Stark II Analysis and
Summary
Other Key Definitions
Section 411.351 of the
regulations defines the designated health services ("DHS") covered
by the law, as well as other key terms.
In order for a referral to be covered under Stark II, it
must be for one of the DHS listed in the statute. The final rule clarifies
that, unless otherwise specifically stated, the term "DHS" means
only a DHS that is payable, in whole or in part, by Medicare, but does not
include services reimbursed by Medicare as part of a composite rate such as
services provided by an ESRD facility or an ASC, unless the DHS category
itself is paid on a composite rate (e.g. inpatient and
outpatient hospital services). Referrals for DHS paid by private payors are
not covered by the Stark law.
The rule provides additional clarification with respect
to the individual DHS categories.
-
Clinical Laboratory Services. HCFA has
defined these services by specific CPT and HCPCS codes. The initial list
of covered codes is included as an attachment to the Federal Register
notice and will be updated annually through HCFA's yearly physician fee
schedule notice which is published every Fall. The list will also be
placed on a HCFA web site. Codes not included in the listing are not
considered clinical laboratory services for purposes of Stark.
The initial list includes all of the 80,000 series CPT
codes except for certain blood component collection services and all HCPCS
level 2 codes for other clinical laboratory services. The professional
component of a clinical laboratory test is considered a DSH if it is listed
as such in the code description.
The reference to specific codes should remove any
ambiguity with respect to whether a test is covered by the Stark law.
-
Durable Medical Equipment. Durable medical
equipment ("DME") is defined by reference to the Medicare
statute and section 414.212 of the Medicare regulations related to
coverage. HCFA, in the preamble to the Stark II regulations, states that
DME are all items classified as DME in the Durable Medical Equipment,
Prosthetics/Orthotics and Supplies ("DMEPOS") fee schedule. HCFA
explains that those categories are mutually exclusive so no item can fall
into more than one category. The distinction between DME and other similar
items such as prosthetic devices is important because most DME does not
qualify for the exception for in-office ancillary services. (See III.B.4.
above.)
-
Home Health Services. Home health services
are defined with reference to the coverage provisions of the Medicare
statute and regulations. Essentially, they are services provided by
Medicare-certified home health agencies that meet the coverage criteria
for home health services. (See also VII. below.)
-
Inpatient and Outpatient Hospital Services.
Inpatient and outpatient hospital services are defined by reference to
payment and coverage provisions of the Medicare statute and include
services of psychiatric hospitals and rural primary care hospitals. They
also include services provided by others "under arrangement"
with a hospital. Services of certain professionals, including physicians,
nurse practitioners, and physician assistants, are excluded from the
definition if they are paid separately (even if billed by the hospital
under a reassignment) and not as part of the hospital inpatient or
outpatient service.
-
Outpatient Prescription Drugs. The
regulations define outpatient prescription drugs as all prescription drugs
covered by Medicare Part B. This is broader than the January 1998
proposal, but certainly clearer. Under this more expansive approach,
chemotherapy drugs, allergenic extracts, and any other drug, even if not
self-administered, and even if prepared or mixed and furnished in the
physician's office, are DHS. There are limited exceptions for EPO
and other drugs provided by ESRD facilities and for certain preventive
vaccinations and immunizations if subject to Medicare frequency
limits. However, many of these same drugs that are now DHS are eligible
for the in-office exception under the final rule if dispensed in the
physician's office. HCFA also clarifies that physicians are not required
to pass on drug discounts to Medicare, unless required by other laws.
-
Parenteral and Enteral ("P&E")
Nutrients, Equipment and Supplies. Parenteral nutrients, equipment and
supplies are items and supplies needed to provide nutrition to patients
with permanent, severe pathology of the alimentary tract that does not
allow absorption of sufficient nutrients to maintain strength. Enteral
nutrients, equipment and supplies are items and supplies needed to provide
enteral nutrition to patients with functioning gastrointestinal tracts,
who, due to pathology, cannot maintain weight and strength.
