Alicia Ault

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on September 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office. As a result, “the application of exceptions will be different going forward,” he said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin. The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices will have to review all their arrangements, from physician compensation to leasing or services agreements, to see if any of the exceptions they relied on will change with Stark III, added Ms. Nordeng. The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on September 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office. As a result, “the application of exceptions will be different going forward,” he said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin. The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices will have to review all their arrangements, from physician compensation to leasing or services agreements, to see if any of the exceptions they relied on will change with Stark III, added Ms. Nordeng. The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on September 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office. As a result, “the application of exceptions will be different going forward,” he said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin. The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices will have to review all their arrangements, from physician compensation to leasing or services agreements, to see if any of the exceptions they relied on will change with Stark III, added Ms. Nordeng. The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II–an interim policy that began in 2004–physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, he said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, Mr. Melvin said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule goes into effect on Dec. 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II–an interim policy that began in 2004–physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, he said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, Mr. Melvin said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule goes into effect on Dec. 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II–an interim policy that began in 2004–physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, CMS wrote that the change in policy means that, “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, he said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, Mr. Melvin said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule goes into effect on Dec. 5, 2007.

NQF Substance Abuse Standards

The National Quality Forum has issued a set of national, evidence-based consensus standards on identifying and treating substance abuse. The 11 practices were endorsed by 365 NQF member organizations, including health care providers, professional societies, purchasers, and federal agencies. Voluntary adoption of the standards would lead to improved patient outcomes, according to the NQF. The recommendations cover identification of substance use conditions, initiation and engagement in treatment, therapeutic interventions, and continuing care management. The guidelines can be purchased at the NQF Web site,

www.qualityforum.org

Settlement on Zyprexa Leaks

A former consultant to Eli Lilly & Co. has agreed to pay the drug maker $100,000 to settle complaints that he leaked confidential information about Zyprexa (olanzapine) to a plaintiffs' attorney. Dr. David Egilman was an expert witness for the plaintiffs in Zyprexa product liability suits. Under the agreement, Dr. Egilman acknowledged that he had intentionally and illegally given attorney James Gottstein documents that had been made available by Lilly during discovery, and that “he knew that these materials painted an incomplete picture of the issues related to Zyprexa,” according to a statement by Lilly. Mr. Gottstein shared the documents with the New York Times, which wrote a series of articles in December 2006 contending that Lilly had withheld information about side effects. Lilly said it would donate Dr. Egilman's settlement to the International Center for Clubhouse Development.

Court Date Set for Ayres

Psychiatrist Dr. William Ayres is set to go before a jury in San Mateo County, Calif., in March 2008 to face charges that he molested seven young male patients. In his Sept. 6 arraignment, Dr. Ayres pleaded not guilty. He has maintained his innocence since he was first arrested in April 2007 and charged with molesting at least five former patients. The arrest came after a 4-year investigation conducted by the San Mateo County Police Department. Dr. Ayres, who is 75, is a former president of the American Academy of Child and Adolescent Psychiatry.

Lawmakers OK Delay in Rx Rule

Coming down to the wire on a new federal mandate requiring the use of tamper-resistant prescription pads for all Medicaid prescriptions beginning Oct. 1, lawmakers in the House and the Senate passed legislation in late September that would delay the mandate's start until March 31, 2008. At press time, President Bush was expected to sign the legislation, although it was not clear whether he would sign it by Oct. 1, National Community Pharmacists Association spokesman John Norton told this newspaper. The tamper-proof prescription pad mandate delay was bundled with extensions on several programs due to expire Sept. 30, including an abstinence education initiative that the Bush administration supports, Mr. Norton said. The original mandate, passed as part of war funding legislation earlier this year, requires all Medicaid prescription be written on “tamper resistant” paper to be eligible for federal reimbursement. Even though many states have similar requirements, pharmacists' organizations have maintained that most physicians do not currently use these types of pads, nor are supplies readily available.

Rise in Adverse Drug Event Reports

The number of serious and fatal adverse drug events (ADEs) reported to the Food and Drug Administration more than doubled between 1998 and 2005, according to a report in the Sept. 10 issue of Archives of Internal Medicine. The agency defines a serious adverse event as an event resulting in death, a birth defect, disability, hospitalization, or that requires intervention. During the 8-year period, 467,809 serious events met the inclusion criteria. The number of reported serious ADEs increased from 34,966 in 1998 to 89,842 in 2005, a 2.6-fold increase; the number of reported deaths during that time increased 2.7-fold, from 5,519 to 15,107. The increase was largely a result of expedited reports from manufacturers of serious events not included on the label.

Task Force Looks at Physician Gifts

In New Jersey, which is sometimes called the nation's medicine cabinet, the state's attorney general is taking a closer look at the gift-giving practices of pharmaceutical and medical device companies. The Attorney General's Advisory Task Force on Physician Compensation, which met for the first time in September, is examining the potential impact of payments and gifts to physicians from the drug and device industry. The task force will also consider possible public disclosure of gifts, direct disclosure to patients, and limits on payments to physicians. Vermont, Maine, Minnesota, West Virginia, and the District of Columbia have passed laws requiring some form of reporting of payments made to physicians by pharmaceutical and medical device companies. In response to the formation of the task force, the Pharmaceutical Research and Manufacturers of America issued a statement citing PhRMA's 2002 Code on Interactions with Healthcare Professionals as an important safeguard. The code declares all forms of entertainment to be inappropriate and says that any gifts that are given to physicians should support medical practice and be valued at less than $100. The New Jersey task force includes the state's Health and Senior Services Commissioner, members of the State Board of Medical Examiners, physicians, industry representatives, and consumer advocates.

NQF Substance Abuse Standards

The National Quality Forum has issued a set of national, evidence-based consensus standards on identifying and treating substance abuse. The 11 practices were endorsed by 365 NQF member organizations, including health care providers, professional societies, purchasers, and federal agencies. Voluntary adoption of the standards would lead to improved patient outcomes, according to the NQF. The recommendations cover identification of substance use conditions, initiation and engagement in treatment, therapeutic interventions, and continuing care management. The guidelines can be purchased at the NQF Web site,

www.qualityforum.org

Settlement on Zyprexa Leaks

A former consultant to Eli Lilly & Co. has agreed to pay the drug maker $100,000 to settle complaints that he leaked confidential information about Zyprexa (olanzapine) to a plaintiffs' attorney. Dr. David Egilman was an expert witness for the plaintiffs in Zyprexa product liability suits. Under the agreement, Dr. Egilman acknowledged that he had intentionally and illegally given attorney James Gottstein documents that had been made available by Lilly during discovery, and that “he knew that these materials painted an incomplete picture of the issues related to Zyprexa,” according to a statement by Lilly. Mr. Gottstein shared the documents with the New York Times, which wrote a series of articles in December 2006 contending that Lilly had withheld information about side effects. Lilly said it would donate Dr. Egilman's settlement to the International Center for Clubhouse Development.

Court Date Set for Ayres

Psychiatrist Dr. William Ayres is set to go before a jury in San Mateo County, Calif., in March 2008 to face charges that he molested seven young male patients. In his Sept. 6 arraignment, Dr. Ayres pleaded not guilty. He has maintained his innocence since he was first arrested in April 2007 and charged with molesting at least five former patients. The arrest came after a 4-year investigation conducted by the San Mateo County Police Department. Dr. Ayres, who is 75, is a former president of the American Academy of Child and Adolescent Psychiatry.

