based on the studies, there appears to be skewed clinical decision-making based on the financial interest of the referring physician … the government wants to avoid that,” said Gottlieb. “On the other hand, the government wants to encourage clinical integration,” he continued, adding that multi-specialty practices have the ability to work as a coordinated team to ensure high quality, efficient, safe care for patients. “The argument is that the patient is benefiting from receiving all the services the patient needs in an integrated care setting.”

As with most changes, there are winners and losers. If regulations are tightened for multi-specialty practices, the big beneficiaries would be single specialty radiology groups, independent imaging centers and hospitals. Not surprisingly, the American College of Radiology (ACR) and the American Society for Therapeutic Radiology and Oncology (ASTRO) have come out strongly in favor of more stringent limits on in-office referrals for imaging and other ancillary services. “They raise legitimate concerns about quality and over-utilization, but they also want to change the competitive landscape to favor radiologists over referring specialists,” Gottlieb said.

Gottlieb concluded, “MedPac is trying to balance the goals of cost reduction with the goals of quality care. Because it’s somewhat of a conundrum, it’s unclear what direction they will head.” What is known for sure, though, is that imaging isn’t the only service likely to feel the impact of regulatory change. Outpatient rehab, radiation therapy and lab tests are also under the MedPac microscope.