TITLE 42--PUBLIC HEALTH
CHAPTER IV--CENTERS FOR MEDICARE
& MEDICAID SERVICES,
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
PART 411_EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT
--Table of Contents
Subpart J_Financial Relationships Between Physicians and Entities
Furnishing Designated Health Services
Sec. 411.355 General exceptions to the referral prohibition related
to both ownership/investment and compensation.
The prohibition on referrals set forth in Sec. 411.353 does not
apply to the following types of services:
(a) Physician services. (1) Physician services as defined in Sec.
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 Sec. 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 Sec. 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 paragraph (a) of this section, ``physician
services'' include only those ``incident to'' services (as defined at
Sec. 411.351) that are physician services under Sec. 410.20(a) of
this chapter.
(b) In-office ancillary services. Services (including certain items
of durable medical equipment (DME), as defined in paragraph (b)(4) of
this section, and infusion pumps that are DME (including external
ambulatory infusion pumps), but excluding all other DME and parenteral
and enteral nutrients, equipment, and supplies (such as infusion pumps
used for PEN)), that meet the following conditions:
(1) They are furnished personally by one of the following
individuals:
(i) The referring physician.
(ii) A physician who is a member of the same group practice as the
referring physician.
(iii) An individual who 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.
(2) They are furnished in one of the following locations:
(i) The same building (as defined at Sec. 411.351), but not
necessarily in the same space or part of the building, in which all of
the conditions of paragraph (b)(2)(i)(A), (b)(2)(i)(B), or (b)(2)(i)(C)
of this section are satisfied:
(A)(1) The referring physician or his or her group practice (if
any) has an office that is normally open to the physician's or group's
patients for medical services at least 35 hours per week; and
(2) The referring physician or one or more members of the referring
physician's group practice regularly practices medicine and furnishes
physician services to patients at least 30 hours per week. The 30 hours
must include some physician services that are unrelated to the
furnishing of DHS payable by Medicare, any other Federal health care
payer, or a private payer, even though the physician services may lead
to the ordering of DHS; or
(B)(1) The patient receiving the DHS usually receives physician
services from the referring physician or members of the referring
physician's group practice (if any);
(2) The referring physician or the referring physician's group
practice owns or rents an office that is normally open to the
physician's or group's patients for medical services at least 8 hours
per week; and
(3) The referring physician regularly practices medicine and
furnishes physician services to patients at least 6 hours per week. The
6 hours must include some physician services that are unrelated to the
furnishing of DHS payable by Medicare, any other Federal health care
payer, or a private payer, even though the physician services may lead
to the ordering of DHS; or
(C)(1) The referring physician is present and orders the DHS during
a patient visit on the premises as set forth in paragraph
(b)(2)(i)(C)(2) of this section or the referring physician or a member
of the referring physician's group practice (if any) is present while
the DHS is furnished during occupancy of the premises as set forth in
paragraph (b)(2)(i)(C)(2) of this section;
(2) The referring physician or the referring physician's group
practice owns or rents an office that is normally open to the
physician's or group's patients for medical services at least 8 hours
per week; and
(3) The referring physician or one or more members of the referring
physician's group practice regularly practices medicine and furnishes
physician services to patients at least 6 hours per week. The 6 hours
must include some physician services that are unrelated to the
furnishing of DHS payable by Medicare, any other Federal health care
payer, or a private payer, even though the physician services may lead
to the ordering of DHS.
(ii) A centralized building (as defined at Sec. 411.351) that is
used by the group practice for the provision of some or all
of the group practice's clinical laboratory services.
(iii) A centralized building (as defined at Sec. 411.351) that is
used by the group practice for the provision of some or all of the
group practice's DHS (other than clinical laboratory services).
(3) They are billed by one of the following:
(i) The physician performing or supervising the service.
(ii) The group practice of which the performing or supervising
physician is a member under a billing number assigned to the group
practice.
(iii) The group practice if the supervising physician is a
``physician in the group practice'' (as defined at Sec. 411.351) under
a billing number assigned to the group practice.
(iv) An entity that is wholly owned by the performing or
supervising physician or by that physician's group practice under the
entity's own billing number or under a billing number assigned to the
physician or group practice.
