Proposed Stark II Regulations Spell Trouble for Oncology Care

MIAMI, Fla--Some of the proposed regulations to implement the Stark II legislation (limiting physician self-referrals) are so bizarre "you don’t know whether to laugh or cry," said Joseph S. Bailes, MD, chairman of ASCO’s clinical practice committee and 1999 president-elect.

For example, Stark II prohibits physicians from renting durable medical equipment to their patients, with one in-office ancillary service exception: infusion pumps. But the proposed rules interpret this exception to be limited to implanted infusion pumps. "That’s one heck of an ancillary service, doing surgical procedures in the office," Dr. Bailes quipped at the 13th meeting of the Network for Oncology Communication and Research (NOCR).

Thus, the proposed rule would allow physicians to bill for a procedure (implantation of a pump) that is never performed in-office, while prohibiting them from furnishing external ambulatory pumps to patients in the office, as is common in oncology. (Drugs used in the pumps could still be billed.)

A patient would have to rent a pump from an equipment supplier, bring it to the oncologist’s office to be filled, and then bring it in again to be disconnected. Opponents of this rule feel this would place a great burden on cancer patients, especially the elderly, and was not the intent of Congress when it passed the Stark II legislation.

The original Stark law was intended to address self-referrals by physicians and dealt only with Medicare and Medicaid lab services. In 1995, Stark II expanded the list of services covered to include many changes that are not in the best interests of oncologists and their patients, Dr. Bailes said.

The designated health services now in the law are clinical lab, radiology, radiation therapy, durable medical equipment, prosthetics, parenteral and enteral nutrition, outpatient prescription drugs, home health, inpatient and outpatient hospice, and physical and occupational therapy. "Remember, this was just labs before," he said.

Drug Reimbursement Issue

In a related issue, Dr. Bailes discussed a section of the proposed fiscal 1999 budget that would effectively eliminate all profit margin on chemotherapy agents administered in the office. The Balanced Budget Act of 1997 reduced Medicare payment for drugs from 100% to 95% of the average wholesale price (AWP). However, the new budget would base reimbursement on actual acquisition cost, rather than published AWP.

Similarly, the proposed regulations to implement Stark II would require physicians to fully pass on to Medicare and other insurers the amount of any discount they receive on drug purchases.

Currently, physicians are not adequately reimbursed for IV drug administration, Dr. Bailes said, and requiring physicians to bill Medicare only for the acquisition costs of drugs could mean that physicians would no longer be able to afford in-office drug delivery.

Dr. Bailes noted that two congressmen--Bill Archer (R-Tex), chairman of the Committee on Ways and Means, and Bill Thomas (R-Calif), chairman of the Ways and Means Subcommittee on Health, which has jurisdiction over the Stark law--have supported the medical community and are pressing the Health Care Financing Administration (HCFA) for clarification of this issue.

In a letter to Nancy-Ann Min DeParle, HCFA administrator, the representatives expressed their concern about the part of the Stark regulations that discusses discounts as a form of remuneration, noting that "discount" is not defined.

They write: "We are concerned that this proposal is intended to require physicians to bill Medicare for drugs at their acquisition cost. We would view any such attempt by HCFA to impose acquisition costs in direct conflict with Congressional intent and would strongly oppose such a measure."

Dr. Bailes, as chair of ASCO’s clinical practice committee, has sent an eight-page commentary on the proposed Stark II regulations to the HCFA. He encouraged those attending the NOCR conference to write their elected representatives with their concerns about this legislation and to copy Rep. Thomas as well.

He said that much effort on the part of ASCO members will be required over the next few years to formulate new policies that will keep up with the new cancer treatments available, so that, overall, patients can get better care and physicians will be adequately reimbursed to provide that care.