Nuclear Medicine And The Stark Truth: What Are The Rules?

Originally published in The Journal Of Nuclear Medicine, Vol. 48, No. 7, July 2007

For years, the Stark Law had little if anything to do with nuclear medicine. The federal prohibition against a physician's referral of a Medicare beneficiary to a health care entity with which that physician (or a member of his or her immediate family) had a financial relationship, unless an exception applied, had no relationship to nuclear imaging, because nuclear studies were not ''designated health services'' (DHS). Although the statutory Stark provisions defined DHS to include radiology as well as radiation therapy services and supplies, the Centers for Medicare and Medicaid Services (CMS) acted in January 2001 to issue the Phase I Stark II final regulations and declared that nuclear medicine was not a DHS.

But in its 2006 Medicare Physician Fee Schedule final rule, CMS revised the definitions of ''radiology services'' and ''radiation therapy services'' to specifically include nuclear medicine. In addition, CMS revised its list of Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes that constitute DHS to include codes describing diagnostic and therapeutic nuclear medicine procedures. The list of CPT and HCPCS codes has expanded to include 78000 and 79000 series CPT codes as well as the corresponding A, C, and Q series HCPCS codes used to describe radiopharmaceuticals administered during the performance of the listed procedures. In discussing its reasons for including nuclear medicine in the definition of DHS, CMS noted the rapid growth in utilization (and possible overutilization) of nuclear medicine services over the relatively short period that Medicare has covered such services.

CMS made January 1, 2007, the effective date of this change. As a result, since the beginning of this year a physician could not hold an ownership interest in an imaging center that provides PET and/or other nuclear medicine services and refer Medicare or Medicaid patients to the entity for the provision of such services without running afoul of the Stark prohibition on physician self referrals (unless the physician's financial relationship fit within an exception). It is timely, then, to look at the basic Stark rules as they apply to nuclear medicine practice, including prohibitions and stipulations governing physician referrals of Medicare or Medicaid patients for a nuclear medicine service (both technical and professional components) in the physician's group practice.

Basic Prohibition

The Stark law generally prohibits a physician from referring a Medicare or Medicaid patient to an entity in which the physician has a financial interest. Specifically, the Stark law states that:

[A] physician who has a direct or indirect financial relationship with an entity, or who has an immediate family member who has a direct or indirect financial relationship with the entity, may not make a referral to that entity for the furnishing of DHS for which payment otherwise may be made under Medicare [or Medicaid] (42 CFR 411.353(a)).

The Stark law can be particularly problematic for physicians, because it does not require proof that the physician actually intended to violate the law. The government needs merely demonstrate that a physician referred a Medicare or Medicaid patient to an entity in which the physician (or immediate family member) had a financial interest and that referral was not protected under an exception. Fines and/or penalties may be imposed even if the physician did not know or did not intend to violate the law.

Definitions

Each of the words and phrases underlined in the previous paragraphs has a specific definition under the Stark law.

Direct or indirect financial relationship is defined as: (1) Ownership or investment interest. An ownership or investment interest by a...