TABLE A - Withrow, McQuade & Olsen, LLP – … · Web viewno claims to Medicare or Medicaid by contract health providers under health plan.B. Financial arrangements (involving price

TABLE A

OVERLAPPING ANTI-KICKBACK SAFE HARBORS AND STARK GENERAL EXCEPTIONS

Description of Safe Harbor/ General Exception

Anti-Kickback Safe Harbor Sources: 42 U.S.C. Section 1320a-7b(b) and 42 C.F.R. § 1001.952

Stark General Exception Sources: 42 U.S.C. Section 1395nn and 42 C.F.R. Section 411.350 et seq.

1. Publicly Traded Securities

42 C.F.R. § 1001.952(a)(1)

42 C.F.R. § 411.356(a)42 C.F.R. § 411.356(b)

Returns on investments (e.g., dividends and interest) in securities of entities with net tangible assets related to the furnishing of health care items or services > $50 million provided:

1. the securities are registered with the Securities and Exchange Commission;

2.. referring investors’ securities are obtained at the same price as is available to the general public trading on a registered securities exchange through a broker and referring investors’ securities are not subject to restrictions on transferability;

3. entity and referring investors do not favor passive investors over non-investors in promoting and/or furnishing the entity’s items or services;

4. entity and its investors (and persons acting on their behalf) do not finance (or guarantee financing of) any purchase of the entity’s securities by a person who could

A. Returns on investments (e.g., dividends and interest) in securities of entities which, at the time the DHS referral is made:*

1. are traded on recognized foreign, national or regional exchange or on an electronic stock market or over-the-counter quotation system; and

2. are securities of a corporation that had shareholder equity > $75 million at the end of its most recent fiscal year or on average during the previous 3 fiscal years.

B. Returns on investments in mutual fund that had, at the end of its most recent fiscal year or on average during the previous 3 fiscal years, total assets > $75 million.

*Securities acquired by a referring physician (or his immediate family member) prior to a public offering of the securities will fit in this exception if they are available to the public at the time the DHS referral is

make or influence referrals; and

5. returns (e.g., dividend payments) are directly proportional to capital investment.

made.

Note that stock options received by a referring physician as compensation will not be considered to be an investment (for purposes of determining whether the Stark law is implicated) until exercised.

2. Space Rental

42 C.F.R. § 1001.952(b)

42 C.F.R. § 411.357(a)

Remuneration paid for the lease of space as long as all of the following six standards are met:

1. The lease agreement is set out in writing and signed by the parties.

2. The lease covers all of the premises leased between the parties for the term of the lease and specifies the premises covered by the lease.

3. If the lease is intended to provide the lessee with access to the premises for periodic intervals of time, rather than on a full-time basis for the term of the lease, the lease specifies exactly the schedule of such intervals, their precise length, and the exact rent for such intervals.

4. The term of the lease is for not less than one year.

5. The aggregate rental charge is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.

6. The aggregate space rented does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental.

Similar to the six standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:

1. The lease arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the premises it covers.

2. The duration of the lease arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).

3. The space rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease arrangement and is used exclusively by the lessee when being used by the lessee (but see separate exception for timeshare arrangements in Item 17 below).

4. The rental charges over the term of the lease arrangement are set in advance and are consistent with fair market value.

5. The rental charges over the term of the lease arrangement are not determined—

(i) In a manner that takes into account the volume or value of any referrals or other business generated between the parties; or

(ii) Using a formula based on—

(A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services performed or business generated in the office space; or

(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.

6. The lease arrangement would be commercially reasonable even if no referrals were made between the lessee and the lessor.

7. If the lease arrangement expires after a term of at least 1 year, a holdover lease arrangement immediately following the expiration of the lease arrangement satisfies this exception if the following conditions are met:

(i) The lease arrangement met the six conditions above when the arrangement expired;

(ii) The holdover lease arrangement is on the same terms and conditions as the immediately preceding arrangement; and

(iii) The holdover lease arrangement continues to satisfy the six conditions above.

3. Equipment Rental

42 C.F.R. § 1001.952(c)

42 C.F.R. § 411.357(b)

Any payment made by a lessee of equipment to the lessor of the equipment for the use of the equipment, as long as all of the following six standards are met:

1. The lease agreement is set out in writing and signed by the parties.

2. The lease covers all of the equipment leased between the parties for the term of the lease and specifies the

A. Similar to the six standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:

1. The lease arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the equipment it covers.

2. The equipment leased does not exceed that which is reasonable and necessary for the legitimate business

equipment covered by the lease.

