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Health Care Law Committee

To the Council of Delegates:

The OSBA Health Care Law Committee respectfully requests your favorable consideration of a proposal to ask the State Medical Board to promulgate a new regulation under ORC §4731.65 et seq.  That statute prohibits referrals by physicians for “designated health services” to entities with which the physician has a financial arrangement (ownership interest or compensation arrangement), directly or indirectly, unless an exception applies.  This law is very similar to a federal statute, 42 U.S.C. §1395nn (which is generally referred to as the “Stark Law” after its principal sponsor, Representative Fortney “Pete” Stark).  The federal statute applies to referrals for services covered under Medicare, Medicaid and other federal programs, while the state statute applies to all referrals.  Over the years, the exceptions under the federal law have developed through a series of statutory amendments and regulatory exceptions authorized by the statute.  However, the state statute has not been amended, and regulations creating additional exceptions, while authorized by the state statute, have not been adopted.  As a result, many business arrangements that qualify for exceptions under the federal statute do not qualify for exceptions under the state statute.  We do not believe that there is any principled basis for the federal and state statute to have different exceptions.  We also believe that the more restrictive aspects of the Ohio statute are due to historical circumstances rather than to reasoned decision-making.  For this reason, we are asking the Council of Delegates to approve the following proposed action:

RESOLVED, that the Ohio State Bar Association hereby authorizes the agents of the Association to ask the State Medical Board to promulgate the following regulation, exercising its rule-making authority under ORC §§4731.67(I) and 4731.70:

“Ohio Revised Code Section 4731.66 shall not apply to any financial arrangement that meets the requirements for an exception under 42 United States Code §1395nn or the regulations promulgated thereunder.”

Respectfully submitted,
Catherine T. Dunlay, Columbus
Chair

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