[ Wednesday, June 11, 2003 ]


Slightly Off-topic: New Stark Prohibitions on Specialty Hospitals

(Did I mention the big Blogger change and how weird it is? The html tags for "bold" are no longer "b" and "/b", but are now "strong" and "/strong", and the tags for italics have changed from "i" to "em".)

You might've heard that Pete Stark, father of the eponymous Stark Law, has proposed a new piece of legislation to take away the "whole hospital" exception to Stark. The rule now is that physicians can't have a compensation relationship with or own an interest in an entity (to which the physician refers patients) if that entity provides "designated health services" (which include inpatient and outpatient hospital services) unless the ownership or compensation relationship meets one of the applicable exceptions. One of the exceptions is that a physician can own an interest in a whole hospital; he/she can't own an interest in only one department or portion of the hospital, unless there's another exception that applies. Because of this exception, a great many "specialty hospitals" have sprung up, where a group of physicians (often cardiologists) will either own a heart specialty hospital on their own or joint venture with an existing hospital, which effectively delivers its own cardio program to the joint venture with the doctors. The doctors' ownership in the hospital is OK because the hospital is a "whole hospital;" Stark would not allow the doctors to own an interest in the hospital's cardio department, but they can own an interest in the joint venture specialty hospital.

Pete Stark has proposed an amendment to the original Stark law to cut out this exception. As far as I can tell, there's not a great likelihood of that new Stark bill getting to the floor. So, no change, right?

Wrong (perhaps). HHS, which writes the regulations implementing the Stark Law (just as they do with HIPAA), has given notice that it intends to revise the Stark Regs to exclude specialty hospitals from the "whole hospital" exception. It will be interesting to watch this develop; I personally feel that this would be a great regulatory overstep by HHS (this type of claim, that a regulatory agency has drafted regulations that go beyond the authority granted to the regulatory agency by congress, or that the regulatory agency has drafted regulations that amount to legislation rather than just interpret and implement legislation, has been a component of several of the suits seeking to overturn the HIPAA privacy regulations). HHS has the right and obligation to draft regulations interpreting and implementing the Stark Law, but they do not have the right or power to draft regulations that change or revise the Stark law.

We will see. In the meantime, here's an article on the subject from HealthLeaders.

Jeff [10:10 AM]

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