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Safe harbor regulations hit shoal at Justice

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The safe harbor regulations have run aground once again. Officialsat the Department of Health and Human Services now predict theregulations will not clear the Office of Management and Budgetfor two to three months--if then. DHHS has been trying to

The safe harbor regulations have run aground once again. Officialsat the Department of Health and Human Services now predict theregulations will not clear the Office of Management and Budgetfor two to three months--if then.

DHHS has been trying to write the safe harbor regulations forover three years. Their purpose is to outline instances when referringphysician investment in imaging and other medical centers wouldbe considered acceptable under Medicare and Medicaid antifraudand abuse legislation.

The intent of the legislation is to stop referral kickbacksand other abuses. The safe harbor regulations would, in effect,curtail the degree of referring physician investment allowed inimaging and other centers (SCAN 9/14/88).

The current holdup is at the Department of Justice. In deferenceto Justice, the OMB stopped the review it began last fall. Itwill not resume until the Justice Department's assessment of safeharbors is complete.

"Justice has serious misgivings about publishing safeharbors in this format, and obviously OMB is not going to proceedwith its review, so this has been a long, drawn-out process withno result," said Joseph M. Thompson Jr., executive vice presidentof the American Imaging Association.

Little is certain about the delays that have beset the regulations.

"We have not been told what the problems are, if any,or what they (Justice reviewers) are looking at," said TonySims, a spokesman for the DHHS Office of the Inspector General,which wrote the regulations. "We were just told it wouldtake a while." Sources indicate, however, that the JusticeDepartment's comments are likely to be extensive.

The bureaucracy's anxiety about the regulations is believedto center on the potentially "anticompetitive" natureof some of their criteria. When the first draft of the regulationswas released in December 1989, Justice and OMB both objected tolanguage regarding physicians' investment in imaging centers towhich they refer patients.

Similar objections may be causing the current problems. TheAIA has named two criteria it believes are anticompetitive. Onestates that no more than 50% of the total investment can be madeby physicians who are in a position to make or influence referrals.The other decrees that no more than 50% of the gross revenue inany fiscal year can come from referrals of business generatedfrom investors.

"(These would) require the restructuring of legitimatetransactions and significantly inhibit new transactions that wouldfoster competition in the health-care marketplace," saidH. Carlton Stinson, AIA president.

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