Health Care Reform Law Alert: Group Practices Providing Advanced Imaging Services Face New Requirements
4/5/2010

Physician groups that offer advanced imaging services (i.e., MRI, CT, and PET) should take note of one of the provisions of the newly enacted Patient Protection and Affordable Care Act¹ ("the Act"). Effective immediately, "group practices"² providing such imaging services should make a written disclosure to patients when making a referral for such services to avoid a potential violation of the Stark Law, 42 U.S.C. § 1395nn.

Who Is Affected

Physician group practices³ that rely on the in-office ancillary services exception to the Stark Law⁴ to bill for "designated health services" such as advanced imaging.

Nature of Change

The Act amends the in-office ancillary services exception under the Stark Law to require that a referring physician (a) inform a patient in writing at the time of the advanced imaging referral that the patient may obtain the services from another supplier and (b) provide a list of suppliers in the area in which the patient resides. This requirement applies to magnetic resonance imaging, computed tomography, positron emission tomography, and any other radiology services that the U.S. Department of Health and Human Services specifies by regulation. By its terms, this provision of the Act⁵ applies to services furnished after January 1, 2010; however, because of the wording of the amendment, it is not clear whether it becomes effective immediately as to MRI, CT, and PET, or whether regulations must first be adopted reflecting this requirement.

Recommended Implementation Actions

Failure to provide the notice, once required, would mean that affected group practices could not lawfully bill Medicare for advanced imaging services rendered to patients. Unless the Centers for Medicare & Medicaid Services provides clear, formal guidance concerning the effective date of this requirement, affected group practices should consider promptly implementing a procedure for giving the required notice and maintaining documentation of it in each referred patient's file in the event of a later audit. Lack of this documentation could become the basis for an assertion of an overpayment and a claim for repayment of billed amounts, and, potentially, additional penalties.

For further information concerning this new law, contact a member of the Stoel Rives Health Care Team:

Barbara L. Nay at (503) 294-9643 or blnay@stoel.com
Kelly Knivila at (503) 294-9532 or kknivila@stoel.com
Anthony R. Miles at (206) 386-7577 or armiles@stoel.com

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¹ H.R. 3590, 111th Cong., as amended by H.R. 4872, 111th Cong. (2010).

² Although most organizations that rely on the "group practice" designation under the Stark Law are physician-owned medical groups, sometimes hospitals and other organizations choose to operate physician groups in this manner in order to take advantage of additional flexibility in compensation arrangements permitted for physicians in group practices.

³ 42 U.S.C. § 1395nn(h)(4); 42 C.F.R. § 411.352.

⁴ 42 U.S.C. § 1395nn(b)(2); 42 C.F.R. § 411.355(b).

⁵ H.R. 3590, § 6003.

⁵ The Stark Law applies to Medicaid indirectly by prohibiting payment of federal matching funds for Medicaid services provided in violation of the Stark Law. 42 U.S.C. § 1396b(s). Federal matching funds provide roughly two-thirds of Medicaid funding. Surprisingly, not all states have adopted parallel state laws prohibiting physician referrals for Medicaid services if the referral would violate the Stark Law.