3. If the lease is intended to provide the lessee with use of the equipment for periodic intervals of time, rather than on a full-time basis for the term of the lease, the lease specifies exactly the schedule of such intervals, their precise length, and the exact rent for such interval.

4. The term of the lease is for not less than one year.

5. The aggregate rental charge is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties.

6. The aggregate equipment rental does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental.

purposes of the lease arrangement and is used exclusively by the lessee when being used by the lessee (and is not shared with or used by the lessor or any person or entity related to the lessor) (but see separate exception for timeshare arrangements in Item 17 below).

3. The duration of the lease arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).

4. The rental charges over the term of the lease arrangement are set in advance, are consistent with fair market value, and are not determined—

(i) In a manner that takes into account the volume or value of any referrals or other business generated between the parties; or

(ii) Using a formula based on—

(A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services performed on or business generated through the use of the equipment; or

(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.

5. The lease arrangement would be commercially reasonable even if no referrals were made between the parties.

6. If the lease arrangement expires after a term of at least 1 year, a holdover lease arrangement immediately following the expiration of the lease arrangement satisfies this exception if the following conditions are

met:

(i) The lease arrangement met the five conditions above when the arrangement expired;

(ii) The holdover lease arrangement is on the same terms and conditions as the immediately preceding lease arrangement; and

(iii) The holdover lease arrangement continues to satisfy the five conditions above.

4. Personal Services and Management Contracts

42 C.F.R. § 1001.952(d)

42 C.F.R. § 411.357(d)

Any payment made by a principal to an agent as compensation for the services of the agent, as long as all of the following seven standards are met:

1. The agency agreement is set out in writing and signed by the parties.

2. The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent.

3. If the agency agreement is intended to provide for the services of the agent on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.

4. The term of the agreement is for not less than one year.

5. The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the

Similar to the seven standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:

1. Each arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the services covered by the arrangement.

2. The arrangement(s) covers all of the services to be furnished by the physician (or an immediate family member of the physician) to the entity (O.K. to incorporate each other by reference or cross-reference a master list of contracts).

3. The aggregate services covered by the arrangement do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement(s).

4. The duration of each arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).

5. The compensation to be paid over the term of each arrangement is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account the volume or value of any referrals

volume or value of any referrals or business otherwise generated between the parties.

6. The services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law.

7. The aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services.

or other business generated between the parties.

6. The services to be furnished under each arrangement do not involve the counseling or promotion of a business arrangement or other activity that violates any Federal or State law.

7. If the arrangement expires after a term of at least 1 year, a holdover arrangement immediately following the expiration of the arrangement satisfies this exception if the following conditions are met:

(i) The arrangement met the six conditions above when the arrangementexpired;

(ii) The holdover arrangement is on the same terms and conditions as the immediately preceding arrangement; and

(iii) The holdover arrangement continues to satisfy the six conditions above.

5. Employees

42 U.S.C. §1320a-7b(b)(3)(B)42 C.F.R. § 1001.952(i)

42 C.F.R. § 411.357(c)

Any amount paid to an employee, who has a bona fide employment relationship, for employment in the furnishing of any item or service.

Employment status is determined by courts under common law agency rules involving many factors including the right to control and direct the individual who performs the services, not only as to what shall be done but how it shall be done.

Stricter than Anti-Kickback:

Any amount paid by an employer to a physician (or immediate family member) who has a bona fide employment relationship with the employer for the provision of services if the following conditions are met:

1. The employment is for identifiable services.

2. The amount of the remuneration under the employment is—

(i) Consistent with the fair market value of the services; and

(ii) Except as provided in paragraph 4 below, is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician.

3. The remuneration is provided under an arrangement that would be commercially reasonable even if no referrals were made to the employer.

4. Paragraph 2(ii) above does not prohibit payment of remuneration in the form of a productivity bonus based on services performed personally by the physician (or immediate family member of the physician).

6. Sales of Physician Practices (encompassed by broader “Isolated Transactions” Stark regulatory exception)

42 C.F.R. § 1001.952(e)

42 C.F.R. § 411.357(f)

Consideration paid for a physician practice, provided both of the following standards are met:

1. The period from agreement to completion of sale does not exceed one year.

2. Seller will not be in professional position to refer to purchaser after one year from date of first agreement to sell.

Exception: A hospital located in a health professional shortage area (“HPSA”) can buy and “hold” the practice of a retiring physician for up to three years pending recruitment of a physician to replace the one retiring, provided the hospital engages in good faith efforts to recruit a new physician and its recruitment efforts comply with the Physician Recruitment safe harbor (42 C.F.R. § 1001.952(n)).

