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
For purposes of Sec. 411.353, the following compensation
arrangements do not constitute a financial relationship:
(a) Rental of office space. Payments for the use of office space
made by a lessee to a lessor if there is a rental or lease agreement
that meets the following requirements:
(1) The agreement is set out in writing, is signed by the parties,
and specifies the premises it covers.
(2) The term of the agreement is at least 1 year. To meet this
requirement, if the agreement is terminated during the term with or
without cause, the parties may not enter into a new agreement during
the first year of the original term of the agreement.
(3) The space rented or leased does not exceed that which is
reasonable and necessary for the legitimate business purposes of the
lease or rental and is used exclusively by the lessee when being used
by the lessee (and is not shared with or used by the lessor or any
person or entity related to the lessor), except that the lessee may
make payments for the use of space consisting of common areas if the
payments do not exceed the lessee's pro rata share of expenses for the
space based upon the ratio of the space used exclusively by the lessee
to the total amount of space (other than common areas) occupied by all
persons using the common areas.
(4) The rental charges over the term of the agreement are set in
advance and are consistent with fair market value.
(5) The rental charges over the term of the agreement are not
determined in a manner that takes into account the volume or value of
any referrals or other business generated between the parties.
(6) The agreement would be commercially reasonable even if no
referrals were made between the lessee and the lessor.
(7) A holdover month-to-month rental for up to 6 months immediately
following the expiration of an agreement of at least 1 year that met
the conditions of this paragraph (a) satisfies the requirements of this
paragraph (a),
provided that the holdover rental is on the same terms and conditions
as the immediately preceding agreement.
(b) Rental of equipment. Payments made by a lessee to a lessor for
the use of equipment under the following conditions:
(1) A rental or lease agreement is set out in writing, is signed by
the parties, and specifies the equipment it covers.
(2) The equipment rented or leased does not exceed that which is
reasonable and necessary for the legitimate business purposes of the
lease or rental and is used exclusively by the lessee when being used
by the lessee and is not shared with or used by the lessor or any
person or entity related to the lessor.
(3) The agreement provides for a term of rental or lease of at
least 1 year. To meet this requirement, if the agreement is terminated
during the term with or without cause, the parties may not enter into a
new agreement during the first year of the original term of the
agreement.
(4) The rental charges over the term of the agreement are set in
advance, 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 parties.
(5) The agreement would be commercially reasonable even if no
referrals were made between the parties.
(6) A holdover month-to-month rental for up to 6 months immediately
following the expiration of an agreement of at least 1 year that met
the conditions of this paragraph (b) satisfies the requirements of this
paragraph (b), provided that the holdover rental is on the same terms
and conditions as the immediately preceding agreement.
(c) Bona fide employment relationships. Any amount paid by an
employer to a physician (or immediate family member) who has a bona
fide employment relationship with the employer for the provision of
services if the following conditions are met:
(1) The employment is for identifiable services.
(2) The amount of the remuneration under the employment is--
(i) Consistent with the fair market value of the services; and
(ii) Except as provided in paragraph (c)(4) of this section, is not
determined in a manner that takes into account (directly or indirectly)
the volume or value of any referrals by the referring physician.
(3) The remuneration is provided under an agreement that would be
commercially reasonable even if no referrals were made to the employer.
(4) Paragraph (c)(2)(ii) of this section does not prohibit payment
of remuneration in the form of a productivity bonus based on services
performed personally by the physician (or immediate family member of
the physician).
(d) Personal service arrangements. (1) General--Remuneration from
an entity under an arrangement or multiple arrangements to a physician
or his or her immediate family member, or to a group practice,
including remuneration for specific physician services furnished to a
nonprofit blood center, if the following conditions are met:
(i) Each arrangement is set out in writing, is signed by the
parties, and specifies the services covered by the arrangement.
(ii) The arrangement(s) covers all of the services to be furnished
by the physician (or an immediate family member of the physician) to
the entity. This requirement is met if all separate arrangements
between the entity and the physician and the entity and any family
members incorporate each other by reference or if they cross-reference
a master list of contracts that is maintained and updated centrally and
is available for review by the Secretary upon request. The master list
must be maintained in a manner that preserves the historical record of
contracts. A physician or family member can ``furnish'' services
through employees whom they have hired for the purpose of performing
the services; through a wholly-owned entity; or through locum tenens
physicians (as defined at Sec. 411.351, except that the regular
physician need not be a member of a group practice).
