February 1998 AAOS Report

HCFA submits proposed ruling of "Stark II" laws

The Health Care Financing Administration (HCFA) has issued its proposed ruling on how the "Stark II" physician self-referral law will be enforced by the government. A detailed analysis of the proposed ruling will be on the Academy’s home page at http://www.aaos.org in the "What’s New This Week" section in February. The law prohibits physicians from referring Medicare and Medicaid patients to facilities in which they have or a member of their immediate family has a financial interest. In its preliminary review of the proposed rule, the Academy’s Washington’s D.C. office indicates many of the concerns of the orthopaedic community have not been adequately addressed. In 1995, former Academy president James W. Strickland, MD, told a congressional subcommittee of problems with provisions of the law on compensation arrangements, durable medical equipment and shared facilities. The preliminary review found that the only orthopaedic concern addressed involves providing crutches to patients. The proposed rule would allow an exemption for crutches if they are supplied consistent with the in-office ancillary services requirements of "Stark II" and the physician does not get direct or indirect profit from furnishing the crutches. The review also found HCFA takes a broad view of what should be considered remuneration even if it does not result in net profits. A public comment period on the proposed rule ends March 10.

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