Remuneration paid in connection with a one-time sale of a physician practice where all of the following are met:

1. The amount of remuneration is consistent with fair market value and is not determined in a manner that takes into account (directly or indirectly) the volume or value of referrals or other business generated between the parties;

2. The remuneration is provided under an arrangement that would be commercially reasonable even if no referrals were made by the physician;

3. There are no additional transactions between the parties for a period of 6 months except for commercially reasonable post-closing adjustments that are not dependent on referrals or other business generated by the referring physician (and except for other transactions excepted from Stark).

7. Physician Recruitment Remuneration provided by a hospital: Remuneration provided by a hospital to recruit a physician that is paid directly to the physician and that

42 C.F.R. § 1001.952(n)

42 C.F.R. § 411.357(e)

1. To induce a new practitioner who has been practicing in her specialty for less than a year to induce such practitioner to locate in a HPSA.

2. To induce an established practitioner to relocate her primary place of practice to an HPSA, provided at least 75% of the revenues of the new practice come from patients who were not seen by the physician at her former practice.

Note that this safe harbor limits the time period for recruitment payments to three years, but does not prescribe the nature of the payments (i.e., whether they include income guarantees, moving expenses, etc.), leaving that determination to negotiation by the parties.

is intended to induce the physician to relocate his or her medical practice to the geographic area served by the hospital in order to become a member of the hospital's medical staff, if all of the following conditions are met:

1. The arrangement is set out in writing and signed by both parties.

2. The arrangement is not conditioned on the physician's referral of patients to the hospital.

3. The amount of remuneration under the arrangement is not determined in a manner that takes into account (directly or indirectly) the volume or value of any actual or anticipated referrals by the physician or other business generated between the parties.

4. The physician is allowed to establish staff privileges at any other hospital(s) and to refer business to any other entities (except as referrals may be restricted under an employment or services arrangement that complies with § 411.354(d)(4)).

In the case of remuneration provided by a hospital to a physician either indirectly through payments made to another physician practice, or directly to a physician who joins a physician practice, the following additional conditions must be met:

1. The writing is also signed by the physician practice.

2. Except for actual costs incurred by the physician practice in recruiting the new physician, the remuneration is passed directly through to or remains with the recruited physician.

3. In the case of an income guarantee of any type made by the hospital to a recruited physician who joins a physician practice, the costs allocated by the physician

practice to the recruited physician do not exceed the actual additional incremental costs attributable to the recruited physician.

4. Records of the actual costs and the passed-through amounts are maintained for a period of at least 6 years and made available to the Secretary upon request.

5. The remuneration from the hospital under the arrangement is not determined in a manner that takes into account (directly or indirectly) the volume or value of any actual or anticipated referrals by the recruited physician or the physician practice (or any physician affiliated with the physician practice) receiving the direct payments from the hospital.

6. The physician practice may not impose on the recruited physician practice restrictions that unreasonably restrict the recruited physician's ability to practice medicine in the geographic area served by the hospital.

8. Physician Investments in Their Own Practices/ Physician Services

42 C.F.R. § 1001.952(p)

42 C.F.R. § 411.355(a)42 C.F.R. § 411.352

Remuneration received by a physician as a return on investment (e.g., dividends and interest) in his own practice, or their own group practice* provided all of the following four standards are met:

1. the group is fully owned by licensed healthcare professionals;

2. the equity interests are in the group itself, and not a subdivision of the group;

3. the group meets the Stark law definition of a “group practice”; and

4. revenues from ancillary services qualify under the Stark law’s in-office ancillary services test.

Remuneration for physicians’ services that are furnished by or under the supervision—at a level that satisfies applicable Medicare supervision requirements—of the referring physician herself, another physician in the referring physician’s group practice, or an independent contractor physician who is furnishing patient care services to the referring physician’s group practice. For purposes of Stark, a "group practice must meet the following conditions:

1. single legal entity;

2. at least 2 physicians (whether employees or direct or indirect owners);

3. each physician who is a member of the referring

*This safe harbor also protects investments in solo practices where the practice is conducted through the solo practitioner’s professional corporation or other separate legal entity.

Note that this safe harbor does not protect investments by group practices or members of group practices in other entities (e.g., laboratories, imaging centers, etc.).

physician’s group practice furnishes the full range of patient care services she routinely provides through the group’s joint facilities;

4. at least 75% of the total patient care services furnished by each of the members of the group are furnished inside the group;

5. expenses and income of the referring physician’s group are distributed in accordance with a method set and in place prior to the receipt of payment for the services giving rise to the overhead expenses or producing the income;

6. unified business with centralized decision making and consolidated billing, accounting and financial reporting;

7. no compensation based on volume or value of referrals; and

8. at least 75% of the referring physician’s group’s physician-patient encounters are conducted by members of the referring physician’s group (the group cannot have too many independent contractor physicians).

