Under the federal health care programs, certain types of referrals are not allowed. The self-referral prohibitions were put in place to prevent physicians or their immediate families, from benefiting from certain transactions. These are some of the legal nuances or distinctions that private practice physicians should be aware of, if they are to operate effectively, and remain complaint.
Although specific referrals are expressly prohibited under the federal Stark Law, ‘safe harbors’ do exist that would allow exceptions. However, most health practitioners are often confused about these provisions. The situation is often compounded when there are also state laws regulating self-referrals. This is the case in California with the Speier Act.
In-Office Ancillary Services
Exceptions to the state and federal compensation relationships exist under the ‘in-office Ancillary Services’ (IOAS). IOAS does provide some protection under the law, but again there are legal nuances that private practice physicians should be aware of.
IOAS was instituted to allow physicians to provide ancillary services in their practices that would be reimbursed by Medicare. These services include radiology and physical therapy. Some physicians mistakenly assume that if they co-own a company that provides ancillary services, and the company is situated in their office building, they automatically qualify for IOAS exemption.
However, this is not the case; therefore some of them are in violation of the laws prohibiting self-referrals. Unfortunately they are often not aware of this until they are audited by Medicare, or Medi-Cal, (in the case of California).
If you are a private practice physician and would like to ensure that your in-office ancillary services arrangements meet Medicare requirements, contact us at Nelson Hardiman, LLP, in Los Angeles. You can call us at 310-203-2800 to set up a consultation.