‘Onerous Proposed Stark II Regulations Must Be Changed’

ARLINGTON, Va--The proposed regulations of Medicare reimbursement have "gone from providing the dollars for care to making the clinical decisions," James L. Wade III, MD, president of the Association of Community Cancer Centers, said at the ACCC’s 24th Annual National Meeting.

The government is now "in the room with you and the patient," added Dr. Wade, president of Cancer Care Specialists of Central Illinois and director of medical oncology, Decatur Memorial Hospital Cancer Care Institute, Decatur, Illinois.

Urging his listeners to demand that the Health Care Finance Administration (HCFA) change a number of the proposed regulations to implement the legislation known as Stark II (concerning physician self-referrals), Dr. Wade stated that they "bear no resemblance" to the intention of the original Stark law and would have "very deleterious consequences" for cancer care.

He pointed, for example, to the "craziness" of considering it as a self-referral "every time you order a test," and the "remarkable definition" of a group practice, which does not permit reimbursement for the services of a physician working as an independent contractor.

The "unusual, new, and very onerous" definition of direct supervision, which forbids staff from doing routine tests before a physician has arrived in the office, imposes a "new and unique burden" on both patients who want tests done early in the morning and on doctors who need to make morning calls on patients in the hospital, Dr. Wade said.

A provision requiring physicians to pass on to Medicare any drug discounts they receive contains "very bizarre language that needs to be removed," he said. "When we called HCFA and asked ‘Discounts from what?’ they didn’t understand it either."

Clearly, Dr. Wade said, the proposals intend to implement by regulation "what President Clinton was unable to do by legislation," ie, reduce the amount of drug costs that physicians can bill to Medicare (see discussion of drug reimbursement below).

Regulations prohibiting physicians from providing ambulatory infusion pumps in the office "also need to be taken out," Dr. Wade said. "If physicians cannot provide these pumps," he said, "patients will need to get them elsewhere, at considerable inconvenience."

Further adding to patients’ inconvenience, he said, are Ambulatory Payment Groups as a basis for reimbursements to hospitals for outpatient care. Because they will prevent some hospitals from providing certain cancer services, "patients will have to travel further and suffer more."

The issue, he said, is that "HCFA is going to have to pay for adequate cancer care. Let us take care of these patients, but pay us fairly for our work, supplies, and equipment."

Amplifying Dr. Wade’s comments, Lee Mortenson, DPA, the ACCC’s executive director, warned that, if adopted, the new regulations will "close down cancer care in physician’s offices." Even under present rules, he said, there is a documented $275 million annual underpayment to offices for chemotherapy administration. And with other proposals threatening outpatient cancer care in hospitals, he asked, "where are these patients going to go? We need both settings."

In addition, he said, the proposed changes in drug reimbursements threaten to destroy the pharmaceutical companies’ profit margins. "Wiping out their margins will wipe out innovation," he warned.

In insisting that HCFA change the proposed regulations, Dr. Mortenson said, "we’re talking about making certain that cancer patients get good quality care. We need to put stakes in the ground. We’re here for patient care. Period." The thousands of letters that members of the ACCC oncology community sent to Chairman Bill Archer (R-TX) of the House Ways and Means Committee indicate that "we have the opportunity to prevail," he said.

Congressman Archer is determined there will be no changes to the current reimbursement for 95% of the average wholesale price (AWP) of drugs provided to patients by physicians, his senior legislative assistant Andrew M. Shore said at the meeting.

The President in his new budget is pushing for reimbursement on actual acquisition cost rather than published AWP. Payment will continue at 95% of AWP, Mr. Shore assured the gathering.

"It is in the law and the President has signed it," he said. He called the original negotiation of 95% of AWP in the 1997 budget "a big victory," because the President was not going to accept 100%. "Congressman Archer insisted on no less than 95%. It could have gone a lot worse for physicians," he added.

Mr. Shore expressed his appreciation for the "boxes of letters" sent to the congressman on this issue from "everyone involved in the cancer community, including not only doctors and drug companies but also nurses and patients."

He hopes that physicians will aggressively lobby their Congressional representatives about their concerns over the future of cancer care. "Operate under the assumption that they know very little about the issues involved," he advised, "and be prepared to give them Oncology Cancer Care 101. Walk them through the issues from the cancer patient’s point of view."

With such an approach, a physician has a "chance to become a resource to a member of Congress on cancer issues" and "develop a base for future discussions of legislation and regulations," Mr. Shore said.

Legal Expert’s View

Thomas N. Bulliett, Jr, JD, an authority on health care regulation and a partner in the Washington law firm of Hogan & Hartson, said that the Stark II regulations will go into effect in an atmosphere of heightened surveillance (see box). And because they will regulate physicians’ earning power in ways that are new and unfamiliar, Mr. Bulliett sees it as vital that oncologists understand and comply with the new rules.

Infractions of Stark II can make physicians and practices vulnerable to civil and even criminal penalties even in the absence of any intent to commit fraud or otherwise break the law. The provisions involve "designated health services" highly relevant to oncology, including clinical laboratory tests, radiology, physical therapy, and in-office chemotherapy. They also affect the definition of supervision, reimbursement of contract physicians, and the nature of group practices.

Mr. Bulliett noted an especially "troublesome" provision that would change the status of prescription drug purchases so as to define them as referrals to the drug manufacturer. Oncologists’ relationships with chemotherapy providers thus could come under the Stark II law, and drug purchases would thus require a Stark law exception, he noted.

Although Mr. Bulliett doubts that the new Stark regulations will take effect this year, he emphasized that every oncology practice consult a local attorney and "make sure your group is in compliance with Stark II."