See www.starkgrouppractice.com for more information about Stark-compliant physician group practices.

9. Physician Investments in Their Own Practices/ In-office Ancillary Services

42 C.F.R. § 1001.952(p)

Remuneration received by a physician as a return on investment (e.g., dividends and interest) in his own practice, or their own group practice* provided all of the following four standards are met:

1. The group is fully owned by licensed healthcare professionals.

2. The equity interests are in the group itself, and not a subdivision of the group.

Remuneration for furnishing designated health services (DHS) which are ancillary to the referring physician’s core medical practice (excluding most but not all DME) if the services at issue are:

1. Furnished by or under the supervision — at a level that satisfies applicable Medicare supervision requirements — of the referring physician herself, a member of the referring physician’s group practice, or an independent contractor physician who is furnishing

42 C.F.R. § 411.355(b)42 C.F.R. § 411.352 3. The group meets the Stark law definition of a “group

practice.”

4. Revenues from ancillary services qualify under the Stark law’s in-office ancillary services test.

*This safe harbor also protects investments in solo practices where the practice is conducted through the solo practitioner’s professional corporation or other separate legal entity.

Note that this safe harbor does not protect investments by group practices or members of group practices in other entities (e.g., laboratories, imaging centers, etc.).

patient care services to the referring physician’s group;

2. Furnished in either the “same building” as that in which the referring physician (or a member of the referring physician’s group practice) furnishes physician services unrelated to the furnishing of DHS or in a “centralized” off-site location that is owned or leased and used exclusively on a full-time basis by the referring physician’s group; and

3. Billed by the referring physician, the referring physician’s group, an entity wholly owned by the referring physician or by her group, or by an independent third-party billing company acting as an agent for any of the foregoing (provided Medicare reassignment rules are followed).

See www.starkgrouppractice.com for more information about Stark-compliant physician group practices.

10. Managed Care Arrangements

42 U.S.C. § 1320a-7b(b)(3)(F)42 C.F.R. § 1001.952(m)42 C.F.R. § 1001.952(t)42 C.F.R. § 1001.952(u)42 C.F.R. § 1001.952(l)

42 C.F.R. § 411.355(c)42 C.F.R. § 411.357(n)42 C.F.R. § 411.357(d)(2)

A. Price reductions offered by a contract health provider to a health plan pursuant to a written agreement between the parties, provided:

1. the term of the agreement is not less than one year;

2. the agreement specifies the items and services covered;

3. fee schedule remains in effect throughout term;

4. no claims to Medicare or Medicaid in excess of fee schedule;

5. price reductions are reported on cost report;

6. no claims to Medicare or Medicaid by contract health providers under health plan.

A. Services furnished by an organization (or its contractors or subcontractors) to enrollees of certain Medicare prepaid plans, certain Medicaid prepaid plans, and HMOs qualified under the Social Security Act.

B. Compensation pursuant to a risk-sharing arrangement (including, but not limited to, withholds, bonuses and risk pools) between a physician and a health plan, insurance company, HMO or independent physician’s association (either directly or through a subcontractor) for services provided to enrollees, provided the arrangement does not violate the anti-kickback statute or any laws or regulations governing billing or claims submission.

C. “Physician incentive plan”* (withhold, capitation, bonus, or otherwise) that does take into account volume of referrals if:

B. Financial arrangements (involving price reductions) between an Eligible Managed Care Organization (“EMCO”) and any of its direct contracting providers, and also any of their next tier “downstream” direct contracting sub-providers, pursuant to a written agreement between the EMCO and provider or provider and sub-provider, provided standards corresponding to those in A. above are satisfied.

C. Price reductions offered by contract health provider (and/or sub-contractors) with “substantial financial risk” to Qualified Managed Care Plan (“QMCP”), provided standards corresponding to those in A. and B. above are satisfied. “Substantial financial risk” is defined in two ways, i.e., by payment methodology (e.g., capitation, percentage of premium and DRG payments, etc.), and by a numeric standard (i.e., if a certain percentage of the provider’s compensation is subject to withhold.)

D. Increased coverage, reduced cost-sharing amounts, or reduced premium amounts offered by health plans to enrollees, provided the plan complies with certain specified standards.

1. no payment induces reducing or limiting medically necessary services;

2. physician is at financial risk; and

3. disclosure to Secretary upon request.

* “Physician incentive plan” is defined as “any compensation arrangement between an entity (or downstream contractor[**]) and a physician or physician group that may directly or indirectly have the effect of reducing or limiting services furnished with respect to individuals enrolled with the entity.”