(v) An independent third party billing company acting as an agent
of the physician, group practice, or entity specified in paragraphs
(b)(3)(i) through (b)(3)(iv) of this section under a billing number
assigned to the physician, group practice, or entity, provided that the
billing arrangement meets the requirements of Sec. 424.80(b)(5) of
this chapter. For purposes of this paragraph (b)(3), a group practice
may have, and bill under, more than one Medicare billing number,
subject to any applicable Medicare program restrictions.
(4) For purposes of paragraph (b) of this section, DME covered by
the in-office ancillary services exception means canes, crutches,
walkers and folding manual wheelchairs, and blood glucose monitors,
that meet the following conditions:
(i) The item is one that a patient requires for the purpose of
ambulating, a patient uses in order to depart from the physician's
office, or is a blood glucose monitor (including one starter set of
test strips and lancets, consisting of no more than 100 of each). A
blood glucose monitor may be furnished only by a physician or employee
of a physician or group practice that also furnishes outpatient
diabetes self-management training to the patient.
(ii) The item is furnished in a building that meets the ``same
building'' requirements in the in-office ancillary services exception
as part of the treatment for the specific condition for which the
patient-physician encounter occurred.
(iii) The item is furnished personally by the physician who ordered
the DME, by another physician in the group practice, or by an employee
of the physician or the group practice.
(iv) A physician or group practice that furnishes the DME meets all
DME supplier standards set forth in Sec. 424.57(c) of this chapter.
(v) 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.
(vi) All other requirements of the in-office ancillary services
exception in paragraph (b) of this section are met.
(5) A designated health service is ``furnished'' for purposes of
paragraph (b) of this section in the location where the service is
actually performed upon a patient or where an item is dispensed to a
patient in a manner that is sufficient to meet the applicable Medicare
payment and coverage rules.
(6) Special rule for home care physicians. In the case of a
referring physician whose principal medical practice consists of
treating patients in their private homes, the ``same building''
requirements of paragraph (b)(2)(i) of this section are met if the
referring physician (or a qualified person accompanying the physician,
such as a nurse or technician) provides the DHS contemporaneously with
a physician service that is not a designated health service provided by
the referring physician to the patient in the patient's private home.
For purposes of paragraph (b)(5) of this section only, a private home
does not include a nursing, long-term care, or other facility or
institution, except that a patient may have a private home in an
assisted living or independent living facility.
(c) Services furnished by an organization (or its contractors or
subcontractors) to enrollees. Services furnished by an organization (or
its contractors or subcontractors) to enrollees of one of the following
prepaid health plans (not including services provided to enrollees in
any other plan or line of business offered or administered by the same
organization):
(1) An HMO or a CMP in accordance with a contract with CMS under
section 1876 of the Act and part 417, subparts J through M of this
chapter.
(2) A health care prepayment plan in accordance with an agreement
with CMS under section 1833(a)(1)(A) of the Act and part 417, subpart U
of this chapter.
(3) An organization that is receiving payments on a prepaid basis
for Medicare enrollees through a demonstration project under section
402(a) of the Social Security Amendments of 1967 (42 U.S.C. 1395b-1) or
under section 222(a) of the Social Security Amendments of 1972 (42
U.S.C. 1395b-1 note).
(4) A qualified HMO (within the meaning of section 1310(d) of the
Public Health Service Act).
(5) A coordinated care plan (within the meaning of section
1851(a)(2)(A) of the Act) offered by an organization in accordance with
a contract with CMS under section 1857 of the Act and part 422 of this
chapter.
(6) A MCO contracting with a State under section 1903(m) of the
Act.
(7) A prepaid inpatient health plan (PIHP) or prepaid ambulance
health plan (PAHP) contracting with a State under part 438 of this
chapter.
(8) A health insuring organization (HIO) contracting with a State
under part 438, subpart D of this chapter.
(9) An entity operating under a demonstration project under
sections 1115(a), 1915(a), 1915(b), or 1932(a) of the Act.