Lawmakers OK Delay in Rx Rule

Coming down to the wire on a new federal mandate requiring the use of tamper-resistant prescription pads for all Medicaid prescriptions beginning Oct. 1, lawmakers in the House and the Senate passed legislation in late September that would delay the mandate's start until March 31, 2008. At press time, President Bush was expected to sign the legislation, although it was not clear whether he would sign it by Oct. 1, National Community Pharmacists Association spokesman John Norton told this newspaper. The tamper-proof prescription pad mandate delay was bundled with extensions on several programs due to expire Sept. 30, including an abstinence education initiative that the Bush administration supports, Mr. Norton said. The original mandate, passed as part of war funding legislation earlier this year, requires all Medicaid prescription be written on “tamper resistant” paper to be eligible for federal reimbursement. Even though many states have similar requirements, pharmacists' organizations have maintained that most physicians do not currently use these types of pads, nor are supplies readily available.

Rise in Adverse Drug Event Reports

The number of serious and fatal adverse drug events (ADEs) reported to the Food and Drug Administration more than doubled between 1998 and 2005, according to a report in the Sept. 10 issue of Archives of Internal Medicine. The agency defines a serious adverse event as an event resulting in death, a birth defect, disability, hospitalization, or that requires intervention. During the 8-year period, 467,809 serious events met the inclusion criteria. The number of reported serious ADEs increased from 34,966 in 1998 to 89,842 in 2005, a 2.6-fold increase; the number of reported deaths during that time increased 2.7-fold, from 5,519 to 15,107. The increase was largely a result of expedited reports from manufacturers of serious events not included on the label.

Task Force Looks at Physician Gifts

In New Jersey, which is sometimes called the nation's medicine cabinet, the state's attorney general is taking a closer look at the gift-giving practices of pharmaceutical and medical device companies. The Attorney General's Advisory Task Force on Physician Compensation, which met for the first time in September, is examining the potential impact of payments and gifts to physicians from the drug and device industry. The task force will also consider possible public disclosure of gifts, direct disclosure to patients, and limits on payments to physicians. Vermont, Maine, Minnesota, West Virginia, and the District of Columbia have passed laws requiring some form of reporting of payments made to physicians by pharmaceutical and medical device companies. In response to the formation of the task force, the Pharmaceutical Research and Manufacturers of America issued a statement citing PhRMA's 2002 Code on Interactions with Healthcare Professionals as an important safeguard. The code declares all forms of entertainment to be inappropriate and says that any gifts that are given to physicians should support medical practice and be valued at less than $100. The New Jersey task force includes the state's Health and Senior Services Commissioner, members of the State Board of Medical Examiners, physicians, industry representatives, and consumer advocates.

NQF Substance Abuse Standards

The National Quality Forum has issued a set of national, evidence-based consensus standards on identifying and treating substance abuse. The 11 practices were endorsed by 365 NQF member organizations, including health care providers, professional societies, purchasers, and federal agencies. Voluntary adoption of the standards would lead to improved patient outcomes, according to the NQF. The recommendations cover identification of substance use conditions, initiation and engagement in treatment, therapeutic interventions, and continuing care management. The guidelines can be purchased at the NQF Web site,

www.qualityforum.org

Settlement on Zyprexa Leaks

A former consultant to Eli Lilly & Co. has agreed to pay the drug maker $100,000 to settle complaints that he leaked confidential information about Zyprexa (olanzapine) to a plaintiffs' attorney. Dr. David Egilman was an expert witness for the plaintiffs in Zyprexa product liability suits. Under the agreement, Dr. Egilman acknowledged that he had intentionally and illegally given attorney James Gottstein documents that had been made available by Lilly during discovery, and that “he knew that these materials painted an incomplete picture of the issues related to Zyprexa,” according to a statement by Lilly. Mr. Gottstein shared the documents with the New York Times, which wrote a series of articles in December 2006 contending that Lilly had withheld information about side effects. Lilly said it would donate Dr. Egilman's settlement to the International Center for Clubhouse Development.

Court Date Set for Ayres

Psychiatrist Dr. William Ayres is set to go before a jury in San Mateo County, Calif., in March 2008 to face charges that he molested seven young male patients. In his Sept. 6 arraignment, Dr. Ayres pleaded not guilty. He has maintained his innocence since he was first arrested in April 2007 and charged with molesting at least five former patients. The arrest came after a 4-year investigation conducted by the San Mateo County Police Department. Dr. Ayres, who is 75, is a former president of the American Academy of Child and Adolescent Psychiatry.

Lawmakers OK Delay in Rx Rule

Coming down to the wire on a new federal mandate requiring the use of tamper-resistant prescription pads for all Medicaid prescriptions beginning Oct. 1, lawmakers in the House and the Senate passed legislation in late September that would delay the mandate's start until March 31, 2008. At press time, President Bush was expected to sign the legislation, although it was not clear whether he would sign it by Oct. 1, National Community Pharmacists Association spokesman John Norton told this newspaper. The tamper-proof prescription pad mandate delay was bundled with extensions on several programs due to expire Sept. 30, including an abstinence education initiative that the Bush administration supports, Mr. Norton said. The original mandate, passed as part of war funding legislation earlier this year, requires all Medicaid prescription be written on “tamper resistant” paper to be eligible for federal reimbursement. Even though many states have similar requirements, pharmacists' organizations have maintained that most physicians do not currently use these types of pads, nor are supplies readily available.

Rise in Adverse Drug Event Reports

The number of serious and fatal adverse drug events (ADEs) reported to the Food and Drug Administration more than doubled between 1998 and 2005, according to a report in the Sept. 10 issue of Archives of Internal Medicine. The agency defines a serious adverse event as an event resulting in death, a birth defect, disability, hospitalization, or that requires intervention. During the 8-year period, 467,809 serious events met the inclusion criteria. The number of reported serious ADEs increased from 34,966 in 1998 to 89,842 in 2005, a 2.6-fold increase; the number of reported deaths during that time increased 2.7-fold, from 5,519 to 15,107. The increase was largely a result of expedited reports from manufacturers of serious events not included on the label.

Task Force Looks at Physician Gifts

In New Jersey, which is sometimes called the nation's medicine cabinet, the state's attorney general is taking a closer look at the gift-giving practices of pharmaceutical and medical device companies. The Attorney General's Advisory Task Force on Physician Compensation, which met for the first time in September, is examining the potential impact of payments and gifts to physicians from the drug and device industry. The task force will also consider possible public disclosure of gifts, direct disclosure to patients, and limits on payments to physicians. Vermont, Maine, Minnesota, West Virginia, and the District of Columbia have passed laws requiring some form of reporting of payments made to physicians by pharmaceutical and medical device companies. In response to the formation of the task force, the Pharmaceutical Research and Manufacturers of America issued a statement citing PhRMA's 2002 Code on Interactions with Healthcare Professionals as an important safeguard. The code declares all forms of entertainment to be inappropriate and says that any gifts that are given to physicians should support medical practice and be valued at less than $100. The New Jersey task force includes the state's Health and Senior Services Commissioner, members of the State Board of Medical Examiners, physicians, industry representatives, and consumer advocates.

CHICAGO – Headache is the fifth most common emergency department complaint, but only a small percentage of migraineurs use emergency care for treatment, according to an analysis of the American Migraine Prevalence and Prevention study presented at the annual meeting of the American Headache Society.

Dr. Benjamin Friedman of the Albert Einstein College of Medicine, New York, said he and his colleagues sought to determine how often Americans with headache use the ED or an urgent care facility, and what the risk factors were for frequent use.

The goal of the study was to discern ways to prevent urgent headache visits. Currently there are about 5 million visits a year for headache, he said.

