It finally happened. The Centers for Medicare and Medicaid Services (“CMS”) released on August 8, 2005 as part of the changes to Medicare reimbursement for the 2006 Physician Fee Schedule a proposed change to federal regulations that would include diagnostic nuclear medicine services to the type of radiology services that are subject to the federal physician self-referral statute otherwise known as the Stark Law.
CMS actually issued a proposed regulation and the public has until September 30, 2005 to provide any comments to CMS on adding nuclear medicine services to the Stark Law and on any other aspects of CMS’ proposed changes to the 2006 Medicare Physician Fee Schedule. After CMS has received public comments on all of the proposed changes, CMS generally will finalize the proposed changes approximately 60 days later and prior to January 1, 2006.
Many physicians and other types of healthcare providers have been looking in their crystal ball to see if and when CMS may make nuclear medicine services subject to the Stark Law’s physician referral prohibition. That answer came on August 8, 2005 in the middle of the 302 page proposed revisions by CMS to the payment requirements for physician services beginning in 2006.
The addition of nuclear medicine services to the Stark Law will primarily affect physicians that have an ownership interest in a free-standing facility that provides nuclear medicine procedures through the use of a positron emission tomography (PET) scanner or other equipment. As emphasized by CMS in this proposed change, physician owners or investors in a facility that provides nuclear medicine services will have to divest their ownership or investment interest or be prohibited from submitting claims to Medicare or billing the beneficiary or any entity for the nuclear medicine services referred by physician-owners and performed with the physician-owned equipment unless the arrangement falls within an exception to the Stark Law.
The Stark Law applies only to a physician’s referrals of Medicare patients for certain designated health services to an entity that the physician or a member of the physician’s immediate family has a financial relationship. Physicians should also keep in mind that an “entity” for the Stark Law also includes the physician’s practice if the physician desires to bill for nuclear medicine services through his or her practice.
The Stark Law also prohibits the entity (i.e. facility or practice) providing the designated health service from submitting claims to Medicare or billing the beneficiary or any other entity for Medicare designated health services that are furnished as a result of a referral prohibited by the Stark Law.
In this proposed regulation, CMS attached a list of codes for all diagnostic nuclear medicine procedures, all therapeutic nuclear medicine procedures, and nuclear medicine radio pharmaceuticals that it is proposing be subject to the Stark Law. CMS has requested comments on whether the attached list with this proposed regulation is considered by the health care industry to be accurate and complete.
CMS commented that at the time CMS was preparing the Phase I of the final Stark Law regulations around 2000, the vast majority of nuclear medicine procedures were already subject to the Stark Law because they were primarily performed in hospital facilities rather than in physician-owned free standing facilities. Since publication of Phase I of the final Stark Law regulations in 2001, CMS commented that many more nuclear medicine procedures have been performed in physician offices or in physician-owned free standing facilities. CMS also noted that diagnostic imaging services paid by Medicare grew more rapidly than any other type of physician service between 1999 and 2003. During that period, physician services grew 22% while imaging services grew twice as fast by 45%.
In this proposed regulation, CMS commented that physician-owners or investors of entities that furnish nuclear medicine services and supplies in a manner that satisfies the requirements of the in-office ancillary services exception to the Stark Law would not be affected by this proposed change. In addition, CMS noted that physician ownership of or investment in entities that furnish nuclear medicine services and supplies to residents of rural areas would not be affected by this proposed change.
CMS further commented that if the physician’s ownership or investment interest would lead to a prohibition on his or her referrals to that entity, the physician has two options. First, the physician can stop making referrals to that entity and make referrals to another entity. Second, the physician can divest himself or herself of the interest.
Finally, it is interesting to note that CMS expressly asked for comments on how to minimize the impact on physicians who are currently parties to arrangements that involve nuclear medicine services and supplies by, for example, specifying a delayed effective date of this proposed change or by grandfathering certain arrangements. CMS did not make any further comments regarding potential to delay the effective date of this proposed change or on the types of arrangements that may be grandfathered.