Relearning The Codes Stark Self-referral Law Revises Its List Of Designated Health Services

In response to public demand, the Centers for Medicare and Medicaid Services (CMS) published a list of CPT/HCPCS codes that met the Stark Law definition of designated health services in the Nov. 1, 2001 issue of the Federal Register.


The Stark Law prohibits physician referrals of services represented by codes payable by Medicare and/or Medicaid when the referral is to an entity with which the referring physician has a financial relationship and no exception applies.

On Dec. 31, 2002, the Centers for Medicare & Medicaid Services published the latest update to the list codes defined as designated health services (DHS) and subject to the Stark Law. The updated list appeared in Addendum E of the Medicare physician fee schedule for calendar year 2003.

The revised list of codes, effective March 1, specifies the services and procedures defined as DHS in the categories of

(1) clinical laboratory services,

(2) physical therapy services (including speech-language pathology services),

(3) occupational therapy services,

(4) radiology and certain other imaging services, and

(5) radiation therapy services and supplies.

The update includes 46 additions, 26 deletions, and one revision to the codes listed in the November 2001 Federal Register (published as part of the 2002 physician fee schedule).

Examples include certain obstetric ultrasound procedures that may be performed by ob/gyn and family practice physicians, select bone-density exams, and certain procedures related to cochlear implants that may be used by otolaryngologists, speech pathologists, and audiologists.

The updated list also includes several category III codes for new technologies and services. For example, the update now includes certain category III and G codes for extracorporeal shock-wave therapy in the DHS category of physical therapy services. Orthopedic surgeons, physical therapists, and other providers may order these therapy procedures, including those for the elbow and musculoskeletal system. The inclusion of these particular codes may prove confusing and potentially troublesome for providers making referrals for such services.

The troublesome nature of the inclusion of the category III codes, and potentially other codes not previously listed as DHS, arises because the services were not previously included as DHS, and providers may have structured business arrangements that assume that particular services (e.g., extracorporeal shock-wave therapy services) are not DHS. Now that the services are defined as DHS, business structures and/or referral arrangements may now need restructuring to promote compliance.

In the update, CMS also adds several codes that may qualify for specific exceptions under the Stark Law and final rule. CMS added three more vaccine codes which identify preventive screening tests, immunizations, and vaccines that may qualify for the final rule’s exception for such services.

Similarly, four J codes added to the list of dialysis-related outpatient drugs may qualify for the exception for such items. Importantly, these drugs and items will be excluded from the Stark Law’s self-referral prohibition only if the specific requirements of the applicable exception are met.

The update also removes certain codes from the previous listing published with the Jan. 1, 2001 final rule. Included are three ultrasound codes that involve invasive procedures. The codes were deleted and are therefore not defined as DHS because the final rule excludes from the DHS category of “radiology and certain other imaging services,” invasive procedures that involve the insertion of a needle, catheter, tube, or probe.

Consult the full list of codes for a complete understanding of the new updates. The list of added and deleted codes may be found on pages 80,017-80,018 of the Dec. 31, 2002 Federal Register, and the full code list begins on page 80,172.

Although the update provides the exclusive and complete list of CPT/HCPCS codes in five specific categories of DHS, it does not delineate procedures that may be classified in other categories of DHS, such as outpatient prescription drugs and inpatient and outpatient hospital services.

Accordingly, physician referrals for other services not listed on the update can potentially be classified in one of these other categories of DHS, and are therefore subject to the Stark Law’s self-referral prohibitions. When it comes to compliance with the Stark Law, health care providers and their counsel must always pay close attention to detail and the facts of each situation.

James B. Calnan is partner-in-charge of the Health Care Services Division of Meyers Brothers, P.C. in Longmeadow; (413) 567-6101.

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