The American Migraine Prevalence and Prevention study (AMPP) is an ongoing multisite survey that began in 2004 when a self-administered headache questionnaire was mailed to a random sample of 120,000 households. The study was supported by a grant to the National Headache Foundation from Ortho-McNeil Inc. Of the 162,576 individuals who responded, 30,721 self-reported severe headaches. Dr. Friedman and his colleagues mailed a follow-up survey in 2005 to a random subsample of 24,000 of the headache sufferers, asking for data on emergency or urgent care use within the previous 12 months.

Data were collected on 13,451 respondents. Among those categorized with migraine or probable migraine, 94% did not visit the emergency department at all, leaving 859 patients who did report a visit. Among those, 48% (412) reported only one visit within the past year. About a third (274) reported 2–3 visits, only 14% (120) reported up to nine visits, and 53 patients reported more than nine visits.

The frequent users, which he classified as 20% of the 859 ED visitors, accounted for 51% of all visits.

The most-cited reasons for going to the ED or urgent care facility included unbearable pain, the inability to reach a primary physician, the ability to get better or different medications, and concern about the significance of the pain (for instance, whether it might be the result of meningitis). A small number of patients said the ED was the primary source of care, and an equal number cited insurance or other financial barriers to care as the reason why they went to an urgent facility instead of a primary physician.

Using a multivariate analysis, Dr. Friedman and his colleagues determined that the main risk factors for urgent care use were the use of those facilities for nonheadache care and a severe migraine disability assessment scale (MIDAS) score. Having insurance was protective against ED visits, he said. The risk factors were similar in frequent ED users, with stronger associations.

The investigators concluded that urgent care facilities are used infrequently for the management of severe headache on a population level, but–because the disorder is so prevalent–headache is a common complaint in the ED. Frequent users are uncommon, but they account for the majority of visits to ED and urgent care. In terms of modifiable risk factors, ED use is associated with more severe headache, so treating the underlying headache may help prevent urgent care visits, Dr. Friedman said.

Dr. Friedman noted that the study is limited by its reliance on self-reporting of ED visits and because it is cross-sectional. Dr. Friedman reported no disclosures other than the study funding.

CHICAGO – Headache is the fifth most common emergency department complaint, but only a small percentage of migraineurs use emergency care for treatment, according to an analysis of the American Migraine Prevalence and Prevention study presented at the annual meeting of the American Headache Society.

Dr. Benjamin Friedman of the Albert Einstein College of Medicine, New York, said he and his colleagues sought to determine how often Americans with headache use the ED or an urgent care facility, and what the risk factors were for frequent use.

The goal of the study was to discern ways to prevent urgent headache visits. Currently there are about 5 million visits a year for headache, he said.

The American Migraine Prevalence and Prevention study (AMPP) is an ongoing multisite survey that began in 2004 when a self-administered headache questionnaire was mailed to a random sample of 120,000 households. The study was supported by a grant to the National Headache Foundation from Ortho-McNeil Inc. Of the 162,576 individuals who responded, 30,721 self-reported severe headaches. Dr. Friedman and his colleagues mailed a follow-up survey in 2005 to a random subsample of 24,000 of the headache sufferers, asking for data on emergency or urgent care use within the previous 12 months.

Data were collected on 13,451 respondents. Among those categorized with migraine or probable migraine, 94% did not visit the emergency department at all, leaving 859 patients who did report a visit. Among those, 48% (412) reported only one visit within the past year. About a third (274) reported 2–3 visits, only 14% (120) reported up to nine visits, and 53 patients reported more than nine visits.

The frequent users, which he classified as 20% of the 859 ED visitors, accounted for 51% of all visits.

The most-cited reasons for going to the ED or urgent care facility included unbearable pain, the inability to reach a primary physician, the ability to get better or different medications, and concern about the significance of the pain (for instance, whether it might be the result of meningitis). A small number of patients said the ED was the primary source of care, and an equal number cited insurance or other financial barriers to care as the reason why they went to an urgent facility instead of a primary physician.

Using a multivariate analysis, Dr. Friedman and his colleagues determined that the main risk factors for urgent care use were the use of those facilities for nonheadache care and a severe migraine disability assessment scale (MIDAS) score. Having insurance was protective against ED visits, he said. The risk factors were similar in frequent ED users, with stronger associations.

The investigators concluded that urgent care facilities are used infrequently for the management of severe headache on a population level, but–because the disorder is so prevalent–headache is a common complaint in the ED. Frequent users are uncommon, but they account for the majority of visits to ED and urgent care. In terms of modifiable risk factors, ED use is associated with more severe headache, so treating the underlying headache may help prevent urgent care visits, Dr. Friedman said.

Dr. Friedman noted that the study is limited by its reliance on self-reporting of ED visits and because it is cross-sectional. Dr. Friedman reported no disclosures other than the study funding.

CHICAGO – Headache is the fifth most common emergency department complaint, but only a small percentage of migraineurs use emergency care for treatment, according to an analysis of the American Migraine Prevalence and Prevention study presented at the annual meeting of the American Headache Society.

Dr. Benjamin Friedman of the Albert Einstein College of Medicine, New York, said he and his colleagues sought to determine how often Americans with headache use the ED or an urgent care facility, and what the risk factors were for frequent use.

The goal of the study was to discern ways to prevent urgent headache visits. Currently there are about 5 million visits a year for headache, he said.

The American Migraine Prevalence and Prevention study (AMPP) is an ongoing multisite survey that began in 2004 when a self-administered headache questionnaire was mailed to a random sample of 120,000 households. The study was supported by a grant to the National Headache Foundation from Ortho-McNeil Inc. Of the 162,576 individuals who responded, 30,721 self-reported severe headaches. Dr. Friedman and his colleagues mailed a follow-up survey in 2005 to a random subsample of 24,000 of the headache sufferers, asking for data on emergency or urgent care use within the previous 12 months.

Data were collected on 13,451 respondents. Among those categorized with migraine or probable migraine, 94% did not visit the emergency department at all, leaving 859 patients who did report a visit. Among those, 48% (412) reported only one visit within the past year. About a third (274) reported 2–3 visits, only 14% (120) reported up to nine visits, and 53 patients reported more than nine visits.

The frequent users, which he classified as 20% of the 859 ED visitors, accounted for 51% of all visits.

The most-cited reasons for going to the ED or urgent care facility included unbearable pain, the inability to reach a primary physician, the ability to get better or different medications, and concern about the significance of the pain (for instance, whether it might be the result of meningitis). A small number of patients said the ED was the primary source of care, and an equal number cited insurance or other financial barriers to care as the reason why they went to an urgent facility instead of a primary physician.

Using a multivariate analysis, Dr. Friedman and his colleagues determined that the main risk factors for urgent care use were the use of those facilities for nonheadache care and a severe migraine disability assessment scale (MIDAS) score. Having insurance was protective against ED visits, he said. The risk factors were similar in frequent ED users, with stronger associations.

The investigators concluded that urgent care facilities are used infrequently for the management of severe headache on a population level, but–because the disorder is so prevalent–headache is a common complaint in the ED. Frequent users are uncommon, but they account for the majority of visits to ED and urgent care. In terms of modifiable risk factors, ED use is associated with more severe headache, so treating the underlying headache may help prevent urgent care visits, Dr. Friedman said.

Dr. Friedman noted that the study is limited by its reliance on self-reporting of ED visits and because it is cross-sectional. Dr. Friedman reported no disclosures other than the study funding.

