Health and Human Services Dept. Could Allow More Doctor-Owned Hospitals and Labs
The Trump administration is trying to weaken a landmark set of laws that prevents doctors from jacking up healthcare costs by ordering unnecessary tests and other medical care at labs and hospitals in which they have financial interests.
The Health and Human Services Department has asked for feedback on the Stark Law, a first step toward rolling back the law, or as HHS Secretary Alex Azar put it, “taking regulatory action to reform these rules.” Trump claims he wants to reduce healthcare costs with measures such as repealing Medicaid expansion and reducing prescription drug costs, but the proposed overhaul of the Stark law seems to contradict that.
Almost 400 organizations and people commented, mostly doctors and healthcare organizations in favor of watering down the protections. The public comment period on the proposal has closed.
“The Stark Law is no longer necessary to ensure that providers do not engage in practices that lead to overutilization of health care services and harm to patients and government programs,” wrote Philip Wheeler, senior vice president and general counsel at Mercy Health.
In 2017, Mercy paid $34 million to settle claims that its hospital and clinic in Springfield, Mo., violated the Stark Law by submitting false claims to Medicare for cancer treatment.
Mercy allegedly paid doctors based in part on its referrals to a Mercy cancer center, and doctors treated patients to maximize reimbursements from Medicare and Medicaid despite patients’ treatment violating national cancer treatment guidelines.
Some patients were hospitalized because of the excess treatment, according to a lawsuit. A patient with borderline intellectual functioning was given too much chemotherapy and radiation. A doctor who complained about the problems to Mercy authorities was demoted and then fired.
Cases such as this were why Congress passed the first Stark Law in 1989, named after former U.S. Rep. Pete Stark (D-Calif.) who sponsored the bill. A 1989 report from the Office of Inspector General found patients of doctors who owned or invested in clinical labs received 45% more lab services than Medicare patients in general, costing Medicare an estimated $28 million in 1987.
“The integrity of our nation’s physicians is being threatened by seductive deals promoted by fast-buck artists,” Stark said in 1989.
The first Stark law prohibited referring Medicare patients to clinical labs by doctors who have financial interests in those labs or whose relatives have financial interests in the labs. Health services covered by the Stark law now also include physical therapy, home health services, medical equipment and supplies and other services.
Featured image: Nashville billionaire Dr. Thomas F. Frist Jr. is one of the founders of the giant Hospital Corporation of America and the brother of William H. (Bill) Frist, Tennessee’s two-term Republican senator and former majority leader. This image was taken from an HCA promotional video, marking the company’s 50th anniversary this year.