Medicare fraud regulations and the implications for joint ventures: are we working at cross purposes?

The broad language and the broad application of the antifraud and Stark statutes has created uncertainty in the developing trend toward prepaid health plans and other systems (such as joint ventures) which are designed to deliver high quality services at reasonable costs. The motivation behind the statutes and the need for statutes that prosecute exploitation of the federal health care systems are needed. However, a reactive prosecutorial system may be inappropriate. A proactive administrative regulatory system where parties contemplating such ventures can receive quick, reliable approval or disapproval (with an explanation) would reduce the uncertainty in the current system. Such a system can be developed using the Stark reporting requirements and can be based on the model of certificate-of-need applications. Such models are being discussed in national health reform proposals, but in the area of antitrust. These proposals should consider such mechanisms for health care fraud that is of a more subtle nature. A serious longterm drawback is the lack of a preemption provision in the current laws and the proposals for national health reform relating to health care fraud and prohibited referrals. A preemption provision would reduce uncertainty that will develop as health care ventures cross state lines.