HEALTHCARE BRIEF - AUGUST 2006

Proposed CMS Physician Fee Schedule Rule would Prohibit Physician Ownership of Nuclear Imaging Centers

On August 8^th the Centers for Medicare and Medicaid Services ("CMS") proposed a new rule imposing a 5% "across the board" reduction in payments for Part B physician services.  As part of that rule, CMS revisited its existing position on physician ownership of nuclear imaging centers, and concluded that self-referrals pose the same risks for PET scanners and other nuclear imaging devices posed by other forms of prohibited self-referrals. 

CMS' proposal would add nuclear imaging services to the list of "designated health services" under the Stark physician anti-referral law.  The so-called "Stark" law was intended to reduce what Congress believed were unnecessary and excessive referrals by physicians to entities in which they had an ownership interest. 

In the August 8^th proposal, CMS cited to a report published by the Journal of Radiology that examined self-referral activity for traditional imaging services.  According to CMS "the research showed that approximately half of the imaging performed by self-referrers ceased when these self referrers lost their financial interest."   Notably, CMS made no reference to the clinical benefit that may or may not be associated with the loss of imaging.    

CMS recognizes that as a practical matter inclusion of nuclear imaging services as a "designated health service" will require physicians holding ownership interests in nuclear imaging equipment and services to divest them.  CMS even acknowledged some culpability for creating an apparent loophole in the self-referral restrictions in its prior publications.  

SIGNIFICANTLY, CMS is soliciting physician input into how the impact on existing physician arrangements can be minimized.  Delays in application of the rule, and grandfathering certain existing arrangements, have been suggested.  Interested physicians should submit comments and suggestions for minimizing the impact no later than September 30, 2006.   

The Law Offices of David E Oles is pleased to assist you in drafting and submitting comments to CMS, and determining if your current arrangements would be impacted by the proposed self-referral restrictions.  Please call us today for an initial consultation.

                                                                                            Dave