AMARILLO, TX – The federal physician self-referral statute (commonly referred to as the “Stark Law”) prohibits physicians (as broadly defined by the Stark Law) from referring patients for designated health services (“DHS”) to an entity with which the physician has a financial relationship. DHS is defined to include prosthetics, such as urological supplies (including catheters).

The Stark Law has a number of exceptions, one of which is the in-office ancillary services (“IOAS”) exception. Under the IOAS exception, urological supplies must be furnished personally by the referring physician, a physician who is a member of the same group as the referring physician, or an individual who is supervised by the physician or by another physician in the group practice.

Additionally, the urological supplies must be furnished in the same or a centralized building used for the provision of some or all of the physician’s medical services. The location requirement is not satisfied if a patient receives urological supplies by mail outside the physician’s office, as the urological supplies would not be dispensed to the patient in the physician’s office.

AAHomecare has become aware of arrangements in which physicians are billing Medicare for catheters that are mailed to patients’ homes. In response, AAHomecare has prepared a White Paper entitled “Physician Practices Dispensing Urological Supplies to Patients: Stark Law Issues.” The White Paper can be accessed on AAHomecare’s website. The AAHomecare White Paper points out the following:

• Under the Stark Law, a “referral” is defined as ordering DHS for which payment may be made under Medicare Part B. However, a “referral” does not occur if the DHS is “personally provided” by the referring physician. 42 CFR § 411.351.
• CMS’ commentary in its 2007 Phase III Stark Final Rule provides clarification on the meaning of the phrase “personally provided.” According to the 2007 Final Rule, “there are few, if any, situations in which a referring physician would personally furnish DME and supplies … because doing so would require that the physician … personally perform all of the duties of a supplier as set forth in the supplier standards in § 424.57(c).” See 72 FR 51019, available at https://www.federalregister.gov/d/07-4252/page-51019.
• According to the 2007 Final Rule, it is “highly unlikely” that a referring physician would meet the criteria for personally performed services when dispensing DME. “The dispensing of DME by a physician almost always constitutes a ‘referral’ for the physician self-referral statute, as would the dispensing of DME by anyone else affiliated with the referring physician, such as a nurse or physician assistant.” Id. (emphasis added).
• If the physician is ordering and furnishing urological supplies for which payments will be made under Medicare Part B, and if the physician is not personally providing the urological supplies, then the physician must comply with a Stark Law exception.
• To meet the IOAS exception (42 CFR 411.322(b)), the referral for urological supplies must comply with a number of requirements, including (i) who must furnish the service, (ii) where the service is furnished, and (iii) compliance with applicable Medicare billing and coverage rules. See 42 CFR 411.355(b); CMS, Physician Self-Referral Law Frequently Asked Questions, available at: https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Downloads/FAQs-Physician-Self-Referral-Law.pdf.
• Under the IOAS exception, urological supplies must be furnished personally by the referring physician, a physician who is a member of the same group as the referring physician, or an individual who is supervised by the physician or by another physician in the group practice. 42 CFR 411.355(b)(1). Additionally, the urological supplies must be furnished in the same or a centralized building used for the provision of some or all of the physician’s medical services. 42 CFR 411.355(b)(2). This location requirement is not satisfied if a patient receives urological supplies by mail outside the physician’s office, as the urological supplies would not be dispensed to the patient in the office.
• As set out in Physician Self-Referral Law Frequently Asked Questions (cms.gov), Page 9 (published September 20, 2021):

“Put another way, items that are designated health services to which the exception is applicable, such as intermittent catheters (which are prosthetic devices), fall within the scope of the exception for in-office ancillary services only when a patient directly receives the item in the physician’s office and in a manner that is sufficient to meet applicable Medicare billing and coverage rules.

The “location requirement” at 42 C.F.R. §411.355(b)(2) would not be satisfied if a patient receives an item by mail outside the physician’s office, as it would not be dispensed to the patient in the office. This is true regardless of whether Medicare coverage and payment rules would permit the supplier to mail the item to the patient and bill the Medicare program for the item.”

In summary:

• If a physician orders and furnishes urological supplies for which payment will be made under Medicare Part B, then a “referral” under the Stark Law occurs unless the urological supplies are personally provided by the physician.
• The commentary to the Final Rule states that it is rare for a physician to personally provide urological supplies because physicians rarely perform all activities required by the DMEPOS Supplier Standard to satisfy the “personally provided” definition.
• The physician’s referrals for urological supplies (such as catheters) are for DHS because DHS is defined to include prosthetics, and urological supplies are considered prosthetics.
• The IOAS exception may be satisfied if (i) the urological supplies are furnished personally by the referring physician or by an individual who is supervised by the referring physician or is supervised by another physician in the referring physician’s group practice and (ii) the urological supplies are furnished in the same or a centralized building used for the provision of some or all of the physician’s medical services.
• To the extent that the urological supplies are mailed to a patient’s home, the IOAS exception is not satisfied, and such delivery would likely violate the Stark Law.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national health care practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Six-Year Lookback Audits: What the Law Requires

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato and Denise M. Leard, Esq., Brown & Fortunato

Wednesday, September 27, 2023

1:30-2:30 p.m. CENTRAL TIME
The Affordable Care Act includes the 60-day overpayment rule that requires DME suppliers to refund overpayments within 60 days of identification. What many suppliers are not aware of is that if an overpayment is identified, either internally or externally, suppliers are mandated by law to perform a six-year lookback audit. If suppliers do not comply with this rule, they are at risk for false claim penalties. This webinar will (i) discuss the 60-day overpayment rule and the six-year lookback obligation; (ii) discuss steps that suppliers can take to reduce the risk of being subjected to the 60-day overpayment rule; and (iii) set out the steps the supplier should take to successfully fulfill its obligations under the rule.

Register for Six-Year Lookback Audits: What the Law Requires on Wednesday, September 27, 2023, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Denise M. Leard, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129