“Practice Group” Exception to Stark Law

Handling Whistleblower Cases Nationwide from Newport News, Virginia

The Stark Act, 42 USC Section 1395, includes a number of exceptions to the prohibition to the ownership and compensation arrangement described in my recent post. The evaluation and application of these exceptions can be a complex undertaking, thereby making a determination as to whether a particular arrangement is permitted by the Stark Law also complex.  The exceptions include Section 1395nn(b)(1), which provides an exception for physicians’ services provided personally by (or under the personal supervision of) another physician in the same “group practice” as the referring physician.  The law further defines group practice as a group of 2 or more physicians legally organized as a partnership, professional corporation, foundation, not-for-profit corporation, faculty practice plan, or similar association:

(i) in which each physician who is a member of the group provides substantially the full range of services which the physician routinely provides, including medical care, consultation, diagnosis, or treatment, through the joint use of shared office space, facilities, equipment and personnel,

(ii) for which substantially all of the services of the physicians who are members of the group are provided through the group and are billed under a billing number assigned to the group and amounts so received are treated as receipts of the group,

(iii) in which the overhead expenses of and the income from the practice are distributed in accordance with methods previously determined,

(iv) except as provided in subparagraph (B)(i), in which no physician who is a member of the group directly or indirectly receives compensation based on the volume or value of referrals by the physician,

(v) in which members of the group personally conduct no less than 75 percent of the physician-patient encounters of the group practice, and

(vi) which meets such other standards as the Secretary may impose by regulation.

In addition, Section 1395(b)(2) addresses in-office ancillary services and provides that the act does not prohibit such services (with a few exceptions such as most durable medical equipment that are furnished) if the services are performed personally by the referring physician or a  physician who is a member of the same group practice as the referring physician, and:

(I) in a building in which the referring physician (or another physician who is a member of the same group practice) furnishes physicians’ services unrelated to the furnishing of designated health services [lab work], or

(II) in the case of a referring physician who is a member of a group practice, in another building which is used by the group practice -

(aa) for the provision of some or all of the group’s clinical laboratory services, or

(bb) for the centralized provision of the group’s designated health services (other than clinical laboratory services),

unless the Secretary determines other terms and conditions under which the provision of such services does not present a risk of program or patient abuse…. Atlantic Urological Associates v. Leavitt, 549 F.Supp.2d 20 (D.D.C. May 5, 2008) citing 42 U.S.C. § 1395nn (b)(2)(A)(ii)(I) & (II).

If you any questions about the Stark Law, feel free to contact us for a free confidential consultation.