NEW ORLEANS – Rates of suicide are highest, proportionately, among the elderly, and seem to be very high among seniors who receive home care in the Rochester, N.Y., area, according to a poster presented at the annual meeting of the American Association for Geriatric Psychiatry.

Thomas Richardson, P.A., and his coinvestigator, Dr. Yeates Conwell, both of the University of Rochester, were looking for precursors of suicide in an attempt to determine how to prevent it.

They randomly selected and interviewed clients receiving home care through the Aging Services Network of Rochester. Overall, 211 patients were selected. Most were white (88%) and female (69%), and 101 patients (48%) lived alone. The mean age was 77 years, with a range of 60–102. This also was a fairly low-income group, with almost 45% of the patients having an income of less than $1,250 a month.

They were evaluated using the Paykel Suicide Scale, the physical activities of daily living and instrumental activities of daily living scales, a modified version of the Louisville Older Persons Events Scale, Lubben Social Network Scale, and the Multidimensional Scale of Perceived Social Support.

Of the 211 patients, 65 admitted to feeling that life was not worth living in the past year, 44 said they had wished they were dead, 21 thought of taking their own life, and 8 seriously considered taking their own life, they wrote.

Some of the patients had these thoughts before. Seven percent, or 14 patients, admitted to at least one lifetime suicide attempt and 2 had tried in the past year.

Patients with lower functional status, more stressful life events, and less social support were at higher risk for suicidal ideation.

Mr. Richardson said the rates were surprising to him, despite the high numbers of suicides nationally each year. He and Dr. Conwell are hoping to build a network of providers who can reach out to these home-based patients and provide suicide prevention and treatment. They have received a 5-year grant from the National Institute of Mental Health to develop a system in which social workers would treat home care patients for depression and interface with physicians.

NEW ORLEANS – Rates of suicide are highest, proportionately, among the elderly, and seem to be very high among seniors who receive home care in the Rochester, N.Y., area, according to a poster presented at the annual meeting of the American Association for Geriatric Psychiatry.

Thomas Richardson, P.A., and his coinvestigator, Dr. Yeates Conwell, both of the University of Rochester, were looking for precursors of suicide in an attempt to determine how to prevent it.

They randomly selected and interviewed clients receiving home care through the Aging Services Network of Rochester. Overall, 211 patients were selected. Most were white (88%) and female (69%), and 101 patients (48%) lived alone. The mean age was 77 years, with a range of 60–102. This also was a fairly low-income group, with almost 45% of the patients having an income of less than $1,250 a month.

They were evaluated using the Paykel Suicide Scale, the physical activities of daily living and instrumental activities of daily living scales, a modified version of the Louisville Older Persons Events Scale, Lubben Social Network Scale, and the Multidimensional Scale of Perceived Social Support.

Of the 211 patients, 65 admitted to feeling that life was not worth living in the past year, 44 said they had wished they were dead, 21 thought of taking their own life, and 8 seriously considered taking their own life, they wrote.

Some of the patients had these thoughts before. Seven percent, or 14 patients, admitted to at least one lifetime suicide attempt and 2 had tried in the past year.

Patients with lower functional status, more stressful life events, and less social support were at higher risk for suicidal ideation.

Mr. Richardson said the rates were surprising to him, despite the high numbers of suicides nationally each year. He and Dr. Conwell are hoping to build a network of providers who can reach out to these home-based patients and provide suicide prevention and treatment. They have received a 5-year grant from the National Institute of Mental Health to develop a system in which social workers would treat home care patients for depression and interface with physicians.

NEW ORLEANS – Rates of suicide are highest, proportionately, among the elderly, and seem to be very high among seniors who receive home care in the Rochester, N.Y., area, according to a poster presented at the annual meeting of the American Association for Geriatric Psychiatry.

Thomas Richardson, P.A., and his coinvestigator, Dr. Yeates Conwell, both of the University of Rochester, were looking for precursors of suicide in an attempt to determine how to prevent it.

They randomly selected and interviewed clients receiving home care through the Aging Services Network of Rochester. Overall, 211 patients were selected. Most were white (88%) and female (69%), and 101 patients (48%) lived alone. The mean age was 77 years, with a range of 60–102. This also was a fairly low-income group, with almost 45% of the patients having an income of less than $1,250 a month.

They were evaluated using the Paykel Suicide Scale, the physical activities of daily living and instrumental activities of daily living scales, a modified version of the Louisville Older Persons Events Scale, Lubben Social Network Scale, and the Multidimensional Scale of Perceived Social Support.

Of the 211 patients, 65 admitted to feeling that life was not worth living in the past year, 44 said they had wished they were dead, 21 thought of taking their own life, and 8 seriously considered taking their own life, they wrote.

Some of the patients had these thoughts before. Seven percent, or 14 patients, admitted to at least one lifetime suicide attempt and 2 had tried in the past year.

Patients with lower functional status, more stressful life events, and less social support were at higher risk for suicidal ideation.

Mr. Richardson said the rates were surprising to him, despite the high numbers of suicides nationally each year. He and Dr. Conwell are hoping to build a network of providers who can reach out to these home-based patients and provide suicide prevention and treatment. They have received a 5-year grant from the National Institute of Mental Health to develop a system in which social workers would treat home care patients for depression and interface with physicians.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for a physician to refer patients to hospitals, laboratories, imaging facilities, or other entities in which the physician may have an ownership interest.

Under the new rule, known as Stark III, to be published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities, under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, Mr. Melvin said.

In the Stark III rule, CMS wrote that the change in policy means that “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, Mr. Melvin said.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, Mr. Melvin said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, Ms. Nordeng added.

The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for a physician to refer patients to hospitals, laboratories, imaging facilities, or other entities in which the physician may have an ownership interest.

Under the new rule, known as Stark III, to be published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities, under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, Mr. Melvin said.

In the Stark III rule, CMS wrote that the change in policy means that “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, Mr. Melvin said.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, Mr. Melvin said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, Ms. Nordeng added.

The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for a physician to refer patients to hospitals, laboratories, imaging facilities, or other entities in which the physician may have an ownership interest.

Under the new rule, known as Stark III, to be published in the Federal Register on Sept. 5, physicians will be considered to be “standing in the shoes” of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, “the application of exceptions will be different going forward,” Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have “a lot of contracts that will have to be looked at and possibly revised,” said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the “stand in the shoes” view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices.

Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS. In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities, under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, Mr. Melvin said.

In the Stark III rule, CMS wrote that the change in policy means that “many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements.”

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, Mr. Melvin said.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, Mr. Melvin said.

With the new rule, practices have to “go back and look at everything,” including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

“At the very least, they're going to want to do a review of the arrangements in place,” to see if any of the exceptions being relied on will change with Stark III, Ms. Nordeng added.

The final Stark rule goes into effect on December 5, 2007.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register Sept. 5, physicians will be considered to be "standing in the shoes" of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, "the application of exceptions will be different going forward," Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have "a lot of contracts that will have to be looked at and possibly revised," said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the "stand in the shoes" view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS.

In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, the CMS wrote that the change in policy means that "many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements."

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices have to "go back and look at everything," including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

"At the very least, they're going to want to do a review of the arrangements in place," to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule will go into effect on Dec. 5.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register Sept. 5, physicians will be considered to be "standing in the shoes" of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, "the application of exceptions will be different going forward," Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have "a lot of contracts that will have to be looked at and possibly revised," said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the "stand in the shoes" view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS.

In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, the CMS wrote that the change in policy means that "many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements."