(d) [Reserved]
(e) Academic medical centers. (1) Services provided by an academic
medical center if all of the following conditions are met:
(i) The referring physician--
(A) Is a bona fide employee of a component of the academic medical
center on a full-time or substantial part-time basis. (A ``component''
of an academic medical center means an affiliated medical school,
faculty practice plan, hospital, teaching facility, institution of
higher education, departmental professional corporation, or nonprofit
support organization whose primary purpose is supporting the teaching
mission of the academic medical center.) The components need not be
separate legal entities;
(B) Is licensed to practice medicine in the State(s) in which he or
she practices medicine;
(C) Has a bona fide faculty appointment at the affiliated medical
school or at one or more of the educational programs at the accredited
academic hospital (as defined at Sec. 411.355(e)(3)); and
(D) Provides either substantial academic services or substantial
clinical teaching services (or a combination of academic services and
clinical teaching services) for which the faculty member receives
compensation as part of his or her employment relationship with the
academic medical center. Parties should use a reasonable and consistent
method for calculating a physician's academic services and clinical
teaching services. A physician will be deemed to meet this requirement
if he or she spends at least 20 percent of his or her professional time
or 8 hours per week providing
academic services or clinical teaching services (or a combination of
academic services or clinical teaching services). A physician who does
not spend at least 20 percent of his or her professional time or 8
hours per week providing academic services or clinical teaching
services (or a combination of academic services or clinical teaching
services) is not precluded from qualifying under this paragraph
(e)(1)(i)(D).
(ii) The compensation paid to the referring physician must meet all
of the following conditions:
(A) The total compensation paid by each academic medical center
component to the referring physician is set in advance.
(B) In the aggregate, the compensation paid by all academic medical
center components to the referring physician does not exceed fair
market value for the services provided.
(C) The total compensation paid by each academic medical center
component is not determined in a manner that takes into account the
volume or value of any referrals or other business generated by the
referring physician within the academic medical center.
(iii) The academic medical center must meet all of the following
conditions:
(A) All transfers of money between components of the academic
medical center must directly or indirectly support the missions of
teaching, indigent care, research, or community service.
(B) The relationship of the components of the academic medical
center must be set forth in one or more written agreements or other
written documents that have been adopted by the governing body of each
component. If the academic medical center is one legal entity, this
requirement will be satisfied if transfers of funds between components
of the academic medical center are reflected in the routine financial
reports covering the components.
(C) All money paid to a referring physician for research must be
used solely to support bona fide research or teaching and must be
consistent with the terms and conditions of the grant.
(iv) The referring physician's compensation 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.
(2) The ``academic medical center'' for purposes of this section
consists of--
(i) An accredited medical school (including a university, when
appropriate) or an accredited academic hospital (as defined at Sec.
411.355(e)(3));
(ii) One or more faculty practice plans affiliated with the medical
school, the affiliated hospital(s), or the accredited academic
hospital; and
(iii) One or more affiliated hospitals in which a majority of the
physicians on the medical staff consists of physicians who are faculty
members and a majority of all hospital admissions is made by physicians
who are faculty members. The hospital for purposes of this paragraph
(e)(2)(iii) may be the same hospital that satisfies the requirement of
paragraph (e)(2)(i) of this section. For purposes of this paragraph, a
faculty member is a physician who is either on the faculty of the
affiliated medical school or on the faculty of one or more of the
educational programs at the accredited academic hospital. In meeting
this paragraph (e)(2)(iii), faculty from any affiliated medical school
or accredited academic hospital education program may be aggregated,
and residents and non-physician professionals need not be counted. Any
faculty member may be counted, including courtesy and volunteer
faculty. For purposes of determining whether the majority of physicians
on the medical staff consists of faculty members, the affiliated
hospital must include or exclude all individual physicians with the
same class of privileges at the affiliated hospital (for example,
physicians holding courtesy privileges).
(3) An accredited academic hospital for purposes of this section
means a hospital or a health system that sponsors four or more approved
medical education programs.
(f) Implants furnished by an ASC. Implants furnished by an ASC,
including, but not limited to, cochlear implants, intraocular lenses,
and other implanted prosthetics, implanted prosthetic devices, and
implanted DME that meet the following conditions:
(1) The implant is implanted by the referring physician or a member
of the referring physician's group practice in an ASC that is certified
by Medicare under part 416 of this chapter and with which the referring
physician has a financial relationship.
