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Proposed Bill to Narrow Stark Law Exception for In-Office Ancillary Services

A proposed bill, H.R. 2914: Promoting Integrity in Medicare Act of 2013 (PIMA), was recently introduced in the House of Representatives. Representatives Jackie Speier (D-CA), Dina Titus (D-NV), and Jim McDermott (D-WA) initiated this legislation as a result of the increase in Medicare billing for in-office ancillary services through the in-office ancillary services (“IOAS”) exception to the Stark law. The Stark law, which functions to limit physician self-referrals, contains several exceptions. The current IOAS exception to the Stark law protects advanced imaging services, anatomic pathology, radiation therapy, and physical therapy services that meet the IOAS exception’s requirements. However, the bill proposes to remove the above-listed services (advanced imaging services, anatomic pathology, radiation therapy, and physical therapy), which the bill refers to as “Specified Non-Ancillary Services,” from protection under the IOAS exception. The initiating Representatives believe that the bill will save billions of Medicare dollars.

The legislation also proposes to increase civil monetary penalties for improper claims from $15,000 to $25,000 for the above Specified Non-Ancillary Services, and increase civil monetary penalties for circumvention schemes from $100,000 to $150,000 for the above Specified Non-Ancillary Services. In addition, PIMA proposes compliance review procedures for Specified Non-Ancillary Services that may include prepayment reviews, claims audits, focused medical review, and computer algorithms designed to identify payment or billing anomalies.

If PIMA is enacted, referring physician practices that rely on Stark law’s IOAS exception to perform advanced imaging services, anatomic pathology, radiation therapy, and physical therapy services, will need legal assistance in analyzing and possibly restructuring their business arrangements in compliance with the Stark law. If you or your healthcare entity would be affected by the passage of PIMA and have any questions about PIMA or need assistance in analyzing, structuring or restructuring business arrangements to comply with PIMA, please contact our experienced healthcare attorneys via phone at 248-544-0888 or via email at wapc@wachler.com.