On 1/4/01 the final regulations for Stark II were released and will go into effect in one year. The tome is 600 pages and tells where, when, how and with whom you may refer. This however is only phase I covering the basic nuts and bolts of the program. Phase II will be release later and will cover ownership exceptions, reporting requirements and sanctions. The OIG will probably increase their enforcement after a sweetheart period for physicians to digest the information. The good news is that now you will have a real blueprint to follow to know what you can or cannot do.

This final regulation states, as did the proposed regulation that physicians may not refer to specific entities in which they or their family holds a financial interest. The new wrinkle is that physicians may now refer to these entities if they have a compensation contract with the entity and the contract is the same as anybody else who was not in a position to refer would be entitled to.

Another change is that those entities that provide the referral services may be paid for those services if they neither knew nor had reason to know they had an indirect financial relationship with the physician. The duty is one of reasonable inquiry.

Other changes include a more definite definition of what the designated health entities that are affected by adding specific codes to the law. The final regs. allows self-referrals performed by the physician but not by employees. It increases the group practice as defined as a single legal entity and in house exceptions to the rule. Hospital employed physicians are not a group practice. The in-house exception continues to be under one address and under direct supervision of a group physician as well as billing by the entity.

Other exceptions are non-monetary compensation up to $300, training for compliance or other federal healthcare programs, risk sharing arrangements and medical staff incidental benefits.

This rule if violated will cause civil fines and loss of money billed. The anti-kickback rule requires intent and is a criminal violation with jail time along with fines.

The financial relationships now include stock options, secured bonds and loans.

There are many other rules in the 600 pages that you need to come into compliance with by the 1/1/02 deadline but if you have questions please ask your own healthcare attorney or contact me. There is also an area for frequently asked questions at
www.hcfa.gov/medlearn/faqphys.htm.                                                     Top

The Joint Commission has added new patient safety standards to start July 1, 2001. These standards will affect how leadership creates an environment that encourages error identification and reduction. This means they will need to support the Performance Improvement Department of the hospital. High-risk procedures as identified by the hospital will need to be looked at proactively to prevent problems. There will need to be communication of results back to the hospital staff to improve performance and reduce patient risks. Lastly, and the most controversial, is the requirement for the physician to inform patients when there is an unanticipated outcome. I do not believe any hospital or physician malpractice attorney will allow this. It is probable that JCAHO will have to drop this as unworkable.

In another bit of intrusion the JCAHO is getting ready to inspect and accredit office based surgical units.

In the area of restraints it should be noted that whether something is a restraint under the JCAHO or HCFA rules is the reason for the restraints. If the restraints are for the purpose of a procedure they do not fall under the rule. If they are for behavioral issues they do. Consider bedside rails. If they are to assist patients getting up and down and can be removed by the patient, they are not restraints and the "one hour rule" does not apply. If they are present for patient safety then they are for behavioral purposes and the "one hour rule" would apply. Watch out for differences between HCFA and JCAHO. In the latter one can have a policy that allows nurses to place restraints on a behavioral patient and then notify the physician for a covering order within 12 hours. HCFA states that an order must precede the placing of restraints, which makes sense if the idea is to reduce the use of restraints. All hospitals will need to keep statistics and PI information on restraint use and the methods used with the results of those methods to reduce that use. Those who are restrained need frequent assessments and documentation of all things. Behavior Health Hospital leadership, not defined, must be notified as soon as possible if a patient is in restraints for more than 12 hours or has two or more episodes or restraint in any twelve hours. Consider defining leadership as the leadership of the unit.

In yet another new development the JCAHO is in the process of making a new approach to assessing the effectiveness of staffing. This will include both those criteria the JCAHO and the hospital believes important.                                                     Top

The New York Times reported that HCFA in response to a Florida lawsuit has instructed their peer review organizations such as CMRI to release information regarding physician performance when the patients have complained to the organization about the care received. This information may be used in any lawsuit against physicians and hospitals. This means those physicians that have rendered an opinion regarding whether or not the care was substandard should be forced to give depositions as to their reasons and appear in court to defend those positions. Please also remember state peer protection statutes do not bind federal peer review organizations.

Interestingly, HCFA has refuted the story stating that names or other specific information of physicians will not be forthcoming. They did not deny that they would give the information whether or not there was sub-standard care given.                                   Top

The OIG has in its semiannual newsletter described its accomplishments for the previous six months. They list saving $15.62 billion in this fiscal year. This includes $14.4 billion to its streamlining of operations, $1.2 billion due to investigations and $142 million from audit disallowances. They have also excluded 3,350 health providers and entities for fraud and abuse and have gotten 414 convictions for crimes against HHS. The 146 page pdf. document may be found at

http://oig.hhs.gov/new.html         Top

HCFA has allowed payment for diabetic education teaching by any Medicare provider including dialysis centers, medical equipment suppliers, RN and certified diabetic educators who are part of a multidisciplinary team and who meets the quality standards for the training. This goes into effect on March 1, 2001. The patient must be newly diagnosed, never have received prior training or be at significant risk from complications. For further details please see
www.hcfa.gov/pubaffr.htm             Top

Ohio has passed a law regulating out-of-state providers who provide telecommunications to treat patients within the state. The providers will need a special certificate from the Ohio Medical Board. The medical staffs will be the decision-makers as to what telemedicine services are appropriate for their organizations.                 Top

Be thankful you do not live in Michigan. The governor has vetoed a prompt payment law that would have required all insurers to pay promptly or pay interest. There is already the law on the Michigan books for the same thing in regard to Medicaid patients. In California both HMOs, IPAs and private insurers must pay interest on clean claims not timely paid and penalties if the interest is not paid.                 Top

Be careful how you bill for hospital observation status. New rules state you may not bill for observation admission and discharge if the time is under 8 hours unless it goes past midnight. It becomes important to document the times of admission and discharge on your billing and observation notes.                        Top

The CDC has had a recommendation that health care workers (HCW) with HIV disclose to patients their status. To date hardly anyone has conformed to the recommendation. Now almost everyone uses "universal precautions" and the risk to patients is virtually nil. There has never been a documented case of transmission of HIV from HCW to patient but there was recently a case of Hepatitis C transmission. The CDC is now re-looking at the rule and considering changing the notification from patients to employers. In reality, nobody will report their status to their employer since confidentiality, especially now with the new HIPAA privacy laws will protect any employee.                                 Top

The California Legislature under Sen. Sheila Kuehl requested a report on the arbitration process. Sen. Kuehl states that the arbitration process is flawed and biased in favor of the defendant. The medical industry, of course, does not agree. It should be known that Sen. Kuehl is a shill for the California Trial Lawyers and has attempted to change MICRA to their favor.     Top