Democratic Rep. Pete Stark of California will introduce legislation to remedy a defect in last year's Balanced Budget Act that could cost the government $1 billion this year. The miscue, discovered by HCFA, is overpayments to HMOs resulting primarily from inaccurate projections of Medicare inflation. HMOs are likely to balk.... In an unrelated matter, an existing law bearing Stark's name — known informally in Washington as Stark II--has aroused the ire of the Medical Group Management Association. Stark II expands the scope of Stark I, which outlawed physician referrals to clinical lab services in which the physician had a financial stake. In January, HCFA issued rules for implementation of Stark II, which prohibits referrals to myriad health services, including physical therapy, radiology and home-health services, if the referring doctor has a financial relationship with that entity. MGMA sent a letter to HCFA passionately arguing that Stark II distorts the intent of the original law and that it would affect virtually all physician referrals.