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Stark Law: Huge Divide between Physicians, Feds


Here are two views on Stark Law - one from a lawyer representing practices and one from the OIG. Is it possible they are talking about the same thing?

Although I am constantly writing and speaking on Stark Law, every so often, it is a good idea to listen to what others are saying. I decided to pull two opposing views, and then analyze what I took away from the two points of view.

First, we will hear from Daniel O. Jamison, chair of the Health Law Practice Group at Dowling, Aaron & Keeler Inc., in Fresno, Calif., writing for the Bakersfield Californian.

Second, are excerpts from a Q&A interview with OIG Inspector General Daniel Levinson by Joe Carlson in Modern Healthcare.

Let’s begin with remarks from Jamison, writing on behalf of doctors and hospitals:

“The consequences of violating the Stark Law are shocking. If the hospital leased an office to a doctor where the government deemed the rent to have been too low, the hospital and doctor can be liable to refund the amount Medicare paid on all patients referred by the doctor to the hospital during the term of the lease, plus a $15,000 penalty for each paid billing. They can both also be kicked out of the Medicare program. What's more, the government has used the False Claims Act, enacted during the Civil War to curb fraud in military procurement, to assert that each bill falsely represented it complied with the law, exposing the hospital and doctor to three times the amount of the bill and between $5,500 and $11,000 in penalty per 'bad bill.' Health 'reform' has made these laws more difficult to comply with.

“Never mind that the referred services were medically necessary and helped the patient. Never mind that the law unjustly assumes all health-care providers would ignore their ethical and legal duty not to recommend unnecessary treatment. Never mind that there already was a federal criminal law that made it a felony to offer or receive a kickback for a referral to be paid for by Medicare. Never mind that post-service government-contracted audits, which involve a complex regulatory scheme and are arguably skewed against the provider, have been implemented.

“Doctors normally will not have a lawyer on their office staff, but physician- and hospital-compliance costs have skyrocketed. By 2004, Johns Hopkins' initial three-year compliance cost for HIPAA alone was between $4.3 million and $7.4 million and was projected to rise to $10 million annually, depleting a $30 million operating margin. These costs become part of the rising cost of health care for all. Meanwhile, taxpayers fund the bureaucracy that expands to write and enforce the regulations. Those dollars are lost for basic government responsibilities like infrastructure. They cannot be used to increase the number of family doctors for Medicaid patients to see in place of the expensive emergency department."

Second, let’s hear from Inspector General Levinson:

Q: One of the things I hear a lot from providers is that the Stark law is simply too complicated.

Levinson: Unfortunately, I'm not in charge of deciding what the law should be when it comes to healthcare compliance. We have an array of statutes of which Stark is a very important part. And our job in the IG's office is to enforce all the laws that we are empowered to enforce.

Q: So you're enforcing the law as it is, you're not making the law?

Levinson: That's the job of the inspector general's office when it comes to not only the Stark law, the False Claims Act, all the five laws I mentioned (the anti-kickback statute, the civil monetary penalties law, and the exclusions statute). We take our obligation, our responsibility that is given to us by lawmakers, very seriously, and we enforce those laws aggressively but fairly.

Q: Is the Stark law too punitive? Does it penalize things that are sort of minor, in a major way?

Levinson: You know, I understand the reasons for the Stark law, and we enforce that law as it is, in a way that we try to do justice to what was intended by it.

Q: Anything else you think is important to bring out?

Levinson: I think the fact that we have 2,700 people attending this conference [the Health Care Compliance Association's annual Compliance Institute] is a positive indication that the world of compliance is getting bigger. And from the informal conversations I have had, is getting more sophisticated. It is drawing more impressive talent, as the stakes get larger and more people are understanding that where we are headed with coordinated care and this emphasis on quality means a larger and more strategic role that compliance officials might play in the futures of their organizations.

My Analysis

Are you kidding me!?!? These aren’t two voices lost, making their way in the wilderness - they aren’t even on the same planet. Speaking on behalf of doctors and hospitals, Jamison expresses heartfelt exasperation at an unfair system which makes no sense. The inspector general, on the other hand, seems somewhere between blithely indifferent, and in a total state of denial as to the suffering his office has caused - and who caused it.

Of course Stark law is insanely complicated, treating mistakes of opinion (i.e., as to Fair Market Value in a real estate lease) the same as deliberate fraud. Of course federal regulations are driving small practitioners out of business and into servitude under the protection of a larger corporate practice group (who can afford an in-house lawyer.) Of course the OIG took over writing the rules and regulations it enforces. (In the 1980s, Congress made the mistake of asking the OIG to write rules for what should not be prosecuted, the Safe Harbors. The OIG took off writing rules, by way of Special Fraud Alerts and other general pronouncements, and has never looked back. See, Bauman, Linda Ed., Health Care Fraud and Abuse, ABA Health Law Section (2002). To say that the OIG merely enforces the rules is like … like . . . . [I was going to finish this sentence, but my head cartoonishly exploded after redlining on hypocrisy.]

Most disheartening of all, are the final words of the inspector general which border upon megalomania. He could not be happier that his bureaucracy has grown massively over the years: that “the world of compliance is getting bigger. . .drawing more impressive talent [and resources which could be spent on care]. . . as the stakes get larger . . .which means a larger and more strategic role that compliance officials might play in the futures of their organizations.”

The only thing OIG chief Levinson didn’t say is . . . “and I control it all.”

Find out more about Martin Merritt and our other Practice Notes bloggers.

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