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices have to "go back and look at everything," including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

"At the very least, they're going to want to do a review of the arrangements in place," to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule will go into effect on Dec. 5.

In issuing the third phase of the final regulations implementing the physician self-referral rule, also known as the Stark law, the Center for Medicare and Medicaid Services has returned to a stance it held in the first phase.

The Stark law governs whether, how, and when it is acceptable for physicians to refer patients to hospitals, laboratories, imaging facilities, or other entities in which they may have an ownership interest.

Under the new rule, known as Stark III, published in the Federal Register Sept. 5, physicians will be considered to be "standing in the shoes" of the group practice when their investment arrangements are evaluated for compliance, according to several attorneys.

This reversion back to the initial Stark policy is among the most important changes in the 516-page document, said Daniel H. Melvin, J.D., a partner in the health law department of McDermott, Will & Emery's Chicago office.

As a result, "the application of exceptions will be different going forward," Mr. Melvin said in an interview.

That means that most physicians who have referral arrangements will have "a lot of contracts that will have to be looked at and possibly revised," said Amy E. Nordeng, J.D., a counsel in the government affairs office of the Medical Group Management Association. Ms. Nordeng agreed that the return to the "stand in the shoes" view was the most significant component of Stark III.

Under Stark II—an interim policy that began in 2004—physicians were considered to be individuals, outside of their practices. Exceptions to the law were evaluated using an indirect compensation analysis, which ended up being onerous and was the subject of many complaints to CMS.

In comments on Stark II, physician groups, hospitals, and other facilities (called designated health services, or DHS entities under the Stark law) urged CMS to revert to the old policy.

CMS itself came to see the indirect compensation analysis as a loophole that allowed potentially questionable investment arrangements to slip through, said Mr. Melvin.

In the Stark III rule, the CMS wrote that the change in policy means that "many compensation arrangements that were analyzed under Phase II as indirect compensation arrangements are now analyzed as direct compensation arrangements that must comply with an applicable exception for direct compensation arrangements."

There were several other notable changes in Stark III.

The regulations clarify that physicians who administer pharmaceuticals under Medicare Part B (such as chemotherapy or infusions) or who prescribe physical therapy, occupational therapy, and speech-language pathology, are entitled to get direct productivity credit for those orders, said Mr. Melvin.

The clarification applies to those two ancillary services only, not to radiology or laboratories, or other services typically offered in-house, he said.

CMS also lifted the prohibition on noncompete agreements. Under Stark II, practices could not impose noncompete agreements on physician recruits. Now, practices can bar competition for up to 2 years, but it's not clear how far, geographically, that noncompete can extend, said Mr. Melvin.

With the new rule, practices have to "go back and look at everything," including how their physicians are being compensated and the arrangements the practice may have for equipment and leasing or services with hospitals or other DHS entities, he said.

"At the very least, they're going to want to do a review of the arrangements in place," to see if any of the exceptions being relied on will change with Stark III, added Ms. Nordeng.

The final Stark rule will go into effect on Dec. 5.

Tanning Knowledge Disparity

White Hispanic teens perceive themselves to be at lower risk for skin cancer than white non-Hispanic teens, and thus take fewer precautions, according to a study of students at a public high school in Miami-Dade County. Hispanics are the fastest growing minority in the United States, and while they have a low incidence of melanoma, incidence has been increasing by 3% a year the last 15 years, according to the study, in the August 2007 Archives of Dermatology. A random sample of 369 students completed a self-administered anonymous survey; 60% (221) were white Hispanic and 40% (148) were white non-Hispanic. Hispanics were significantly more likely than non-Hispanics to tan deeply, 44% compared with 31%. Both groups reported spending a similar amount of time in the sun. But Hispanics were 2.5 times more likely than whites to have used a tanning bed in the past year, and reported a greater number of tanning bed uses. Three-quarters of each group agreed that sun exposure was the most important skin cancer risk factor. But more whites were familiar with skin self-exams and how to perform them. Whites were more likely to wear protective clothing and sunscreen with an SPF of 15 or higher. The authors concluded that skin cancer prevention programs should also target Hispanics.

OTC Anti-Aging Products Reviewed

Consumers are increasingly looking for a fountain-of-youth-in-a-bottle, but it still does not exist, despite the proliferation of such claims, according to a review of over-the-counter "anti-aging" products in the July/August issue of Aesthetic Surgery Journal. Dr. Timothy A. Miller, chief of the division of plastic and reconstructive surgery at the University of California, Los Angeles, and resident Dr. Catherine K. Huang reviewed derivatives of vitamins A, B, C, and E, antioxidants like coenzyme Q-10, alpha hydroxy acids, botanicals, moisturizers, and pentapeptides. Only vitamin C, alpha hydroxy acids, and pentapeptides have evidence indicating some anti-aging properties, they concluded. And there have been some promising studies of vitamin A and B derivatives, they said, but the authors concluded that, "although many different compounds are marketed as anti-aging products, there are few studies proving their efficacy."

Nanoparticles in Sunscreens

The nonprofit environmental group Friends of the Earth wants nanoparticles removed from sunscreens, saying that the substances don't boost effectiveness, and that they may be harmful. The group noted that most consumers won't even know which brands have nanoparticles, since they aren't on the label. The group queried 128 manufacturers; 90 refused to answer; 9 said their product did not contain nanoparticles. The group's "Nanoparticles and Sunscreens: A Consumer Guide for Avoiding Nano Sunscreens," can be found at

www.foe.org/nano

NIH Lupus Research Plan

Government scientists recently outlined their plans for future research in lupus. The goals include laying the foundation for lupus prevention, identifying disease triggers, defining target organ damage mechanisms, understanding autoantibodies, expanding biopsychosocial research, discovering and validating biomarkers, and advancing therapy options. These goals are part of a long-range planning document recently released by the National Institute of Arthritis and Musculoskeletal and Skin Diseases, part of the National Institutes of Health. The NIH document predicts that lupus prevention could become an "attainable goal" in the next decade, and outlines a need to advance research efforts to identify disease risk through family studies and genetics. The document, which was mandated by Congress, was developed with input from scientific experts from the lupus community, according to NIH. "The ultimate goal of this plan is to identify needs and opportunities from both public and private organizations to continue to accelerate progress in lupus research to further improve quality of life of patients who have lupus," Dr. Stephen Katz, director of NIAMS, wrote in the introduction to the research plan.

Tanning Knowledge Disparity

White Hispanic teens perceive themselves to be at lower risk for skin cancer than white non-Hispanic teens, and thus take fewer precautions, according to a study of students at a public high school in Miami-Dade County. Hispanics are the fastest growing minority in the United States, and while they have a low incidence of melanoma, incidence has been increasing by 3% a year the last 15 years, according to the study, in the August 2007 Archives of Dermatology. A random sample of 369 students completed a self-administered anonymous survey; 60% (221) were white Hispanic and 40% (148) were white non-Hispanic. Hispanics were significantly more likely than non-Hispanics to tan deeply, 44% compared with 31%. Both groups reported spending a similar amount of time in the sun. But Hispanics were 2.5 times more likely than whites to have used a tanning bed in the past year, and reported a greater number of tanning bed uses. Three-quarters of each group agreed that sun exposure was the most important skin cancer risk factor. But more whites were familiar with skin self-exams and how to perform them. Whites were more likely to wear protective clothing and sunscreen with an SPF of 15 or higher. The authors concluded that skin cancer prevention programs should also target Hispanics.