** “Downstream contractor” is defined as “a ‘first tier contractor’ as defined at [42 C.F.R.] § 1001.952(t)(2)(iii) or a ‘downstream contractor’ as defined at [42 C.F.R.] § 1001.952(t)(2)(i).”

11. Ambulatory Surgical Centers (“ASCs”), End Stage Renal Disease (“ESRD”) facilities, and Hospices

42 C.F.R. § 1001.952(r)

42 C.F.R. § 411.355(f) and (g)

Returns on investments in 4 categories of ASCs-- (1) surgeon-owned ASCs; (2) single-specialty ASCs (e.g., those owned by gastroenterologists); (3) multi-specialty ASCs (e.g., mix of surgeons and gastroenterologists); and (4) hospital/physician-owned—provided all of the following standards are met:

1. the ASC is certified as such under Medicare regulations;

2. loans from the entity to investors for the purpose of investing are prohibited;

3. investment interests are offered on terms not related to the volume or value of referrals;

The Stark law deliberately excluded most ASC services from the definition of DHS. Stark exceptions also exists for:

A. Implanted prosthetics and prosthetic devices and implanted DME furnished by the referring physician or a member of her group in a Medicare-certified ASC if:

1. the implant is implanted during a surgical procedure performed in the ASC;

2. billing and claims submission for the implants complies with all federal and state laws and regulations; and

4. all ancillary services are directly and integrally related to primary procedures performed at the ASC and none are separately billed to Medicare or other federal health care programs;

5. neither the ASC nor physicians practicing at the ASC discriminate against federal health care program beneficiaries; and

6. each investor meets one of the following criteria:

a. a physician who is in a position to refer patients directly to the ASC and perform procedures for those patients;

b. a group practice that meets the requirements of the group practice safe harbor and that is composed entirely of physicians that meet the requirements of (vi.)(a) above; or

c. an investor who does not provide items or services to the ASC or its investors, is not employed by the ASC or any investor, and is not in a position to refer patients to the ASC or any of its investors.

3. the arrangement does not violate the anti-kickback statute.

B. “EPO and other dialysis-related drugs” (defined as “certain outpatient prescription drugs that are required for the efficacy of dialysis and identified as eligible for this exception on the list of CPT/HCPCS codes”) that meet the following conditions:

1. they are administered to a patient in an ESRD facility, or, in the case of EPO or Aranesp only, are dispensed by the ESRD facility for use at home; and

2. the arrangement for the furnishing of them does not violate the anti-kickback law or any laws or regulations governing billing or claims submission.

Note that this exception does not apply to any financial relationship between the referring physician and any entity other than the ESRD facility that furnishes the drugs.

12. Referral Services

42 C.F.R. § 1001.952(f)

42 C.F.R. § 411.357(q)

All of the following four standards:

1. referral service is non-exclusive if provider is qualified;

2. any fees from participants are assessed equally, are based only on operating costs of service and are not tied to referrals or other business generated by either the referral service or the participant for the other;

3. no requirements on manner in which the participant provides services;

Same four standards as Anti-Kickback.

4. referral service must maintain written records evidencing disclosures to persons seeking referrals as specified in regulations.

13. Obstetrical Malpractice Insurance Subsidies

42 C.F.R. § 1001.952(o)

42 C.F.R. § 411.357(r)

Payment of obstetrical malpractice insurance premiums for practitioners engaging in obstetrical practice by hospitals (and other entities) in primary care HPSAs, provided the following conditions are met:

1. payment is in accordance with a written agreement between the hospital and practitioner;

2. at least 75% of the subsidized practitioner’s patients are medically underserved patients;

3. there is no requirement that the practitioner make referrals to hospital as condition for receiving the benefits;

4. practitioner is not restricted from establishing staff privileges at any other entity;

5. the amount of the payment does not vary based on the volume or value of referrals;

6. the practitioner treats patients who receive benefits under federal health programs in nondiscriminatory manner; and

7. the insurance is a bona fide malpractice insurance policy or program and the premium, if any, is calculated based on a bona fide assessment of the liability risk covered under the insurance.

Same seven standards as Anti-Kickback.

14. Donation of Electronic Prescribing Items and Services

Nonmonetary remuneration (consisting of items and services in the form of hardware, software, or information technology and training services) necessary and used solely to receive and transmit electronic prescription

Same eight standards as Anti-Kickback, plus:

9. For items or services that are of the type that can be used for any patient without regard to payer status, the

42 C.F.R. § 1001.952(x)

42 C.F.R. § 411.357(v)

information, if all of the following conditions are met:

1. The items and services are provided by a: (i) hospital to a physician who is a member of its medical staff; (ii) group practice to a physician who is a “member of the group”; or (iii) “PDP sponsor or MA organization” to a prescribing physician.

