More restrictions on specialty hospitals: some win, others lose under Stark version II.(Practice Trends)

It's a good news/bad news situation with the final federal physician self-referral regulations.

The good news: The regulations, known as "Stark II," make it easier for rural physicians to refer patients to practices, hospitals, and other health care entities. The bad news is further restrictions on the financial relationships surrounding specialty hospitals.

"Normally under this law, it's prohibited to make a referral to another entity, even when a family member of the physician has a financial relationship to the referring facility." Aaron Krupp, senior counsel with the Medical Group Management Association, told this newspaper. A new exception under Stark II allows referrals to another designated facility even if such a financial relationship existed, provided that the patient resided in a rural area.

There's also an exception for supplying technology items or services if doing so enables participation in community-wide health information systems.

This exception involves certain information technology services that allow access to patient electronic health care records, general health information, medical alerts, and related information for patients served by community providers. The Centers for Medicare and Medicaid Services expects the provision will make it easier for providers to share patient information, and for public health officials to identify emerging health threats.

"If the physician purchases the technology for a fair price, then there's really no Stark issue. This is very important to a lot of health systems looking to go high tech," Patrick Hope, legislative counsel for the American College of Physicians, said in an interview.

The self-referral law had a chilling effect when it first came out, because it was unclear whether certain arrangements fit into the exceptions. CMS in this latest rule "tries to make these exceptions a little more ...