|
In response to a dramatic increase in the volume and cost of radiation therapy and other ancillaries furnished to Medicare patients in referring physicians' offices, the Medicare Payment Advisory Commission (MedPac)--which advises Congress on Medicare payment issues--is considering changes to the Stark Law's in-office ancillary services exception and certain physician payment reforms. While MedPac only recommends changes, its recommendations typically receive serious consideration from Congress and the Centers for Medicare & Medicaid Services (CMS), and often become law.
 An eventual decision by Congress or CMS to adopt the more far-reaching changes to the in-office exception under consideration could determine whether Medicare patients receive radiation therapy from radiation oncologist-only practices, multispecialty physician groups, hospitals or freestanding radiation therapy centers. In addition, the changes could reduce the market size for manufacturers of linear accelerators and other radiation therapy equipment by making it illegal, less profitable and/or more difficult for physician groups other than radiation oncologist-only practices to use the equipment to treat Medicare patients.
In-office exception
Understanding what may lie ahead requires a firm grasp of the Stark Law's self-referral prohibition and the in-office exception. Unless an exception applies, the Stark Law prohibits a physician from making a "referral" of a patient for "designated health services" (DHS), including radiation therapy services and supplies, covered by Medicare to a physician group, hospital or other provider with which the physician has an ownership or compensation relationship. The Stark Law also prohibits the physician group or other DHS provider from billing Medicare for DHS provided pursuant to a prohibited referral.
The in-office exception allows owners and employees of a medical practice that qualifies as a "group practice" under the Stark Law to refer Medicare patients within the group for radiation therapy services and other DHS consistent with the Stark Law. The group practice requirements are intended to ensure that the medical practice is clinically, financially and operationally integrated and not merely a loose affiliation of physicians for purposes of sharing profits from referrals.
If the group satisfies the group practice requirements, its physicians' in-group Medicare patient referrals for DHS must satisfy the in-office exception, which requires the DHS to be furnished personally by the referring physician; a radiation oncologist or other physician who belongs to the same group practice as the referring physician; or an individual who is supervised by the referring physician or another physician in the group practice.
A radiation oncologist's request for radiation therapy or ancillary services necessary for, and integral to, the provision of radiation therapy doesn't constitute a "referral" (and wouldn't require a Stark Law exception) if the test or service is furnished by (or under the supervision of): the radiation oncologist; a physician employed by the same practice as the radiation oncologist; or a physician who contracts with the radiation oncologist's group practice to furnish or supervise such procedures while on site at the practice's facilities. Accordingly, a radiation oncologist in a single-specialty radiation oncology practice generally wouldn't need to rely on the in-office exception (or another Stark Law exception) for orders of radiation therapy services for Medicare patients.
In-office radiation therapy
During its January and March meetings, MedPac considered three options for addressing its perception that the financial incentives of the fee-for-service payment system under the Medicare Physician Fee Schedule (MPFS) (i.e., more services mean more fees) are causing multispecialty groups to overutilize radiation therapy. MedPac noted that Medicare paid $104 million to multispecialty physician groups for radiation therapy in 2008--an 84 percent increase from 2003, although multispecialty groups' share of overall Medicare radiation therapy spending remained at 5 percent.
Option #1--Total exclusion: The most far-reaching option is to exclude radiation therapy from the in-office exception. The result: A physician in a multispecialty group practice couldn't refer a patient to another physician or therapist in the practice for radiation therapy. For example, a medical oncologist in an integrated oncology practice couldn't refer a patient for radiation therapy to a radiation oncologist in the same practice. This option would benefit single-specialty radiation oncology practices, hospitals and other radiation therapy providers by eliminating competition from multispecialty group practices.
Option #2--Exclusion unless clinical integration: Another option is to prohibit self-referral for radiation therapy unless the group practice meets new, more demanding clinical integration requirements. MedPac would need to undertake further analysis to define the clinical integration requirements. For example, in its June report, MedPac indicated that each physician in the group could be required to provide a substantial share (e.g., 90 percent) of his services through the group. The proposed substantial share requirement would be similar to the existing Stark group practice requirement that group owners and employees making DHS referrals collectively provide 75 percent of their patient care services through the group practice, except that the requirement would be applied to each physician individually and also apply to independent contractor physicians hired to supervise DHS. Thus, for example, a urology practice couldn't engage a radiation oncologist on less than a 90 percent of full-time basis to supervise the provision of radiation therapy to prostate cancer patients. MedPac believes that this approach would increase the likelihood of realizing the quality of care benefits of an integrated practice such as group physicians interacting with each other more frequently, sharing information about patients and following similar clinical pathways. This approach would also favor larger multispecialty practices with the cancer patient volume to support a 90-percent or full-time radiation oncologist.
Option #3--Patient accuracy: The payment accuracy option is a proposal to adjust payment rates to ensure that they're equitable and accurately reflect the costs of providing the services. For example, Medicare could reduce payment rates for self-referred services or improve payment accuracy by bundling payments for ancillaries with payment for other services provided during the same patient encounter or episode of care.
Next steps
MedPac may issue a recommendation from among the menu of options for addressing perceived overutilization of radiation therapy and other ancillaries by referring physician groups later this year, but the complexity of the issue may delay a recommendation into 2011.
Public discussions at recent MedPac meetings--as well as the contents of its June report--indicate that MedPac believes that the long-term solution for overutilization is either bundled payments to providers for an entire episode of care or other payment system reforms that reward providers of coordinated care that constrain the volume of services and improve quality of care. However, due to federal budget pressures and other short-term considerations, we may see an incremental approach such as one of the options for reforming the in-office exception. In any case, Congress or CMS likely won't implement any recommendation before 2012.
Daniel F. Gottlieb, Esq., is a Chicago-based partner in the health law department of the law firm McDermott Will & Emery LLP.
|