MEMBER UPDATE: January 24, 2002


On January 4, 2002, Phase I of the Stark II regulations went into effect, making lithotripsy performed "under arrangement" with a hospital a "designated health service" and therefore subject to Stark II's anti-referral provisions. Although a recent article from the Urology Times may have left readers with the impression that lithotripsy referrals are now banned, this is not the case. Physicians can still make lithotripsy referrals if they meet the exceptions found in the statute, all of which require that the compensation paid by the hospital to the physician-owned lithotripsy facility be limited to "fair market value." Accordingly, properly structured arrangements for lithotripsy referrals may continue, but, in general, at lower prices than before. This result is what prompted ALS' lawsuit against CMS.

Stark II Lawsuit
As you know, on November 30, 2001, Judge Henry Kennedy denied ALS and USA's motion for a preliminary injunction in the Stark II lawsuit against CMS. Judge Kennedy's boilerplate order denying the motion contained none of the findings of fact or conclusions of law required by the federal rules. This shortcoming was the basis for ALS and USA's immediate appeal to the D.C. Circuit Court of Appeals. After Judge Kennedy granted the government's motion to stay the case pending the outcome of the appeal, it was determined that the best course of action would be to drop the appeal and press forward at the trial court level to get a final decision on the merits. Our goal is to get as quick a decision as possible.

On January 16, 2002, Judge Kennedy granted ALS' motion to resume briefing in the case. The judge entered a schedule requiring all motions, oppositions, and replies to be filed within the next two months. In keeping with the Court's schedule, ALS and USA will soon move for summary judgment on our claims. We are contending that CMS had no valid basis for including lithotripsy within the Stark II regulations and that CMS violated a federal law requiring agencies to consider the effect of proposed regulations on small businesses.

CMS will also file its own summary judgment motion within the next three weeks. We hope that the judge will rule on both summary judgment motions by June of this year. If the judge rules in our favor, CMS will not be permitted to enforce the Stark II regulations with respect to lithotripsy. If the decision is unfavorable, we will immediately appeal, and bring all of the issues before the appellate court.

If you have any questions concerning this Member Update, please contact the Executive Director of the American Lithotripsy Society, Wes Harrington at the ALS Headquarters in Waltham, Massachusetts. Watch the ALS Website / Governmental Affairs Updates / for more information regarding this situation in the weeks ahead.

Back to Governmental Affairs

Visit us again to receive up-to-the-minute reports on major issues such as the Health Care Finance Administration's (HCFA) proposed implementation of the Stark II (Physician Ownership) regulations and HCFA's proposed rates for lithotripsy performed in/out patient and ambulatory surgical center settings.

For additional information contact, Wesley E. Harrington, CAE, Executive Director of ALS at:
American Lithotripsy Society, 305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088


American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088

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