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ALS MEMBER UPDATE: SEPTEMBER 6, 2001:
ALS FILES SUIT AGAINST HCFA SEEKING TO ENJOIN ENFORCEMENT OF THE STARK II REGUATIONS

The American Lithotripsy Society [ALS] and the Urology Society of America [USA] have filed a lawsuit challenging the Stark II regulations. The lawsuit, filed in federal court in the District of Columbia on August 24, 2001, takes aim at the decision of the Health Care Finance Administration [HCFA] (now CMS) to interpret the anti-referral provisions of Stark II to cover lithotripsy. HCFA extended the regulations to lithotripsy despite clear congressional intent that the statute was not intended to apply to lithotripsy. HCFA took this action despite being unable to point to any evidence that lithotripsy presents any danger of overutilization, the evil that Stark II was designed to prevent.


ALS and USA are also asking the court to invalidate the definition of fair market value HCFA set forth in the preamble to its regulations. This definition, directed solely at lithotripsy providers, deviates from the common-sense definition Congress chose and essentially permits HCFA to ignore prices negotiated by lithotripsy providers in arms-length negotiations with hospitals. HCFA claims that unspecified "distortions" caused by physician ownership of lithotripters justify this deviation. Under its regulations, HCFA would have the power to set fair market value for services for Medicare and private pay patients at whatever price HCFA deems to be appropriate. Since HCFA refuses to give guidance in advance on what it thinks constitutes fair market value, HCFA's position forces lithotripsy providers throughout the country to guess how HCFA might evaluate their compensation. If they guess wrong, they face significant penalties.


The complaint filed by ALS and USA alleges that the Stark II regulations violate the Administrative Procedures Act because the regulations are arbitrary and irrational, are contrary to congressional directives, and are based on positions HCFA has no evidence to support. The suit also alleges that the regulations violate the Regulatory Flexibility Act because they contain no analysis of the impact of the regulations on small businesses.


ALS and USA are asking the court to issue an injunction prohibiting HCFA from enforcing the Stark II regulations with regard to lithotripsy. The suit does not seek to overturn the regulations in their entirety. Moreover, the lawsuit does not challenge HCFA's setting of ASC or HOPPS rates for lithotripsy. Any such challenge would have to take place in a different forum. It is nevertheless our hope that this lawsuit might ultimately force HCFA to abandon its long-running hostility towards lithotripsy and lithotripsy providers.

If you have any questions concerning this Member Update, please contact:
American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Tel: 781-895-9098 / Fax: 781-895-9088


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American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088
email:
als@lithotripsy.org


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