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It’s common practice among many physician groups to refer everything from blood tests to MRIs to entities from which they benefit financially. It wasn’t supposed to be that way: Congress in the 1990s passed the Stark Law, which prohibited doctors from “self-referring Medicare patients. But loopholes have kept the practice alive and well. Urologists at cancer-care giant 21 st Century Oncology Holdings Inc. for example, refer tests to the company s in-house lab, as a page-one article in The Wall Street Journal reports , taking advantage of the law s exceptions. The company says that its urologists refer tests to the in-house lab for valid medical reasons, not financial ones, and that such referrals are permitted by exceptions to the Stark law.

The Stark Law has exceptions. Under the “in-office ancillary services” exception, a doctor can refer a Medicare patient for a treatment or test to another doctor “who is a member of the same group practice” if the treatment or test is furnished in “the same building” or a “centralized building” used by the group practice “for the provision of some or all” of its services. Mr. Stark says part of the rationale for this exception was to protect academic medical centers like the Cleveland Clinic whose specialists coordinate patient care among one another.

Back when lawmakers included the exception, some of today s medical advances hadn’t occurred. As new technologies that could be offered outside the hospital were introduced, doctors argued that the exception should cover them. One result: an explosion in doctors’ ownership of MRI machines and other advanced imaging equipment they can profit from by, essentially, referring business to themselves. Companies like 21 st Century Oncology also invoke the exception to refer patients in-house for radiation therapy and diagnostic tests, allowing their physician employees to share in the resulting profits.