Nuclear Medicine Retains Exemption from Stark Rule Against Self-referral Procedures

April 8, 2004

Nuclear Medicine Retains Exemption from Stark Rule Against Self-referral Procedures

The Centers for Medicare & Medicaid Services issued the second phase of its final regulations addressing physician referrals to entities with which they have a financial relationship on March 25, 2004. This interim final regulation will protect beneficiaries and taxpayers from abusive referral patterns while providing straightforward rules for physicians and providers to comply with the law. Nuclear medicine procedures were exempted from the original regulations and that exemption was reaffirmed in the interim final regulations. See below for comments and responses on the nuclear medicine question from the Federal Register.

The physician self-referral law prohibits a physician from referring Medicare and Medicaid patients for certain designated health services to entities with which the physician (or a member of they physician's immediate family) has a financial relationship, unless an exception applies. The law also prohibits an entity from billing for services provided as a result of a prohibited referral. There are eleven designated health services to which the prohibition applies, including clinical laboratory services, physical therapy services, including speech-language pathology services; occupational therapy services; radiology and certain other imaging services; radiation therapy services and supplies; durable medical equipment and supplies; parenteral and enteral nutrients, equipment and supplies; prosthetics, orthotics, and prosthetic devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. A financial relationship can be either a compensation arrangement or an ownership or investment interest, and it can be either direct or indirect.

This second phase of the regulations responds to comments CMS received on the first phase of the regulations, covers the remaining statutory exceptions not covered in the first phase, and creates several new regulatory exceptions for nonabusive financial relationships. The new regulations will be effective on July 24, 2004. In general, the new regulation conforms to existing coverage and payment rules; protects beneficiary access to care; and establishes bright-line rules and administrative simplicity where possible.

The passages relevant to nuclear medicine are reprinted below from the Federal Register, V.69, No, 59, pp.16102-4:

    F. Radiology and Certain Other Imaging Services (Phase I-66 FR 931)

    Under section 1877(h)(6)(D) of the Act, ??radiology services, including magnetic resonance imaging, computerized axial tomography, and ultrasound services?? are DHS. Radiation therapy services and supplies are DHS under section 1877(h)(6)(E) of the Act. In the January 1998 proposed rule, we proposed a single definition for both of these DHS categories. In Phase I, we took the following steps, among others, to define this category with greater clarity: We separately defined the DHS identified in section 1877(h)(6)(D) and section 1877(h)(6)(E) of the Act. We defined the category of services covered by section 1877(h)(6)(D) of the Act under the name ??radiology and certain other imaging services?? to make clear the Congress?s intent to include some imaging services other than radiology. We defined the entire scope of DHS under section 1877(h)(6)(D) of the Act in a list of CPT and HCPCS codes. We excluded the following services from the definition of ??radiology and other imaging services??: (i) X-ray, fluoroscopy, and ultrasound services that require the insertion of a needle, catheter, tube or probe; (ii) radiology procedures that are integral to the performance of, and are performed during, nonradiological medical procedures; and (iii) nuclear medicine procedures. We received a number of comments concerning radiology services, medicine. We are deleting the parenthetical ??(except as otherwise specifically excluded on the CMS Web site and in annual updates)?? in response to comments discussed in section XI.A addressing the distinction between items and services that do not constitute a DHS and items and services that are DHS but may qualify for an exception under ยง 411.355.In response to comments, we are modifying the definition to exclude certain radiology procedures performed immediately after a nonradiological medical procedure?.

    Comment: An association representing radiologists urged us to consider nuclear medicine a DHS because excluding nuclear medicine, was done in Phase I, increases the risk of program abuse. The commenter asserted that nuclear medicine is a subspecialty of radiology and that radiologists perform and interpret the vast majority of nuclear medicine studies performed in the United States. The commenter also asserted that the exclusion of nuclear medicine has encouraged potentially abusive business arrangements involving physician financial relationships with entities to which they refer patients for positron emission tomography (PET) scans. Another commenter expressed concern that echocardiography is a DHS, while nuclear medicine procedures (some of which are commonly performed as a clinical alternative for stress echocardiography) are not. The comment suggested that a physician?s financial interest in nuclear medicine modalities could influence the physician to select nuclear medicine procedures over echocardiography.

    Response: We are making no changes to the treatment of nuclear medicine procedures under the DHS definitions at this time. However, we are mindful of the issue raised by the commenter and are continuing to consider the application of section 1877 of the Act to nuclear medicine procedures. Moreover, parties should be mindful that arrangements involving nuclear medicine may violate the anti-kickback statute, depending on the circumstances.