Oncologists Risk Self-Referral Violations Over Medicare Mail-Order Drug Rule

A new interpretation of a decades-old law could put community oncology practices in the crosshairs of regulators who monitor and enforce provisions against self-referral and add a barrier to patient access.

Enacted by Congress in 1989, the Medicare Physician Self-Referral Law, commonly called the Stark law, prohibits physicians from referring patients to receive services from entities in which they have a financial interest. The law has a list of 12 types of items and services subject to the law’s provisions. Although the list includes drugs, the status of medications distributed by mail from medically integrated dispensaries (MIDs) remained somewhat ambiguous, according to authors of a recent article in JCO Oncology Practice.

The new interpretation, published as part of the Frequently Asked Questions (FAQs) about the law, stated that mail-order drugs distributed by integrated medical pharmacies do in fact fall under the self-referral law’s provisions. Nonetheless, some observers found the interpretation even more confusing than the original wording, according to Samyukta Mullangi, MD, of Tennessee Oncology in Dickson, and co-authors of the article.

“[The new interpretation] led to many MIDs abandoning the use of mail-order dispensing,” they stated. “In fact, practices may be at risk of violating this law if they dispensed medication even to a caregiver who presented to their medically integrated pharmacies in person to pick up oral cancer medications for their loved one.”

“Within community oncology, one cannot overstate the impact that this guidance has had on patient care,” Mullangi and co-authors continued. “With nearly half of all cancer regimens now incorporating oral medications, particularly in the era of targeted therapies, the majority of oncology practices have, over the past decade, established medically integrated specialty pharmacies to facilitate prescribing and toxicity monitoring.”

Location, Location, Location

At issue is the law’s “location requirement.” As stated in the FAQs, the “‘location requirement’ … requires that the patient receive the item in the physician’s office. Put another way, items that are designated health services to which the exception is applicable … fall within the scope of the exception for in-office ancillary services only when a patient directly receives the item in the physician’s office and in a manner that is sufficient to meet applicable Medicare billing and coverage rules.”

“The ‘location requirement’ … would not be satisfied if a patient receives an item by mail outside the physician’s office, as it would not be dispensed to the patient in the office.”

The interpretation means that a patient who could receive oral medications by mail would have to drive, or be driven, to the MID to get the medication.

“This is a very widespread issue and it’s become a really distressing thing because it impairs our relationship with our patients in terms of being able to care for them in a closed loop, in partnership with our pharmacists,” Mullangi told MedPage Today. “It also causes a lot of distress for patients, who we know we’re forcing to come back in person to pick up their meds in order to continue having that relationship with a pharmacist.”

The interpretation is at odds with the Biden administration emphasis on reducing disparities in healthcare access and outcomes, as the patients most affected by the new interpretation tend to be older, reliant on others for transportation, or living in rural areas. A recent analysis highlighted the rule’s potential impact on patient care, showing that patients who live a longer driving distance are at greater risk of disparities and disproportionately disadvantaged by elimination of the mail-order option. The analysis of almost 1,000 Medicare patients showed that almost 30% lived more than 20 miles from the nearest clinic.

Though published in 2021, the interpretation has made the greatest impact since mid-2023, when the COVID-era public health emergency ended, said Nick Ferreyros, of the Community Oncology Alliance (COA).

“It’s actually one of our top issues,” said Ferreyros. “We’ve had a number of [Capitol] Hill days around it, and we’ve been talking to practices for a while… . It’s a huge issue because it’s really a nonsensical determination by CMS, and it sort of flies in the face of best practice for patient care … and it just doesn’t make any sense, on a legal basis, how this is a Stark violation.”

“CMS has not been able to adequately explain why in the world a physician putting pills in a FedEx envelope would be a Stark violation,” he added. “As far as I know, community oncology practices don’t own FedEx or UPS or the U.S. Postal Service. It really does not make any sense in that regard.”

Legislative Help

Relief could be on the horizon as bipartisan legislation has been introduced in the House and the Senate — HR5526 and S3458 (both titled Seniors’ Access to Critical Medications Act) — to restore mail-order access to oral oncology medications.

Given the current fractious environment in Congress, a timetable for consideration or a vote on the legislation is anyone’s guess, said Ferreyros, adding “you don’t see a lot of bills in Congress with 50 sponsors that are bipartisan… . But it’s looking good in every conversation we have. It just makes sense. It’s a patient-friendly bill and it doesn’t cost the government any money because these prescriptions are already going to be dispensed one way or another.”

The controversy over mail-order drug distribution has brought into focus another form of “toxicity” for patients: time toxicity.

“We’ve brought this new paradigm into cancer care, which is to really think about time toxicity for patients,” said Mullangi. “There’s more to cancer care than the cost of symptoms and everything else. How much time do you spend interacting with the healthcare system rather than living your life? This just makes everything worse, just because we can’t give common-sense approaches to ways of delivering care to our patients.”

The American Society of Clinical Oncology has added its support to efforts to address the adverse impact of the Stark rule interpretation.

“The Association of Clinical Oncology (ASCO) is urging the Centers for Medicare & Medicaid (CMS) to modify its interpretation of the Stark Law so that all patients can easily access their medications,” organizational leadership said in a statement. “In 2023, ASCO successfully advocated for the American Medical Association [AMA] to ask CMS to retract the determination that delivery of medicine to a patient using the postal service or other trusted service violates the in-office exception of the Stark Law. ASCO also called on the AMA to advocate for legislation to clarify that a surrogate may deliver medicine dispensed at a physician-owned pharmacy without violating the law if CMS does not change its position. This modification promotes the use of integrated pharmacy services, which studies have shown may increase patient adherence to medication.”