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New Health Bill Proposes to Eliminate Stark Law Exception for Certain In-Office Ancillary Services

Representative Jackie Spier (D-Calif) has introduced a bill (HR 2914) that would eliminate advanced diagnostic imaging, anatomic pathology, radiation therapy, and physical therapy services from the Stark Law’s in-office ancillary services exception (IOASE).  The stated goal of the Promoting Integrity in Medicare Act of 2013 (PIMA) is to cut unnecessary Medicare spending, reduce overutilization of complex services, and narrow the IOASE to better reflect congressional intent.

PIMA creates a new definition under the Stark Law for “specified non-ancillary services” and excludes such services from protection under the IOASE.  A specified non-ancillary service is defined as a service that is “not usually provided and completed during an office visit to a physician’s office in which the service is determined to be necessary” and includes: 

  • Anatomic pathology services, including the technical or professional component of the following:

  • Surgical pathology (cytopathology, mematology, blood banking, pathology consultation and clinical laboratory interpretation services), 

  • Radiation therapy services

  • Advanced diagnostic imaging studies, including diagnostic MRI, computed tomography, and nuclear medicine

  • Physical therapy services

In addition to excluding these complex services from the IOASE, PIMA also increases the civil monetary penalties (CMPs) applicable to referrals for specified non-ancillary services and creates new compliance review procedures involving HHS and the OIG.  The CMP for improper claims relating to specified non-ancillary services is $25,000 ($15,000 for all other improper claims) and the CMP for specified non-ancillary service circumvention schemes is $150,000 ($100,000 for all other circumvention schemes). The legislation requires that HHS and the OIG review compliance with PIMA’s new prohibition and specifically target types of entities that the Secretary determines represent a high risk of noncompliance.  PIMA suggests that HHS and OIG review such entities through prepayment reviews, claims audits, focused medical reviews, and computer algorithms designed to identify billing and payment abnormalities.

Finally, the bill clarifies that:

  • the legislation does not affect the Stark Law exceptions for rural providers,

  • physician groups participating in ACOs in the Medicare Shared Savings Program can continue to provide integrated services, and

  • physician practices billing for the technical component or professional component of a specified non-ancillary service are subject to the Stark Law’s restrictions even if billing in compliance with Medicare’s anti-markup rule.

PIMA comes in the wake of three recent GAO reports that have found an increase in utilization ofadvanced imaging servicesanatomic pathology services, and prostate cancer treatments where providers self-refer.  Spier’s office reports that a fourth GAO report on self-referral in physical therapy services is expected later this year.  

The bill has broad-based support from a number of health care industry trade associations and coalitions, including the Alliance for Integrity in Medicare (AIM), which is composed of the American Clinical Laboratory Association (ACLA), the American College of Radiology, the American Physical Therapy Association, the American Society for Clinical Pathology, the American Society for Radiation Oncology, Association for Quality Imaging, the College of American Pathologists, and Radiology Business Management Association.  As noted in a recent post, the ACLA, in particular, has taken a strong stance against abusive self-referral arrangements and has advocated for many years for CMS to close the loopholes that have allowed these arrangements to proliferate.  Given that CMS has repeatedly failed to heed the call – even after Dr. Jean Mitchell’s April 2012 study  identified a link between self-referrals by urologists and increased utilization – advocates like ACLA wisely chose to look to Congress instead for relief.  CMS has disappointed many in the laboratory industry with its apparent efforts to hinder abusive self-referral arrangements by imposing reimbursement cuts applicable to all laboratories providing pathology services – even independent laboratories that do not (and cannot) order biopsies.   Although HR 2914 has the support of many well-known organizations, its success remains to be seen given that Republicans in Congress typically take a hands-off approach when it comes to fixing the Stark Law. 

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume III, Number 220
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About this Author

Theresa Carnagie, Health Law Attorney, MIntz Levin Law Firm
Member

Theresa counsels health care clients on a variety of transactional, regulatory, and fraud and abuse matters.

Theresa focuses much of her practice on counseling health plans, pharmacy benefit managers, pharmacies, device manufacturers, and distributors on regulatory and compliance matters. Her practice extends to counseling on drug pricing and reimbursement issues, Medicare Advantage and Medicare Part D compliance, and the regulatory requirements under the Affordable Care Act and state health insurance exchanges. Theresa has extensive experience...

202-661-8710
Karen Lovitch Mintz DC Health Care Compliance, Fraud & Abuse, and Regulatory Counseling Medicare, Medicaid & Commercial Coverage & Reimbursement Health Care Transactions Health Care Transactional Due Diligence Health Care Enforcement & Investigations
Member

Karen focuses her practice on representing health care companies in regulatory, transactional, and operational matters. She has a substantial health care regulatory background and advises clients on matters pertaining to the federal anti-kickback statute, the Stark law, state statutes prohibiting kickbacks and self-referrals, the Clinical Laboratory Improvement Amendments of 1988, and the federal Physician Payments Sunshine Act. Karen often applies her strategic insight on these matters to counsel companies on regulatory issues arising in connection with mergers and acquisitions and other...

202-434-7324
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