Friday, November 28, 2014

Health Care Law: The Winding Path Of The Stark Law And Medicaid Claims

By Melissa A. Mora

If the Stark law, 42 U.S.C. § 1395nn, was not perplexing enough, recent decisions and settlements have made it even more puzzling. Until the past few years, the federal government primarily enforced the Stark law through false claims act cases where providers engaged in some type of prohibited relationship with a physician resulting in improper referrals from that physician and the submission of a Medicare claim.

The Omnibus Budget Reconciliation Act of 1993 amended the federal statute governing payments to states - 42 U.S.C. § 1396b. The Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, (Aug. 10, 1993). Specifically, this regulation provides that no Medicaid payment shall be made for the provision of a designated health service to an individual on the basis of a referral that would result in the denial of a payment under the same terms and conditions for a Medicare claim under the Stark law. This legislation increased the existing misperception as to the application of the Stark law on Medicaid claims.

In an effort to clarify some of the confusion, the Centers for Medicare and Medicaid Services (CMS) indicated in commentary that it does not believe the rules and sanctions under the Stark law apply to physicians and providers when the referral involves Medicaid claims. 63 Fed. Reg. 1659, 1704 (January 9, 1998). This was further complicated as CMS went on to say in the same guidance that it cannot pay for Medicaid claims that violate the Stark law, but that the state could. CMS declined to finalize the proposed language and, to date, has not issued any further commentary as to the Stark law’s reach in Medicaid cases.

Over the past few years, a number of courts interpreted 42 U.S.C. § 1396b to extend the Stark law and false claims liability to Medicaid claims. See Fresenius Med. Care Holdings, Inc. v. Tucker, 704 F.3d 935, 937 (11th Cir. 2013); United States v. Tenet Healthcare Corp., 2012 WL 2871264, at *6 (S.D. Fla. July 12, 2012); United States v. Halifax Med. Ctr., 2012 WL 921147, at *3-4 (M.D. Fla. March 19, 2012).

More recently, in United States v. All Children’s Health Systems, Inc., 2013 WL 6054803 (M.D. Fla. Nov. 15, 2013), the court denied the defendant’s motion seeking to dismiss the action based on the defendant’s argument that the Stark law does not apply to Medicaid claims. The court, in citing to the decisions referenced herein, found that although the defendant’s argument is generally correct that the Stark law applies to Medicare claims, the referral prohibition also applies to Medicaid claims through 42 U.S.C. § 1396b(s).

These decisions and recent government enforcement efforts are shedding light on the expanded application of the Stark law to Medicaid claims, once thought to only to apply to Medicare claims. Going forward, we may see additional cases with similar results as the government makes significant effort not to pay for any false or improper claims.

In the face of the government’s heightened sensitivity to the submission of false and improper claims, the health care community should proceed with caution when navigating the winding path of the Stark law’s applicability to Medicaid claims.