(2) The implant is implanted in the patient during a surgical
procedure paid by Medicare to the ASC as an ASC procedure under Sec.
416.65 of this chapter.
(3) The arrangement for the furnishing of the implant does not
violate the anti-kickback statute (section 1128B(b) of the Act).
(4) All billing and claims submission for the implants does not
violate any Federal or State law or regulation governing billing or
claims submission.
(5) The exception set forth in this paragraph (f) does not apply to
any financial relationships between the referring physician and any
entity other than the ASC in which the implant is furnished to, and
implanted in, the patient.
(g) EPO and other dialysis-related drugs. EPO and other dialysis-
related drugs that meet the following conditions:
(1) The EPO and other dialysis-related drugs are furnished in or by
an ESRD facility. For purposes of this paragraph, ``EPO and other
dialysis-related drugs'' means 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; and
``furnished'' means that the EPO or dialysis-related drugs are
administered to a patient in the ESRD facility or, in the case of EPO
or Aranesp (or equivalent drug identified on the List of CPT/HCPCS
Codes) only, are dispensed by the ESRD facility for use at home.
(2) The arrangement for the furnishing of the EPO and other
dialysis-related drugs does not violate the anti-kickback statute
(section 1128B(b) of the Act).
(3) All billing and claims submission for the EPO and other
dialysis-related drugs does not violate any Federal or State law or
regulation governing billing or claims submission.
(4) The exception set forth in this paragraph does not apply to any
financial relationship between the referring physician and any entity
other than the ESRD facility that furnishes the EPO and other dialysis-
related drugs to the patient.
(h) Preventive screening tests, immunizations, and vaccines.
Preventive screening tests, immunizations, and vaccines that meet the
following conditions:
(1) The preventive screening tests, immunizations, and vaccines are
subject to CMS-mandated frequency limits.
(2) The arrangement for the provision of the preventive screening
tests, immunizations, and vaccines does not violate the anti-kickback
statute (section 1128B(b) of the Act).
(3) All billing and claims submission for the preventive screening
tests, immunizations, and vaccines does not violate any Federal or
State law or regulation governing billing or claims submission.
(4) The preventive screening tests, immunizations, and vaccines
must be covered by Medicare and must be listed as eligible for this
exception on the List of CPT/HCPCS Codes.
(i) Eyeglasses and contact lenses following cataract surgery.
Eyeglasses and contact lenses that are covered by Medicare when
furnished to patients following cataract surgery that meet the
following conditions:
(1) The eyeglasses or contact lenses are provided in accordance
with the coverage and payment provisions set forth in Sec.
410.36(a)(2)(ii) and Sec. 414.228 of this chapter, respectively.
(2) The arrangement for the furnishing of the eyeglasses or contact
lenses does not violate the anti-kickback statute (section 1128B(b) of
the Act).
(3) All billing and claims submission for the eyeglasses or contact
lenses does not violate any Federal or State law or regulation
governing billing or claims submission.
(j) Intra-family rural referrals. (1) Services provided pursuant to
a referral from a referring physician to his or her immediate family
member or to an entity furnishing DHS with which the immediate family
member has a financial relationship, if all of the following conditions
are met:
(i) The patient who is referred resides in a rural area as defined
at Sec. 411.351 of this subpart;
(ii) Except as provided in paragraph (j)(1)(iii) of this section,
in light of the patient's condition, no other person or entity is
available to furnish the services in a timely manner within 25 miles of
or 45 minutes transportation time from the patient's residence;
(iii) In the case of services furnished to patients where they
reside (for example, home health services or DME), no other person or
entity is available to furnish the services in a timely manner in light
of the patient's condition; and
(iv) The financial relationship 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;
(2) The referring physician or the immediate family member must
make reasonable inquiries as to the availability of other persons or
entities to furnish the DHS. However, neither the referring physician
nor the immediate family member has any obligation to inquire as to the
availability of persons or entities located farther than 25 miles of or
45 minutes transportation time from (whichever test the referring
physician utilized for purposes of paragraph (j)(1)(ii)) the patient's
residence.