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Referral Requirements – Can Employed Doctors Be Required to Make Referrals?

Referral Requirements Under the Stark Regulations

Referral Requirements Employed PhysiciansThe Stark Law Regulations include a provision that dictates the conditions under which the employer of a physician may mandate referrals for designated health services.  Certain specific conditions must be met if an employer wishes to require and employed physician to make referrals to its designated health services.  The Stark regulations provider that a physician’s compensation from a bona fide employer or under a managed care contract or other contract for personal services may be conditioned on the physician’s referrals to a particular provider, practitioner, or supplier, provided that the compensation arrangement meets several specific conditions.

The conditions that must be met include the following:

–  The physician’s compensation must be set in advance for the term of the agreement.

–  The physician’s compensation must be consistent with fair market value for services performed (that is, the payment may not take into account the volume or value of anticipated or required referrals).

– The arrangement must otherwise comply with an applicable exception under Sec. 411.355 or Sec. 411.357.

–  The arrangement must meet the following conditions: (A) The requirement to make referrals to a particular provider, practitioner, or supplier is set forth in a written agreement signed by the parties. (B) The requirement to make referrals to a particular provider, practitioner, or supplier does not apply if the patient expresses a preference for a different provider, practitioner, or supplier; the patient’s insurer determines the provider, practitioner, or supplier; or the referral is not in the patient’s best medical interests in the physician’s judgment.

– The required referrals relate solely to the physician’s services covered by the scope of the employment or the contract, and the referral requirement is reasonably necessary to effectuate the legitimate business purposes of the compensation arrangement. In no event may the physician be required to make referrals that relate to services that are not provided by the physician under the scope of his or her employment or contract.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

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