2. The items and services are provided as part of, or are used to access, an electronic prescription drug program that meets the applicable standards under Medicare Part D at the time the items and services are provided.

3. The donor (or any person on the donor’s behalf) does not take any action to limit or restrict the use or compatibility of the items or services with other electronic prescribing or electronic health records systems.

4. For items or services that are of the type that can be used for any patient without regard to payer status, the donor does not restrict, or take any action to limit, the physician’s right or ability to use the items or services for any patient.

5. Neither the physician nor the physician’s practice (including employees and staff members) makes the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

6. Neither the eligibility of a physician for the items or services, nor the amount or nature of the items or services, is determined in a manner that takes into account the volume or value of referrals or other business generated between the parties.

7. The arrangement is set forth in a written agreement that: (i) is signed by the parties; (ii) specifies the items

donor does not restrict, or take any action to limit, the physician's right or ability to use the items or services for any patient.

10. The items and services do not include staffing of physician offices and are not used primarily to conduct personal business or business unrelated to the physician's medical practice.

and services being provided and the donor’s cost of the items and services; and (iii) covers all of the electronic prescribing items and services to be provided by the donor. This requirement is met if all separate agreements between the donor and the physician (and the donor and any family members of the physician) incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and updated centrally and is available for review by the Secretary upon request. The master list must be maintained in a manner that preserves the historical record of agreements.

8. The donor does not have actual knowledge of, and does not act in reckless disregard or deliberate ignorance of, the fact that the physician possesses or has obtained items or services equivalent to those provided by the donor.

15. Electronic Health Records Technology

42 C.F.R. § 1001.952(y)

42 C.F.R. § 411.357(w)

Nonmonetary remuneration (consisting of items and services in the form of software or information technology and training services) necessary and used predominantly to create, maintain, transmit, or receive “electronic health records,”* if all of the following conditions are met:

1. The items and services are provided to an individual or entity engaged in the delivery of health care by: (i) an individual or entity that provides services covered by a Federal health care program and submits claims or requests for payment, either directly or through reassignment, to the Federal health care program; or (ii) a “health plan.”

2. The software is “interoperable”* at the time it is provided to the recipient. For purposes of this subparagraph, software is deemed to be “interoperable”* if a certifying body recognized by the Secretary has

Nonmonetary remuneration (consisting of items and services in the form of software or information technology and training services) necessary and used predominantly to create, maintain, transmit, or receive electronic health records, if:

1. The items and services are provided to a physician by an entity (as defined at § 411.351) that is not a laboratory company.

2. The software is interoperable (as defined in § 411.351) at the time it is provided to the physician. For purposes of this paragraph, software is deemed to be interoperable if, on the date it is provided to the physician, it has been certified by a certifying body authorized by the National Coordinator for Health Information Technology to an edition of the electronic health record certification criteria identified in the then-applicable version of 45 CFR part 170.

certified the software within no more than 12 months prior to the date it is provided to the recipient.

3. The donor (or any person on the donor’s behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or electronic health records systems.

4. Neither the recipient nor the recipient’s practice (or any affiliated individual or entity) makes the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

5. Neither the eligibility of a recipient for the items or services, nor the amount or nature of the items or services, is determined in a manner that directly takes into account the volume or value of referrals or other business generated between the parties. For the purposes of this paragraph, the determination is deemed not to directly take into account the volume or value of referrals or other business generated between the parties if any one of the following conditions is met:

(i) the determination is based on the total number of prescriptions written by the recipient (but not the volume or value of prescriptions dispensed or paid by the donor or billed to a Federal health care program);

(ii) the determination is based on the size of the recipient’s medical practice (for example, total patients, total patient encounters, or total relative value units);

(iii) the determination is based on the total number of hours that the recipient practices medicine;

(iv) the determination is based on the recipient's overall use of automated technology in his or her medical practice (without specific reference to the use of

3. The donor (or any person on the donor's behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or electronic health records systems (including,but not limited to, health information technology applications, products, or services).

4. Before receipt of the items and services, the physician pays 15 percent of the donor's cost for the items and services. The donor (or any party related to the donor) does not finance the physician's payment or loan funds to be used by thephysician to pay for the items and services.