Referrals for "P&E" are not eligible for
the exception for in-office ancillary services. HCFA specifically declined
to create a further exception to permit self-referrals for P&E.
-
Physical Therapy, Occupational Therapy and
Speech-Language Pathology Services. HCFA has defined these services
with reference to specific CPT and HCPCS codes which are listed in an
attachment to the Federal Register notice and which HCFA will place
on a web site. The listing will be reviewed annually and published as part
of the Medicare physician fee schedule rule. The current listing includes
most of the physical medicine and rehabilitation codes in the 97,000
series of the CPT. Also included are cardiac rehabilitation codes, limb
muscle testing and pulse oximetry if for the purpose of testing functional
capacity. Electromyography ("EMGs") are not included in the
definition. If a service is not included in the listing, it is not a
therapy service under this definition.
The definition in the final rule is much more narrow
than the all-encompassing definition in the proposed rule.
-
Prosthetics, Orthotics and Prosethetic Devices
and Supplies. HCFA's approach here is similar to that taken with
respect to the definition of DME. HCFA relies on the definition in section
1861 of the Medicare law and refers providers to the DMEPOS fee schedule.
Items or services classified as prosthetics, orthotics or prosthetic
devices and supplies ("O&P") in that fee schedule will be
considered such for purposes of the Stark law.
Orthotics are defined as leg, arm, back or neck
braces listed in section 1861(s)(9) of the Act. Prosthetics are
artificial legs, arms and eyes as defined in section 1861(s)(9). Prosthetic
devices are devices (other than dental) that replace all or part of an
internal body organ, including colostomy bags and one pair of conventional
eyeglasses or contact lenses furnished with cataract surgery with the
insertion of an intraocular lens. Prosthetic supplies are supplies
necessary for the effective use of a prosthetic device (including supplies
related to colostomy care).
HCFA notes that some O&P have HCPCS codes but are
not in the DMEPOS fee schedule. If the item is not listed in the DMEPOS fee
schedule, HCFA recommends that providers contact their carriers if they are
unsure whether an item is considered O&P.
HCFA notes that splints, casts and other devices
used to treat fractures and dislocations are not O&P and not a DHS
because they are in a separate benefit category in the Medicare statute.
HCFA also clarifies that O&P provided in an ASC and paid under the ASC
facility fee, will not be considered O&P under the Stark law.
-
Radiation Therapy Services and Supplies.
Services in this category are also specifically listed by CPT codes, and
will be placed on a HCFA web site and reviewed annually. Nuclear
medicine procedures are not included in the definition of radiation
therapy services. In addition, HCFA states in the preamble that it has
declined to exclude prostate brachytherapy from the definition of
radiation therapy.
-
Radiology and Certain Other Imaging Services.
Again, HCFA has opted to define this term with respect to specific CPT and
HCPCS codes. The list includes the professional and technical components
of any diagnostic test or procedure using X-rays, ultrasound, or other
imaging services, computerized axial tomography (CAT scans) or MRI. It is
drawn mostly from the 70,000 series of CPT, but also includes some echo,
doppler and vascular ultrasound codes from the 93,000 series, and a few
HCPCS codes that involve radiology or other imaging technology.
It does not include certain
imaging procedures that require the insertion of a needle, catheter, tube or
probe (e.g., endoscopies and cardiac catheterization). Also excluded are
radiology procedures integral to the performance of and performed during,
nonradiological medical procedures, and screening mammographies.
|back
to top|
-
Consultation. The
Stark law creates a narrow exception from the definition of
"referral" for certain requests for DHS by pathologists,
radiation oncologists or diagnostic radiologists if pursuant to a
"consultation." In this regulation, HCFA defines
"consultation" as (1) a request by another physician for the
physician's opinion regarding a specialized medical problem; (2) the need
for which is documented in the medical record; and (3) for which the
consultant provides a written report to the requesting physician. For
radiation therapy, a course of treatment meets the definition of
consultation provided the radiation oncologist who communicates with the
referring physician on a regular basis. Thus, the service does not
necessarily have to be paid for as a consult.
