As part of health reform this year, Congress closed the door on physicians owning or investing in hospitals where they refer their patients. Lawmakers also severely limited the ability of grandfathered hospitals to expand. Rules proposed earlier this month include some surprises, and comments are due by Aug. 31.
In 1989, Congress passed §1877 of the Social Security Act, codified at 42 U.S.C. §1395nn. Known as the physician self-referral law or Stark law after proponent U.S. Rep. Fortney “Pete” Stark, D-Calif., the law prohibits a physician from referring patients for designated health services payable by Medicare if the physician (or an immediate family member) has a financial relationship with the entity providing the services — unless an exception applies. Likewise, the entity may not submit claims for such referred services.
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