OTC Anti-Aging Products Reviewed

Consumers are increasingly looking for a fountain-of-youth-in-a-bottle, but it still does not exist, despite the proliferation of such claims, according to a review of over-the-counter "anti-aging" products in the July/August issue of Aesthetic Surgery Journal. Dr. Timothy A. Miller, chief of the division of plastic and reconstructive surgery at the University of California, Los Angeles, and resident Dr. Catherine K. Huang reviewed derivatives of vitamins A, B, C, and E, antioxidants like coenzyme Q-10, alpha hydroxy acids, botanicals, moisturizers, and pentapeptides. Only vitamin C, alpha hydroxy acids, and pentapeptides have evidence indicating some anti-aging properties, they concluded. And there have been some promising studies of vitamin A and B derivatives, they said, but the authors concluded that, "although many different compounds are marketed as anti-aging products, there are few studies proving their efficacy."

Nanoparticles in Sunscreens

The nonprofit environmental group Friends of the Earth wants nanoparticles removed from sunscreens, saying that the substances don't boost effectiveness, and that they may be harmful. The group noted that most consumers won't even know which brands have nanoparticles, since they aren't on the label. The group queried 128 manufacturers; 90 refused to answer; 9 said their product did not contain nanoparticles. The group's "Nanoparticles and Sunscreens: A Consumer Guide for Avoiding Nano Sunscreens," can be found at

www.foe.org/nano

NIH Lupus Research Plan

Government scientists recently outlined their plans for future research in lupus. The goals include laying the foundation for lupus prevention, identifying disease triggers, defining target organ damage mechanisms, understanding autoantibodies, expanding biopsychosocial research, discovering and validating biomarkers, and advancing therapy options. These goals are part of a long-range planning document recently released by the National Institute of Arthritis and Musculoskeletal and Skin Diseases, part of the National Institutes of Health. The NIH document predicts that lupus prevention could become an "attainable goal" in the next decade, and outlines a need to advance research efforts to identify disease risk through family studies and genetics. The document, which was mandated by Congress, was developed with input from scientific experts from the lupus community, according to NIH. "The ultimate goal of this plan is to identify needs and opportunities from both public and private organizations to continue to accelerate progress in lupus research to further improve quality of life of patients who have lupus," Dr. Stephen Katz, director of NIAMS, wrote in the introduction to the research plan.

Tanning Knowledge Disparity

White Hispanic teens perceive themselves to be at lower risk for skin cancer than white non-Hispanic teens, and thus take fewer precautions, according to a study of students at a public high school in Miami-Dade County. Hispanics are the fastest growing minority in the United States, and while they have a low incidence of melanoma, incidence has been increasing by 3% a year the last 15 years, according to the study, in the August 2007 Archives of Dermatology. A random sample of 369 students completed a self-administered anonymous survey; 60% (221) were white Hispanic and 40% (148) were white non-Hispanic. Hispanics were significantly more likely than non-Hispanics to tan deeply, 44% compared with 31%. Both groups reported spending a similar amount of time in the sun. But Hispanics were 2.5 times more likely than whites to have used a tanning bed in the past year, and reported a greater number of tanning bed uses. Three-quarters of each group agreed that sun exposure was the most important skin cancer risk factor. But more whites were familiar with skin self-exams and how to perform them. Whites were more likely to wear protective clothing and sunscreen with an SPF of 15 or higher. The authors concluded that skin cancer prevention programs should also target Hispanics.

OTC Anti-Aging Products Reviewed

Consumers are increasingly looking for a fountain-of-youth-in-a-bottle, but it still does not exist, despite the proliferation of such claims, according to a review of over-the-counter "anti-aging" products in the July/August issue of Aesthetic Surgery Journal. Dr. Timothy A. Miller, chief of the division of plastic and reconstructive surgery at the University of California, Los Angeles, and resident Dr. Catherine K. Huang reviewed derivatives of vitamins A, B, C, and E, antioxidants like coenzyme Q-10, alpha hydroxy acids, botanicals, moisturizers, and pentapeptides. Only vitamin C, alpha hydroxy acids, and pentapeptides have evidence indicating some anti-aging properties, they concluded. And there have been some promising studies of vitamin A and B derivatives, they said, but the authors concluded that, "although many different compounds are marketed as anti-aging products, there are few studies proving their efficacy."

Nanoparticles in Sunscreens

The nonprofit environmental group Friends of the Earth wants nanoparticles removed from sunscreens, saying that the substances don't boost effectiveness, and that they may be harmful. The group noted that most consumers won't even know which brands have nanoparticles, since they aren't on the label. The group queried 128 manufacturers; 90 refused to answer; 9 said their product did not contain nanoparticles. The group's "Nanoparticles and Sunscreens: A Consumer Guide for Avoiding Nano Sunscreens," can be found at

www.foe.org/nano

NIH Lupus Research Plan

Government scientists recently outlined their plans for future research in lupus. The goals include laying the foundation for lupus prevention, identifying disease triggers, defining target organ damage mechanisms, understanding autoantibodies, expanding biopsychosocial research, discovering and validating biomarkers, and advancing therapy options. These goals are part of a long-range planning document recently released by the National Institute of Arthritis and Musculoskeletal and Skin Diseases, part of the National Institutes of Health. The NIH document predicts that lupus prevention could become an "attainable goal" in the next decade, and outlines a need to advance research efforts to identify disease risk through family studies and genetics. The document, which was mandated by Congress, was developed with input from scientific experts from the lupus community, according to NIH. "The ultimate goal of this plan is to identify needs and opportunities from both public and private organizations to continue to accelerate progress in lupus research to further improve quality of life of patients who have lupus," Dr. Stephen Katz, director of NIAMS, wrote in the introduction to the research plan.

Starting next year, federal health programs will cover any procedure performed at an ambulatory surgery center, with few but defined exclusions, according to final regulations released by the Centers for Medicare and Medicaid Services.

The payment formula for such procedures, to be phased in over 4 years, was also set by the regulations.

Previously, CMS covered approximately 2,600 procedures when they were performed at an ASC; now, an additional 790 procedures will be eligible in 2008. According to Dr. Charles Mabry, chairman of the American College of Surgeons' health policy steering committee and a member of the general surgery coding and reimbursement committee, as new procedures receive CPT codes, they, too will be covered, unless they are specifically excluded.

The Centers for Medicare and Medicaid Services will not pay for a procedure if it falls within the following exclusion criteria:

▸ It poses a significant safety risk to the beneficiary.

▸ It would result in the patient's requiring active monitoring or an overnight stay.

▸ It directly involves major blood vessels.

▸ It requires major or prolonged invasion of body cavities.

▸ It results in extensive blood loss.

▸ It is emergent or life threatening.

▸ It requires systemic thrombolysis.

▸ It can be reported only with an unlisted code.

The change means that more patients will likely be able to have procedures done in an ASC, said Dr. Mabry, who is also a shareholder in an ambulatory surgery center in Pine Bluff, Ark.

The question now: “Is the payment rate the right rate?” he said. (See box below.)

CMS also decided to limit payment for procedures performed in an ASC that are done in a physician's office more than half the time. “CMS does not want to create inappropriate payment incentives for procedures to be performed in ASCs if the physician's office is the most efficient setting for providing high-quality care,” according to the agency.

FASA, the advocacy arm of the Foundation for Ambulatory Surgery in America, objected to this proposal and also to CMS's list of exclusions, arguing that the agency should pay for any procedure that is not covered under the inpatient system.

Under the new rule, Medicare will make separate payments for ancillary services, such as radiology, and for some drugs and biologicals considered integral to a surgical procedure. The agency will also make adjustments for procedures that have high device costs (that is, when the cost of the device accounts for more than half the median cost of the procedure).