-
Fair Market Value.
This term appears in most of the compensation exceptions. The definition
in the final rule is almost the same as the January 1998 proposal. It
defines "fair market value" as the value in an arm's-length
transaction, consistent with the general market value. "General
market value" is defined as the price an asset brings, or the
compensation that would be included in a service agreement, as the result
of bona fide bargaining between well-informed buyers and sellers who are
not otherwise in a position to generate business for the other party on
the date of the acquisition or time of the service agreement. The fair
market price is the price at which other sales have been consummated for
similar assets in a particular market, and for services, the compensation
included in other bona fide service agreements with comparable terms at
the time of the agreement.
With respect to the
exception for rentals and leases (which exceptions are not included in Phase
I and will be addressed in Phase II), the regulations state that "fair
market value" means the value of a rental property for general
commercial purposes which does not take into account its intended use.
The value of rental space may not be adjusted to reflect the additional
value the lessee places on proximity or convenience to the lessor, if the
lessor is a source of referrals to the lessee.
There is also new language
in the definition of "fair market value" which states that a
rental payment does not take into account intended use if it takes into
account costs incurred by the lessor in developing, upgrading, or
maintaining the property or its improvements.
In the preamble, HCFA
responds to questions related to how a provider should document fair market
value. HCFA states that it will not give formal guidance and that
documentation depends on the circumstances. However, the Agency notes that
for rentals of office space, a list of comparables would be acceptable. Also
acceptable, in some situations, would be an appraisal from a qualified
independent expert.
-
Employee. The
regulations define "employee" with reference to the IRS
definition, which in turn incorporates the state's common law test of
employment. With respect to leased employees, HCFA, in the preamble,
states that they could qualify as employees under Stark if they meet the
IRS test.
-
Immediate Family Member.
The Stark law prohibits referrals for DHS if the referring physician or an
immediate family member has a financial relationship with the entity to
which the service is referred. There is no change in the definition of
this term from the 1995 regulations implementing Stark I. An immediate
family member of a referring physician includes husband or wife; birth or
adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of
a grandparent or grandchild.
-
"Incident to".
The regulations define this term with reference to the requirements of
section 1861(s)(2)(A) of the Act and section 2050 of the Medicare Carriers
Manual. "Incident to" services are services provided by the
physician or his or her employees in the office, under the physician's
direct (in the suite) supervision.
-
Patient Care Services.
The final rule defines "patient care services" to include any
tasks performed by a physician in a group that addresses the medical needs
of a specific patient, or of patients in general (regardless of whether
they involve direct patient encounters), or that generally benefit a
particular practice, even if administrative or managerial in nature. This
term is relevant to the 75 percent test and the "full range of
services" tests which are components of the definition of group
practice. (See IV. C. and D. above.)
-
Referral and Referring
Physician. A "referring physician" is a physician who makes
a referral (as defined below) or who controls referrals made to another
person or entity.
A "referral" is a
request by a physician for, or the ordering of, or the certifying or
recertifying of the need for, any DHS for which payment may be made under
Medicare Part B, including a request for a consultation with another
physician and any test or procedure ordered by or to be performed by (or
under the supervision of) that other physician. Also included in the
definition of "referral" is the establishment of a plan of care
which includes the provision of a DSH, and the certifying or re-certifying
of a plan of care.
Significantly, HCFA has
excluded from the definition of referral any DHS personally performed
or provided by the referring physician. This is a major departure from the
January 1998 proposal. Services performed by any other person, including the
referring physician's employees, or other group practice members are not
considered to be personally performed by the referring physician and thus
would not be excluded from the definition of referral. (They might, however,
be eligible for the physician services exception, or for treatment as
"incident to" services in the group practice compensation test.)
As discussed above, certain
referrals which are pursuant to a consultation by certain types of
physicians are not considered referrals. (See discussion of consultations in
VI. B. 1. above.)
|back
to top|
Back to Stark II Analysis and
Summary main page
| |
