THE FEDERAL SELF REFERRAL LAW
This law, often referred to as the Stark Law after it's sponsor Congressman Pete Stark from Los Angeles prohibits a physician from referring patients to an entity for "designated health services" with whom the physician has a financial relationship unless an exception is available.? The "designated health services" include many of the ancillary services which are to be included within the business model here and which are, indeed essential to the proper functioning, comprehensive clinical continuity of care, and profitability of this business model.? They include such services as physical therapy, occupational therapy, radiology, durable medical equipment and other services.? Of course, the Stark Law applies only in cases where payment for the services will be made by Medicare and Medicaid.? While the Medicaid population on Cape Cod is not large the Medicare population is large.
A "referral" as defined in the Stark Law occurs when a physician makes a request for an item or service including consultation with another physician or any test or procedure by the other physician or someone under his or her supervision.
A financial relationship is defined to include "an ownership or investment interest in the entity" or a "compensation arrangement…between the physician and the entity".? The physicians here will have both these relationships with the PC (42CFR section 411.351).
As mentioned, absent in exception the referral is prohibited or, to be more precise payment may not be made by Medicare or Medicaid for such a referral.? An exception for such referrals is provided for physician services provided personally by, or under the personal supervision of another physician in the same group practice as the referring physician 42U.S.C.section 1395nn(B)(1).
In order to qualify for the "in office ancillary services exception" either the referring physician or another physician who is a member of the same "group practice" must personally furnish the services or if technicians perform the services they must be directly supervised by either the referring physician or another physician in the "group practice".? It is critical to satisfy the numerous and detailed definitional requirements of a "group practice" in order to qualify for the "in office ancillary services exception".? The group practice definition will be discussed in detail further.? Note that the persons such as non physicians, including physical therapists furnishing services under supervision need not be employed by the group practice to qualify for the exception however certain Medicare reimbursement methodology coverage rules may require employment of the technician or other auxiliary health personnel, CEG Medicare carriers manual section 2050.
The regulations interpret the "direct supervision" requirement to mean that the physician must be present in the office suite and "immediately available" to provide assistance and direction throughout the time services are being performed (42CFR sec. 411.351).? This is essentially the same as the traditional Medicare coverage definition for ancillary services furnished "incident to" a physician's fake fern ugg australia boots for sale direct professional services which require a physicians "direct personal supervision" (see Medicare Carriers Manual sec.2050.2).
In order to qualify for this exception the "in office ancillary services" must be furnished in the same building in which the referring in which the referring physician practices or in another building used by the group practice as a centralized location for it's ancillary services such as clinical laboratory or physical therapy.? The group may have multiple locations for such centralized services.? Such centralized building location must be owned or leased by the group practice for at least six months.
Clearly the ancillary services, tests etc., referred by the physicians who are employed by the PC and also owners of the PC will be furnished in the centralized location and directly supervised by either the referring physician or another physician who is a member or the "group practice".? It is even possible, to provide the "group practice" definition as strictly adhered to form, in part a "group without walls".
This is a term which is usually applied to a group practice which meets all the technical definitions of a group practice but which is comprised in part or even entirely of physicians in several different locations, in this case perhaps the original locations without moving into the centralized location described in the business plan.? It would be possible that a physician who is at a remote location to the centralized office could make a referral for an ancillary covered service which if it is "directly supervised" by another member of the group practice would fit within the in office ancillary services exception.
The Definition of a Group Practice
The group practice consists of two or more physicians who are legally organized as an entity including a professional corporation.? All physicians need not own or control the practice however clearly, if all are owners the requirements are met 60 Fed.Reg. at 41937.
Each physician who's a member of the group must provide substantially the full range of services that the physician routinely provides through the joint use of the groups shared office space facilities equipment and personnel.
These services that are provided by the physicians who are members of the group must be billed in the name of the group and treated as receipts of the group.
Overhead expenses and income must be distributed in accordance with methods determined in advance by the group.? Further, no such compensation may be based on the volume or value of referrals by the physician either directly or indirectly.? There may be certain productivity bonuses however.
These definition requirements will be examined in more detail and the compliance by the PC with these requirements will be discussed and demonstrated.
The group must be a single practice entity.? The PC will be either a Massachusetts Professional Corporation or a Massachusetts PLLC, depending upon a tax analysis.? For the purposes of the Stark Regulations the two are interchangeable.? Both are clearly a single legal entity.
There must be at least two physicians who are members of the group as either employees or owners.? There will be a maximum of ten members of the group here.? Note, independent contractors are not counted as members of the group, however under the in office ancillary services exception, such an independent contractor may supervise the furnishing of ancillary services and, under such circumstance may receive profit shares and productivity bonuses.
(An essential element of the single entity requirement is that the entity have centralized decision making by a body representative of the practice but maintains effective control over the groups assets and liabilities as well as consolidated billing and accounting and financial reporting and centralized utilization review.? All of these are essential requirements of the PC.? Not, of course, solely for compliance with the in office ancillary services exception but because, simply, it is good business practice.)
Each physician who is a member of the group must furnish substantially the full range of patient care services that the physician routinely furnishes as part of his medical practice including routine medical care and consultations.? The physicians here will be practicing only through the PC.? This is where they will provide their full range of services.
At least 75% of the total patient care services of the group practice members must be furnished through the group, billed in the name of the group in the amounts treated as receipts of the group while the method of calculating this measurement of the "substantially all" task for the group practice definition can become complex, because there will be no other practice, odalities or entities for any of the physicians involved here the 75% rule will be easy to attain.? Even if some of the physicians perform certain teaching duties or spend time working in a hospital emergency room it should not make a significant impact on the 75% requirement.? Note that independent contractors are not counted as members of the group for the purpose of this calculation.? They are however permitted to supervise in
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