Those high device-cost procedures include placement of neurostimulators, pulse generators, or pacemakers. The adjustment is already in effect under CMS's hospital outpatient payment system.

Payments to ASCs Proposed for 2008

In addition to setting the formula for how ambulatory surgery centers will be paid going forward, CMS has also issued proposals on how the formula will guide payments to ASCs in 2008, and on how much hospital outpatient departments will receive in 2008.

In 2008, the federal health agency has proposed that ASCs would be paid at 65% of hospital outpatient rates, a slight increase over an earlier proposal of 62%. Medicare and Medicaid expect to pay $3 billion in 2008 to about 4,600 participating ASCs, according to CMS.

In the proposed pay rates, orthopedic procedures would receive the greatest increases, whereas gastrointestinal procedures would be cut. Procedures involving the implantation of cardiac devices are mostly slated for increases, and payment for the implantation of neurologic devices would also increase.

The agency also issued its proposal for hospital outpatient payments, which is partially driven by the desire to keep beneficiary copays at 20%. In 2008, the overall copay will be about 26%, but for most procedures, beneficiaries will be liable for only 20%.

Hospitals will receive $35 billion under the proposed rule in 2008, about a 10% increase over 2007. CMS said “the current rate of growth of expenditures is of great concern,” because of its effect on taxpayers and beneficiaries whose premiums fund 25% of Medicare Part B expenses.

Hospitals will get an automatic 2% cut in fees in 2009 if they don't report on 10 quality measures in 2008, including 5 measures on how well emergency departments handle myocardial infarction; 2 surgical care measures (the selection and timing of antibiotic prophylaxis); 1 heart failure measure (ACE inhibitor or angiotensin receptor blocker given); 1 on community-acquired pneumonia (empiric antibiotic); and a diabetes measure (poor hemoglobin A_1c control).

Starting next year, federal health programs will cover any procedure performed at an ambulatory surgery center, with few but defined exclusions, according to final regulations released by the Centers for Medicare and Medicaid Services.

The payment formula for such procedures, to be phased in over 4 years, was also set by the regulations.

Previously, CMS covered approximately 2,600 procedures when they were performed at an ASC; now, an additional 790 procedures will be eligible in 2008. According to Dr. Charles Mabry, chairman of the American College of Surgeons' health policy steering committee and a member of the general surgery coding and reimbursement committee, as new procedures receive CPT codes, they, too will be covered, unless they are specifically excluded.

The Centers for Medicare and Medicaid Services will not pay for a procedure if it falls within the following exclusion criteria:

▸ It poses a significant safety risk to the beneficiary.

▸ It would result in the patient's requiring active monitoring or an overnight stay.

▸ It directly involves major blood vessels.

▸ It requires major or prolonged invasion of body cavities.

▸ It results in extensive blood loss.

▸ It is emergent or life threatening.

▸ It requires systemic thrombolysis.

▸ It can be reported only with an unlisted code.

The change means that more patients will likely be able to have procedures done in an ASC, said Dr. Mabry, who is also a shareholder in an ambulatory surgery center in Pine Bluff, Ark.

The question now: “Is the payment rate the right rate?” he said. (See box below.)

CMS also decided to limit payment for procedures performed in an ASC that are done in a physician's office more than half the time. “CMS does not want to create inappropriate payment incentives for procedures to be performed in ASCs if the physician's office is the most efficient setting for providing high-quality care,” according to the agency.

FASA, the advocacy arm of the Foundation for Ambulatory Surgery in America, objected to this proposal and also to CMS's list of exclusions, arguing that the agency should pay for any procedure that is not covered under the inpatient system.

Under the new rule, Medicare will make separate payments for ancillary services, such as radiology, and for some drugs and biologicals considered integral to a surgical procedure. The agency will also make adjustments for procedures that have high device costs (that is, when the cost of the device accounts for more than half the median cost of the procedure).

Those high device-cost procedures include placement of neurostimulators, pulse generators, or pacemakers. The adjustment is already in effect under CMS's hospital outpatient payment system.

Payments to ASCs Proposed for 2008

In addition to setting the formula for how ambulatory surgery centers will be paid going forward, CMS has also issued proposals on how the formula will guide payments to ASCs in 2008, and on how much hospital outpatient departments will receive in 2008.

In 2008, the federal health agency has proposed that ASCs would be paid at 65% of hospital outpatient rates, a slight increase over an earlier proposal of 62%. Medicare and Medicaid expect to pay $3 billion in 2008 to about 4,600 participating ASCs, according to CMS.

In the proposed pay rates, orthopedic procedures would receive the greatest increases, whereas gastrointestinal procedures would be cut. Procedures involving the implantation of cardiac devices are mostly slated for increases, and payment for the implantation of neurologic devices would also increase.

The agency also issued its proposal for hospital outpatient payments, which is partially driven by the desire to keep beneficiary copays at 20%. In 2008, the overall copay will be about 26%, but for most procedures, beneficiaries will be liable for only 20%.

Hospitals will receive $35 billion under the proposed rule in 2008, about a 10% increase over 2007. CMS said “the current rate of growth of expenditures is of great concern,” because of its effect on taxpayers and beneficiaries whose premiums fund 25% of Medicare Part B expenses.

Hospitals will get an automatic 2% cut in fees in 2009 if they don't report on 10 quality measures in 2008, including 5 measures on how well emergency departments handle myocardial infarction; 2 surgical care measures (the selection and timing of antibiotic prophylaxis); 1 heart failure measure (ACE inhibitor or angiotensin receptor blocker given); 1 on community-acquired pneumonia (empiric antibiotic); and a diabetes measure (poor hemoglobin A_1c control).

Starting next year, federal health programs will cover any procedure performed at an ambulatory surgery center, with few but defined exclusions, according to final regulations released by the Centers for Medicare and Medicaid Services.

The payment formula for such procedures, to be phased in over 4 years, was also set by the regulations.

Previously, CMS covered approximately 2,600 procedures when they were performed at an ASC; now, an additional 790 procedures will be eligible in 2008. According to Dr. Charles Mabry, chairman of the American College of Surgeons' health policy steering committee and a member of the general surgery coding and reimbursement committee, as new procedures receive CPT codes, they, too will be covered, unless they are specifically excluded.

The Centers for Medicare and Medicaid Services will not pay for a procedure if it falls within the following exclusion criteria:

▸ It poses a significant safety risk to the beneficiary.

▸ It would result in the patient's requiring active monitoring or an overnight stay.

▸ It directly involves major blood vessels.

▸ It requires major or prolonged invasion of body cavities.

▸ It results in extensive blood loss.

▸ It is emergent or life threatening.

▸ It requires systemic thrombolysis.

▸ It can be reported only with an unlisted code.

The change means that more patients will likely be able to have procedures done in an ASC, said Dr. Mabry, who is also a shareholder in an ambulatory surgery center in Pine Bluff, Ark.

The question now: “Is the payment rate the right rate?” he said. (See box below.)

CMS also decided to limit payment for procedures performed in an ASC that are done in a physician's office more than half the time. “CMS does not want to create inappropriate payment incentives for procedures to be performed in ASCs if the physician's office is the most efficient setting for providing high-quality care,” according to the agency.

FASA, the advocacy arm of the Foundation for Ambulatory Surgery in America, objected to this proposal and also to CMS's list of exclusions, arguing that the agency should pay for any procedure that is not covered under the inpatient system.

