Stark Law loophole linked to overutilization


An exception in the Stark Law for "in-house, ancillary services" was meant to make patient care more efficient; but when some practices started buying equipment to offer costly diagnostic tests and radiation therapy under the same corporate roof, testing became a cash cow that may have thwarted the intent of the law, according to The Wall Street Journal. As a result, the former congressman for whom the law was named, Rep. Pete Stark (D-California), told the WSJ he probably wouldn't vote for the law today unless it was changed. 

The Stark Law limits physician referrals of certain healthcare services in Medicare and Medicaid if doctors have a financial relationship with whoever renders the services. The law's main purpose is to reduce improperly influenced medical decisions. But regulators have rarely challenged those who exploit the law's in-office exception, the WSJ noted. And government-sponsored insurance may be paying through the nose as a result.

"Self-referral has become common practice among many U.S. physician groups, which refer anything from lab services to MRIs to entities from which they benefit financially," the WSJ wrote.

Consider the case of 21st Century Oncology Holdings Inc., a national chain of cancer treatment practices that is being investigated by the Office of Inspector General for utilization of costly bladder cancer tests known as fluorescent in situ hybridization, or FISH tests. 21st Century Oncology's two current pathologists each billed Medicare more for the computer-assisted version of this test than any other pathologist or lab in the country in 2012, the WSJ noted. The test pays between $700 and $1000, while an older test used for the same purpose pays up to $84 in the provider's lab's region, the WSJ reported.

Though the company says its urologists order FISH tests for justifiable medical reasons, there's question about whether their doctors' compensation is linked to orders for these tests, the WSJ noted. But a spokesman for 21st Century Oncology told the WSJ that urologists receive bonuses tied to the lab's overall test revenue, which is allowed under the Stark Law.   

For more:
- here's the WSJ article

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