5. Neither the physician nor the physician's practice (including employees and staff members) makes the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

6. Neither the eligibility of a physician for the items or services, nor the amount or nature of the items or services, is determined in a manner that directly takes into account the volume or value of referrals or other business generated between the parties. For purposes of this paragraph, the determination is deemed not to directly take into account the volume or value of referrals or other business generated between the parties if any one of the following conditions is met:

(i) The determination is based on the total number of prescriptions written by the physician (but not the volume or value of prescriptions dispensed or paid by the donor or billed to the program);

(ii) The determination is based on the size of the physician's medical practice (for example, total patients,

technology in connection with referrals made to the donor);

(v) the determination is based on whether the recipient is a member of the donor's medical staff, if the donor has a formal medical staff;

(vi) the determination is based on the level of uncompensated care provided by the recipient; or

(vii) the determination is made in any reasonable and verifiable manner that does not directly take into account the volume or value of referrals or other business generated between the parties.

6. The arrangement is set forth in a written agreement that:

(i) is signed by the parties;

(ii) specifies the items and services being provided, the donor’s cost of the items and services, and the amount of the physician’s contribution; and

(iii) covers all of the electronic health records items and services to be provided by the donor. This requirement is met if all separate agreements between the donor and the physician (and the donor and any family members of the physician) incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and updated centrally and is available for review by the Secretary upon request. The master list must be maintained in a manner that preserves the historical record of agreements.

7. The donor does not have actual knowledge of, and does not act in reckless disregard or deliberate ignorance of, the fact that the recipient possesses or has obtained items or services equivalent to those provided by the

total patient encounters, or total relative value units);

(iii) The determination is based on the total number of hours that the physician practices medicine;

(iv) The determination is based on the physician's overall use of automated technology in his or her medical practice (without specific reference to the use of technology in connection with referrals made to the donor);

(v) The determination is based on whether the physician is a member of the donor's medical staff, if the donor has a formal medical staff;

(vi) The determination is based on the level of uncompensated care provided by the physician; or

(vii) The determination is made in any reasonable and verifiable manner that does not directly take into account the volume or value of referrals or other business generated between the parties.

7. The arrangement is set forth in a written agreement that—

(i) Is signed by the parties;

(ii) Specifies the items and services being provided, the donor's cost of the items and services, and the amount of the physician's contribution; and

(iii) Covers all of the electronic health records items and services to be provided by the donor. This requirement is met if all separate agreements between the donor and the physician (and the donor and any family members of the physician) incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and updated

donor.

8. For items or services that are of the type that can be used for any patient without regard to payor status, the donor does not restrict, or take any action to limit, the recipient’s right or ability to use the items or services for any patient.

9. The items and services do not include staffing of the recipient's office and are not used primarily to conduct personal business or business unrelated to the recipient’s clinical practice or clinical operations.

10. [Reserved].

11. Before receipt of the items and services, the recipient pays 15% of the donor’s cost for the items and services. The donor (or any affiliated individual or entity) does not finance the recipient's payment or loan funds to be used by the recipient to pay for the items and services.

12. The donor does not shift the costs of the items or services to any Federal health care program.

13. The transfer of the items and services occurs, and all conditions in this paragraph have been satisfied, on or before December 31, 2021.

* “Electronic health record” means a repository of consumer health status information in computer processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.

centrally and is available for review by the Secretary upon request. The master list must be maintained in a manner that preserves the historical record of agreements.

8. The donor does not have actual knowledge of, and does not act in reckless disregard or deliberate ignorance of, the fact that the physician possesses or has obtained items or services equivalent to those provided by the donor.

9. For items or services that are of the type that can be used for any patient without regard to payer status, the donor does not restrict, or take any action to limit, the physician's right or ability to use the items or services for any patient.

10. The items and services do not include staffing of physician offices and are not used primarily to conduct personal business or business unrelated to the physician's medical practice.

11. [Reserved].

12. The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act), or any Federal or State law or regulation governing billing or claims submission.

13. The transfer of the items or services occurs and all conditions in this paragraph are satisfied on or before December 31, 2021.

16. Assistance for Nonphysician Practitioners

Remuneration provided by a hospital:

1. To induce a new practitioner who has been practicing in her specialty for less than a year to induce such practitioner to locate in a HPSA.

Remuneration provided by a hospital to a physician to compensate a nonphysician practitioner to provide patient care services, if all of the following conditions are met:

1. The arrangement is set out in writing and signed by

42 C.F.R. § 1001.952(n)

42 C.F.R. § 411.357(x)

2. To induce an established practitioner to relocate her primary place of practice to an HPSA, provided at least 75% of the revenues of the new practice come from patients who were not seen by the physician at her former practice.

Note that this safe harbor limits the time period for recruitment payments to three years, but does not prescribe the nature of the payments (i.e., whether they include income guarantees, moving expenses, etc.), leaving that determination to negotiation by the parties.

the hospital, the physician, and the nonphysician practitioner.