Under the new rule, Medicare will make separate payments for ancillary services, such as radiology, and for some drugs and biologicals considered integral to a surgical procedure. The agency will also make adjustments for procedures that have high device costs (that is, when the cost of the device accounts for more than half the median cost of the procedure).

Those high device-cost procedures include placement of neurostimulators, pulse generators, or pacemakers. The adjustment is already in effect under CMS's hospital outpatient payment system.

Payments to ASCs Proposed for 2008

In addition to setting the formula for how ambulatory surgery centers will be paid going forward, CMS has also issued proposals on how the formula will guide payments to ASCs in 2008, and on how much hospital outpatient departments will receive in 2008.

In 2008, the federal health agency has proposed that ASCs would be paid at 65% of hospital outpatient rates, a slight increase over an earlier proposal of 62%. Medicare and Medicaid expect to pay $3 billion in 2008 to about 4,600 participating ASCs, according to CMS.

In the proposed pay rates, orthopedic procedures would receive the greatest increases, whereas gastrointestinal procedures would be cut. Procedures involving the implantation of cardiac devices are mostly slated for increases, and payment for the implantation of neurologic devices would also increase.

The agency also issued its proposal for hospital outpatient payments, which is partially driven by the desire to keep beneficiary copays at 20%. In 2008, the overall copay will be about 26%, but for most procedures, beneficiaries will be liable for only 20%.

Hospitals will receive $35 billion under the proposed rule in 2008, about a 10% increase over 2007. CMS said “the current rate of growth of expenditures is of great concern,” because of its effect on taxpayers and beneficiaries whose premiums fund 25% of Medicare Part B expenses.

Hospitals will get an automatic 2% cut in fees in 2009 if they don't report on 10 quality measures in 2008, including 5 measures on how well emergency departments handle myocardial infarction; 2 surgical care measures (the selection and timing of antibiotic prophylaxis); 1 heart failure measure (ACE inhibitor or angiotensin receptor blocker given); 1 on community-acquired pneumonia (empiric antibiotic); and a diabetes measure (poor hemoglobin A_1c control).

Building on the success of its Hospital Quality Improvement Demonstration, Premier Inc. is launching a new initiative to pay hospitals that perform at the top of a scale measuring improvements in mortality, the percentage of patients who receive appropriate care, efficiency, harm avoidance, and patient satisfaction.

Premier introduced the QUEST (Quality, Efficiency, Safety, and Transparency) initiative in late July and said it was recruiting hospitals to participate through the end of September. In a briefing with reporters, Premier president and CEO Richard A. Norling said that 60 hospitals had expressed interest so far, but he declined to name them.

Premier is an alliance that is owned by 1,700 nonprofit hospitals. Premier's purchasing network also serves 46,500 health care entities.

The alliance's previous project—HQID—was a joint effort with the Centers for Medicare & Medicaid Services that began in 2003 and concludes in November.

QUEST will initially focus on hospitals' risk-adjusted mortality ratio, and on how well they deliver appropriate care, measured by the percentage of patients who receive perfect care according to evidence-based guidelines. Hospitals will also be measured on the severity adjusted cost per discharge, a reflection of efficiency.

In the second year, QUEST hospitals will have to show how well they prevent health care-related infections and adverse drug events, and how well they serve patients, measured through CMS Hospital Consumer Assessment of Healthcare Providers and Systems.

QUEST participants are also expected to share best practices.

The hospitals that show the most improvement from baseline will receive an incentive payment, most likely in year 3.

Premier has provided seed money for the incentives, said Susan DeVore, the alliance's chief operating officer. The company is in discussions with the Blue Cross Blue Shield Association to provide more funds.

QUEST results will be made public at some point, though in aggregate only.

“Transparency has arrived and should be considered a good thing for providers,” said Dr. Ken Davis, chief medical officer of North Mississippi Health Services, at the briefing. The Tupelo, Miss.-based hospital is a member of Premier and will be a QUEST participant, said Dr. Davis.

Building on the success of its Hospital Quality Improvement Demonstration, Premier Inc. is launching a new initiative to pay hospitals that perform at the top of a scale measuring improvements in mortality, the percentage of patients who receive appropriate care, efficiency, harm avoidance, and patient satisfaction.

Premier introduced the QUEST (Quality, Efficiency, Safety, and Transparency) initiative in late July and said it was recruiting hospitals to participate through the end of September. In a briefing with reporters, Premier president and CEO Richard A. Norling said that 60 hospitals had expressed interest so far, but he declined to name them.

Premier is an alliance that is owned by 1,700 nonprofit hospitals. Premier's purchasing network also serves 46,500 health care entities.

The alliance's previous project—HQID—was a joint effort with the Centers for Medicare & Medicaid Services that began in 2003 and concludes in November.

QUEST will initially focus on hospitals' risk-adjusted mortality ratio, and on how well they deliver appropriate care, measured by the percentage of patients who receive perfect care according to evidence-based guidelines. Hospitals will also be measured on the severity adjusted cost per discharge, a reflection of efficiency.

In the second year, QUEST hospitals will have to show how well they prevent health care-related infections and adverse drug events, and how well they serve patients, measured through CMS Hospital Consumer Assessment of Healthcare Providers and Systems.

QUEST participants are also expected to share best practices.

The hospitals that show the most improvement from baseline will receive an incentive payment, most likely in year 3.

Premier has provided seed money for the incentives, said Susan DeVore, the alliance's chief operating officer. The company is in discussions with the Blue Cross Blue Shield Association to provide more funds.

QUEST results will be made public at some point, though in aggregate only.

“Transparency has arrived and should be considered a good thing for providers,” said Dr. Ken Davis, chief medical officer of North Mississippi Health Services, at the briefing. The Tupelo, Miss.-based hospital is a member of Premier and will be a QUEST participant, said Dr. Davis.

Building on the success of its Hospital Quality Improvement Demonstration, Premier Inc. is launching a new initiative to pay hospitals that perform at the top of a scale measuring improvements in mortality, the percentage of patients who receive appropriate care, efficiency, harm avoidance, and patient satisfaction.

Premier introduced the QUEST (Quality, Efficiency, Safety, and Transparency) initiative in late July and said it was recruiting hospitals to participate through the end of September. In a briefing with reporters, Premier president and CEO Richard A. Norling said that 60 hospitals had expressed interest so far, but he declined to name them.

Premier is an alliance that is owned by 1,700 nonprofit hospitals. Premier's purchasing network also serves 46,500 health care entities.

The alliance's previous project—HQID—was a joint effort with the Centers for Medicare & Medicaid Services that began in 2003 and concludes in November.

QUEST will initially focus on hospitals' risk-adjusted mortality ratio, and on how well they deliver appropriate care, measured by the percentage of patients who receive perfect care according to evidence-based guidelines. Hospitals will also be measured on the severity adjusted cost per discharge, a reflection of efficiency.

In the second year, QUEST hospitals will have to show how well they prevent health care-related infections and adverse drug events, and how well they serve patients, measured through CMS Hospital Consumer Assessment of Healthcare Providers and Systems.

QUEST participants are also expected to share best practices.

The hospitals that show the most improvement from baseline will receive an incentive payment, most likely in year 3.

Premier has provided seed money for the incentives, said Susan DeVore, the alliance's chief operating officer. The company is in discussions with the Blue Cross Blue Shield Association to provide more funds.

QUEST results will be made public at some point, though in aggregate only.

“Transparency has arrived and should be considered a good thing for providers,” said Dr. Ken Davis, chief medical officer of North Mississippi Health Services, at the briefing. The Tupelo, Miss.-based hospital is a member of Premier and will be a QUEST participant, said Dr. Davis.