Exceptions to the Stark Law on Doctor Self-Referral

We previously looked at the origins of the Stark law, as well as the scope of its coverage.  With this post, we will examine the exceptions to the Stark law prohibitions and how they apply in practice.

There are a number of exceptions to the Stark law – arrangements that CMS has determined do not violate its physician self-referral rules.  The two most important of these are the “Physician Services” exception, also known as the “group practice” exception,[i] and the “In-office ancillary services exception.”[ii]  Additionally, there are other exceptions, such as for the lease of office space and equipment.[iii]  However, these are narrow exceptions and require specific terms in the lease in order to qualify.

The group practice exception allows physicians in the same group practice to refer patients to each other.  However, in order to satisfy the group practice exception, there are several requirements that must be met.  Among the requirements, there must be a single legal entity covering all the doctors in the group practice, with requirements on applying revenue and expenses among the members of the entity, there must be at least two physicians in the group, each doctor must provide the full range of services for the group that he performs outside the group, and 75% or more of the services the doctor provides must be for the group.

The in-office ancillary service exception can include things like lab work and imaging equipment.  However, in order to qualify, the services must be performed within the same group practice, in the same building where the group practices, and the service must be performed or supervised by the referring physician or another member of the group practice.  The physician must also disclose his ownership interest in the ancillary service and allow the patient the option of going elsewhere to have the service performed.  Any service that does not comply with these requirements is a violation of the Stark law.

These exceptions are often complicated and very fact-specific, so if you are unsure whether your practice qualifies for one of the exceptions to the Stark law, it is important to ensure that you consult with an attorney familiar with the Stark law’s application and exceptions.

 

[i] 42 C.F.R. § 411.355(a).

[ii] 42 C.F.R. § 411.355(b).

[iii] 42 C.F.R. § 411.357(a) (office space) and (b) (equipment).