Fraud and abuse. Understanding the Stark II proposed regulations

HCFA's recently published proposed regulations for implementing Stark II legislation have significant implications regarding Medicare and Medicaid payments for physician referrals, and likely will be the most extensive governmental guidance available on the Stark laws. While final regulations will not be issued for some time, the availability of the guidance provided by these expanded definitions increases the risk that the government will increase its antifraud and abuse activities, particularly with respect to those aspects of the statutes that were previously unclear. Physicians and hospitals should become familiar with the new definitions of designated health services for which self-referrals are prohibited, particularly inpatient and outpatient hospital services, whose inclusion as designated health services significantly expands the scope of the Stark prohibitions to many common hospital/physician transactions. They also should begin to lay plans to ensure compliance with the new regulations and to map cut strategies for revising existing organizational structures and financial arrangements.