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Step 1. Are you a physician currently seeing Medicare patients?
YesNo
Step 2. Do you refer Medicare patients?
Step 3. Do you refer Medicare patients for any of the following “Designated Health Services” (DHS)?
Step 4. Do you refer to an "entity" that performs DHS or bills Medicare for the provision of DHS?
Step 5. Do you, or an immediate family member, have an ownership or investment interest in an entity that performs DHS or bills Medicare for DHS?
Exceptions applicable only to ownership or investment interests
There are a number of exceptions applicable to ownership or investment interests. For example, one exception applicable only to ownership or investment interests is the exception applicable to ownership in publicly-traded companies. An example: If a for-profit hospital corporation's securities were traded on the New York Stock Exchange, and the corporation had stockholder equity exceeding $75 million, the physician could refer a Medicare patient for DHS to a hospital owned by that corporation.
Another exception applies to an ownership or investment interest in a "rural provider." Under this exception, a physician could, for example, refer a Medicare patient for DHS to a clinical lab in which the physician was an investor if at least 75 percent of the DHS provided by the lab were furnished to patients who live outside of a Metropolitan Statistical Area
Step 6. "Do you, or an immediate family member, have a compensation arrangements with an entity that performs DHS or bills Medicare for DHS?"
Exceptions applicable only to compensation arrangements
(a) Examples of direct compensation arrangements exceptions.
One exception applicable only to compensation arrangements is the exception for personal services arrangements. An example here could include an arrangement where a hospital paid a physician to be on-call to the hospital's emergency room. So long as the payments to the physician were made pursuant to a written agreement, represented fair market value, did not reflect the volume or value of the physician's referrals to the hospital, and satisfied other requirements of the exception, the physician could refer Medicare patients to the hospital for DHS without violating the Stark Law.
Another exception applicable to compensation arrangements is the exception for equipment leases. One example here could involve a situation where a hospital leases the use of DHS-furnished medical equipment, e.g., magnetic resonance imaging equipment (MRI), owned by a physician group. Group practice physicians could refer Medicare patients to the hospital for DHS even though the hospital was paying the group practice for use of the MRI so long as, among other things, the leases term is for at least one year, the rental charges are consistent with fair market value, and are not determined in a manner that takes into account the volume or value of any referrals or other business generated between the hospital and group practice physicians.
(b) Example of indirect compensation arrangement exception
The following is an example of the application of an indirect compensation arrangement exception. Suppose medical equipment manufacturer paid a royalty to a physician every time the physician implanted a device invented by the physician during a surgery performed in a hospital. Under these circumstances, the physician-inventor would have an indirect compensation arrangement with the hospital. If the royalty payments represented fair market value, then the indirect compensation arrangement could fall within the exception for indirect compensation arrangements.
(1) Exceptions applicable to both ownership/investment interests and compensation arrangements:
The physician services exception applies to both ownership or investment interests and to compensation arrangements. For example, under this exception, a physician who was a owner in a group practice and received a salary from that practice could refer a Medicare patient to another physician group practice member for the provision of a DHS, even though the referring physician held an ownership interest in, and had a compensation relationship, the group practice.
The in-office ancillary services exception applies to both ownership or investment interests and to compensation arrangements. For example, under this exception, a physician who is a shareholder in a medical group and who receives compensation from the group could nevertheless refer a Medicare patient to the medical practice for the provision of DHS.
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