A Medical Device Daily

The Centers for Medicare & Medicaid Services (CMS) recently published the third phase of rules dealing with physician self-referral under Stark law, and although the agency bills this as the final installment, previous experience with federal rulemaking suggests that this view is optimistic.

The fact that Congress has yet to pass a bill for healthcare information technology also suggests that this set of regulations is not yet cast in stone.

CMS said the final rule enhances the flexibility regarding hospital recruitment and retention of physicians in that payments related to such efforts “are expanded to permit recruitment of more physicians into extended areas when needed.” The final rule also states that any doctors whose compensation from a hospital exceeds the limit is off the hook so long as the payment does not exceed the cap by more than 50% and the excess is reimbursed to the hospital within 180 days or by the end of the calendar year, whichever is first.

Herb Kuhn, acting deputy administrator at CMS, said in a prepared statement that the rules “protect beneficiaries from receiving services they may not need and the Medicare program from paying potentially unnecessary costs.”

Stark law dates back to 1989 when the legislation was passed and in its original form, was designed to deal with physicians who recommend tests that would be handled by labs in which the physician had a financial interest. The legislation is named after Rep. Pete Stark (D-California), the primary author of the original bill. Stark now chairs the House Ways and Means Health subcommittee, which has jurisdiction over many of CMS’s functions.

Stark and anti-kickback laws have both served as a flashpoint for efforts to pass legislation designed to boost roll-out of electronic health records in both the current and the previous iterations of Congress (Medical Device Daily, May 31, 2006, April 2, 2007).

According to the text of the CMS rule, the agency posted the first phase of the final rule in the Federal Register in January 2001, while Phase II showed up in the FR in March 2004.

The rule, in part, responds to comments to Phase II of the final rule. According to the text of the final rule, a number of the comments submitted to CMS after Phase II indicated an objection to the requirement that any arrangements that are not barred by regulations under the Stark law cannot violate anti-kickback laws. According to CMS, those comments apparently included the observation that “the condition is unnecessary and undercuts our efforts to create ‘bright lines’.”

The agency’s position is that its authority is limited, which necessitates inclusion of anti-kickback statutes “to ensure that the exceptions promulgated under that authority do not pose a risk of program or patient abuse.” CMS is also of the opinion that since physician practices have to comply with anti-kickback rules in any case, “any additional burden associated with the requirement is minimal.”

The final rule is a 516-page document and is available at the CMS web site. It will be published in the Federal Register Sept. 5. Given the 90-day lag between the publication date and the effective date, the rule is scheduled to be in force Dec. 4.

At press time, the American Medical Association (Chicago) had not returned calls seeking comment on how these new rules will impact physicians.

Spineology hit with warning over promotions

FDA’s review of medical device promotions snared another fish, this time Spineology (St. Paul, Minnesota) for its promotion of the Optimesh.

According to the Aug. 15 warning letter, the 510(k) for the Optimesh clears it for use “in maintaining the relative position of bone growth material ... within a vertebral body defect that does not “impact the stability of the relative position and does not include the vertebral endplates.” However, the agency discovered that the company’s web site and a DVD distributed at the 2006 meeting of the North American Spine Society (Burr Ridge, Illinois) promoted the device “for use in procedures requiring structural support.” The list of such procedures is said to have included vertebral compression fractures, kyphoplasty and spineoplasty.

According to the warning letter, the label for the Optimesh is required “to bear a black box warning stating that the safety and effectiveness of the device for use in fusion of the interbody space has not been established.” Spineology had not responded to a call for comment at press time.

Unions opposed to patent reform

The knowledge that the House and the Senate had passed fairly similar versions of the Patent Reform Act of 2007 (Medical Device Daily, Aug. 21, 2007) led to optimism about the chances for passage in the first year of the 110th Congress. However, three labor unions have lent their voices to the chorus calling for changes to those bills, presenting a roadblock to passage.

The AFL-CIO (Washington) is one of the three unions that have sent letters to Democrats in the Senate and House to oppose the provision that deals with the review process for granted patents and the provision dealing with how damages are calculated for patent infringement claims.

The letter from AFL-CIO stated that the provisions for damages and review “may have a negative impact on innovation and research,” adding that as “the Chinese government is constantly being challenged to live up to its intellectual property obligations, we do not want to take actions that may weaken ours.”

For its part, the United Steelworkers (Pittsburgh) said that almost seven in 10 patents filed in the U.S. are from manufacturing firms, and claimed that the bills “would allow an endless loop of legal challenges after patents are awarded” and “will make it more difficult for U.S. patent holders to prevail against frivolous challenges.”

Congress will not likely take up the patent reform effort immediately upon its return from the August recess due to the need to get bills for FDA reauthorization and the CHIP program out the door. Those bills have to go out by the end of September or immediate funding problems ensue, and both bills are controversial.

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