Some hotly debated rules governing Medicare and Medicaid payment to doctors have been made final. The regulation changes affect Physicians' interests in referrals and leasing arrangements.

The revised Physician Self-Referral and Hospital Ownership Disclosure Provisions of the Inpatient Prospective Payment System (IPPS) Fiscal Year 2009 regulations have just been published in the Federal Register by the Centers for Medicare and Medicaid Services (CMS). The regulations carry out the original physician self-referral laws, in section 1877 of the Social Security Act, popularly known as the "Stark Laws."

The Final Rule of this provision of the IPPS, published August 19, will generally be effective for discharges on or after October 1, 2008, except for certain rules deferred until 2009 (see below)*.
The Final Rule also requires a physician-owned hospital, defined as a hospital in which a physician or an immediate family member of the physician has an ownership or investment interest, to furnish upon a patient's request a list of physicians or immediate family members who own or invest in the hospital, unless no physician owners or members of their immediate families refer patients to the hospital. In addition, a physician-owned hospital must require all physician owners or investors who are also active members of the hospital's medical staff to agree, as a condition of continued medical staff membership or admitting privileges, to disclose in writing their ownership or investment interests in the hospital to all patients they refer to the hospital.

The Stark Laws, prohibiting physicians from referring Medicare/Medicaid program patients for certain services to an entity with which the physician or an immediate family member has a financial relationship, were originally passed in 1989. Congressman Pete Stark (D-CA) had proposed a Federal physician self-referral law in 1988, which led to the passage of "Stark I," at a time when Congress was revising Medicare's physician payment program. Stark I law applied only to clinical laboratory services. Congress then expanded the Stark law to cover a considerable list of designated health services in addition to the clinical lab services. These amendments, effective January 1, 1995, were known as "Stark II."

*The changes in the FY 2009 Rules are as follows:

1) The Rule finalizes CMS's proposed rule placing the burden of proof that the services were not rendered pursuant to a prohibited referral on the entity submitting the claim and appealing payment denial.

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