2. The arrangement is not conditioned on—

(A) The physician's referrals to the hospital; or

(B) The nonphysician practitioner's referrals to the hospital.

3. The remuneration from the hospital—

(A) Does not exceed 50 percent of the actual compensation, signing bonus, and benefits paid by the physician to the nonphysician practitioner during a period not to exceed the first 2 consecutive years of the compensation arrangementbetween the nonphysician practitioner and the physician (or the physician organization in whose shoes the physician stands); and

(B) Is not determined in a manner that takes into account (directly or indirectly) the volume or value of any actual or anticipated referrals by—

(1) The physician (or any physician in the physician's practice) or other business generated between the parties; or

(2) The nonphysician practitioner (or any nonphysician practitioner in the physician's practice) or other business generated between the parties.

4. The compensation, signing bonus, and benefits paid to the nonphysician practitioner by the physician does not exceed fair market value for the patient care services furnished by the nonphysician practitioner to patients of the physician's practice.

5. The nonphysician practitioner has not, within 1 year of the commencement of his or her compensation arrangement with the physician (or the physician organization in whose shoes the physician stands under § 411.354(c))—

(A) Practiced in the geographic area served by the hospital; or

(B) Been employed or otherwise engaged to provide patient care services by a physician or a physician organization that has a medical practice site located in the geographic area served by the hospital, regardless of whether thenonphysician practitioner furnished services at the medical practice site located in the geographic area served by the hospital.

6. (A) The nonphysician practitioner has a compensation arrangement directly with the physician or the physician organization in whose shoes the physician stands under § 411.354(c); and

(B) Substantially all of the services that the nonphysician practitioner furnishes to patients of the physician's practice are primary care services or mental health care services.

7. The physician does not impose practice restrictions on the nonphysician practitioner that unreasonably restrict the nonphysician practitioner's ability to provide patient care services in the geographic area served by the hospital.

8. The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act), or any Federal or State law or regulation governing billing or claims submission.

“Nonphysician practitioner” means a physician assistant, a nurse practitioner or clinical nurse specialist, a certified nurse-midwife, a clinical social worker, or a clinical psychologist.

17. Timeshare Arrangements

42 C.F.R. § 1001.952(b)42 C.F.R. § 1001.952(b)

42 C.F.R. § 411.357(y)

See Item 2 above for Space Rental.

See Item 3 above for Equipment Rental.

Remuneration provided under an arrangement for the use of premises, equipment, personnel, items, supplies, or services if the following conditions are met:

1. The arrangement is set out in writing, signed by the parties, and specifies the premises, equipment, personnel, items, supplies, and services covered by the arrangement.

2. The arrangement is between a physician (or the physician organization in whose shoes the physician stands under §411.354(c) and—

(i) A hospital; or

(ii) Physician organization of which the physician is not an owner, employee, or contractor.

3. The premises, equipment, personnel, items, supplies, and services covered by the arrangement are used—

(i) Predominantly for the provision of evaluation and management services to patients; and

(ii) On the same schedule.

4. The equipment covered by the arrangement is—

(i) Located in the same building where the evaluation and management services are furnished;

(ii) Not used to furnish designated health services other than those incidental to the evaluation and management services furnished at the time of the

patient's evaluation and management visit; and

(iii) Not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment (other than equipment used to perform CLIA–waived laboratory tests).

5. The arrangement is not conditioned on the referral of patients by the physician who is a party to the arrangement to the hospital or physician organization of which the physician is not an owner, employee, or contractor.

6. The compensation over the term of the arrangement is set in advance, consistent with fair market value, and not determined—

(i) In a manner that takes into account (directly or indirectly) the volume or value of referrals or other business generated between the parties; or

(ii) Using a formula based on—

(A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services provided while using the premises, equipment, personnel, items, supplies, or services covered by the arrangement; or

(B) Per-unit of service fees that are not time-based, to the extent that such fees reflect services provided to patients referred by the party granting permission to use the premises, equipment, personnel, items, supplies, or services covered by the arrangement to the party to which the permission is granted.

7. The arrangement would be commercially reasonable even if no referrals were made between the parties.

8. The arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act) or any Federal or State law or regulation governing billing or claims submission.

9. The arrangement does not convey a possessory leasehold interest in the office space that is the subject of the arrangement.

This site includes a summary of certain compliance issues facing health care providers today. This site does not, and is not intended to, give legal advice. Reference should be made to full text of the statutes and regulations for complete analysis.

Please send any comments about this web site to [email protected], or contact Scott Withrow at 404-814-0037.

Copyright 2016 Scott C. Withrow. All rights reserved. Last updated May 4, 2016.