STARK LAW - In Office Ancillary Services Exception
A danger to individual physicians and medical groups is the physician self referral law. The Stark law is a major source of problems for in house ancillary services that are often an important profit center for practices. 42 CFR 411.355 provides the in office ancillary service exceptions to the Stark Law prohibitions on referrals (See: 42 CFR 411.353)
Put simply, the prohibition under section 411.353 does not apply to “in office ancillary services” under certain specific conditions. Some of these Stark law exceptions are simple and clear. Others are not.
The first self referral exception under 411.355 are for “Physician Services”. So referring “in house” to another physician is fine. But beware the concept of “in house”. It is a legal concept not a question of where the other physician’s office physically exists. The actual statute explains this:
PHYSICIAN SERVICES - Defined
(1) Physician services as defined at § 410.20(a) of this chapter that are furnished—
(i) Personally by another physician who is a member of the referring physician's group practice or is a physician in the same group practice (as defined at § 411.351) as the referring physician; or
(ii) Under the supervision of another physician who is a member of the referring physician's group practice or is a physician in the same group practice (as defined at § 411.351) as the referring physician, provided that the supervision complies with all other applicable Medicare payment and coverage rules for the physician services.
(2) For purposes of this paragraph (a), “physician services” include only those “incident to” services (as defined at § 411.351) that are physician services under § 410.20(a) of this chapter.
Whenever a law is very specific, you can be certain that there are published cases, medical law journals and other interpretative writings that explore these parameters and define them more fully than what one gleans just reading the statute.
DURABLE MEDICAL EQUIPMENT (DME) & Other in House Sales
Other exceptions are more difficult. 42 CFR 411.351(b) creates an exception for In-office ancillary equipment.
This is an important area because in house sales of durable medical equipment (DME), infusion pumps that are DME (including external ambulatory infusion pumps) and many other items can be sold out of a doctors office for profit. But the rules are strict and the limits are very real. The in house for profit sales meet the ancillary service exception if:
1. The person providing the in house ancillary service is the referring physician or a member of the same practice group. PA’s and staff can provide the service if that person is
“supervised by the referring physician or, if the referring physician is in a group practice, by another physician in the group practice, provided that the supervision complies with all other applicable Medicare payment and coverage rules for the services.” Note that the language in quotations is directly from the statute. And yes, it is clear but it is to be read carefully and strictly.
LOCATION RESTRICTIONS
The statute has location restrictions and other rules designed to ensure that an outside service isn’t doing the real work with the physician group simply serving as a shill.
BILLING RESTRICTIONS (Important!)
Billing is a key focus and the ancillary services exception requires that the billing be done by the physician performing or supervising the service or the group practice either directly or through a third party billing service that is truly tied to the overall medical practice.
If you are planning the in-house provision of for profit items or services, it is wise to have a experienced healthcare attorney review the procedure for potential Stark violations.