(iii) The aggregate services contracted for do not exceed those
that are reasonable and necessary for the legitimate business purposes
of the arrangement(s).
(iv) The term of each arrangement is for at least 1 year. To meet
this requirement, if an arrangement is terminated during the term with
or without cause, the parties may not enter into the same or
substantially the same arrangement during the first year of the
original term of the arrangement.
(v) The compensation to be paid over the term of each arrangement
is set in advance, does not exceed fair market value, and, except in
the case of a physician incentive plan (as defined at Sec. 411.351 of
this subpart), is not determined in a manner that takes into account
the volume or value of any referrals or other business generated
between the parties.
(vi) The services to be furnished under each arrangement do not
involve the counseling or promotion of a business arrangement or other
activity that violates any Federal or State law.
(vii) A holdover personal service arrangement for up to 6 months
following the expiration of an agreement of at least 1 year that met
the conditions of paragraph (d) of this section satisfies the
requirements of paragraph (d) of this section, provided that the
holdover personal service arrangement is on the same terms and
conditions as the immediately preceding agreement.
(2) Physician incentive plan exception. In the case of a physician
incentive plan (as defined at Sec. 411.351) between a physician and an
entity (or downstream contractor), the compensation may be determined
in a manner (through a withhold, capitation, bonus, or otherwise) that
takes into account directly or indirectly the volume or value of any
referrals or other business generated between the parties, if the plan
meets the following requirements:
(i) No specific payment is made directly or indirectly under the
plan to a physician or a physician group as an inducement to reduce or
limit medically necessary services furnished with respect to a specific
individual enrolled with the entity.
(ii) Upon request of the Secretary, the entity provides the
Secretary with access to information regarding the plan (including any
downstream contractor plans), in order to permit the Secretary to
determine whether the plan is in compliance with paragraph (d)(2) of
this section.
(iii) In the case of a plan that places a physician or a physician
group at substantial financial risk as defined at Sec. 422.208, the
entity or any downstream contractor (or both) complies with the
requirements concerning physician incentive plans set forth in Sec.
422.208 and Sec. 422.210 of this chapter.
(e) Physician recruitment. (1) Remuneration provided by a hospital
to recruit a physician that is paid directly to the physician and that
is intended to induce the physician to relocate his or her medical
practice to the geographic area served by the hospital in order to
become a member of the hospital's medical staff, if all of the
following conditions are met:
(i) The arrangement is set out in writing and signed by both
parties;
(ii) The arrangement is not conditioned on the physician's referral
of patients to the hospital;
(iii) The hospital does not determine (directly or indirectly) the
amount of the remuneration to the physician based on the volume or
value of any actual or anticipated referrals by the physician or
other business generated between the parties; and
(iv) The physician is allowed to establish staff privileges at any
other hospital(s) and to refer business to any other entities (except
as referrals may be restricted under an employment or services contract
that complies with Sec. 411.354(d)(4)).
(2)(i) The ``geographic area served by the hospital'' is the area
composed of the lowest number of contiguous zip codes from which the
hospital draws at least 75 percent of its inpatients. The geographic
area served by the hospital may include one or more zip codes from
which the hospital draws no inpatients, provided that such zip codes
are entirely surrounded by zip codes in the geographic area described
above from which the hospital draws at least 75 percent of its
inpatients.
(ii) With respect to a hospital that draws fewer than 75 percent of
its inpatients from all of the contiguous zip codes from which it draws
inpatients, the ``geographic area served by the hospital'' will be
deemed to be the area composed of all of the contiguous zip codes from
which the hospital draws its inpatients.
(iii) Special optional rule for rural hospitals. In the case of a
hospital located in a rural area (as defined at Sec. 411.351), the
``geographic area served by the hospital'' may also be the area
composed of the lowest number of contiguous zip codes from which the
hospital draws at least 90 percent of its inpatients. If the hospital
draws fewer than 90 percent of its inpatients from all of the
contiguous zip codes from which it draws inpatients, the ``geographic
area served by the hospital'' may include noncontiguous zip codes,
beginning with the noncontiguous zip code in which the highest
percentage of the hospital's inpatients resides, and continuing to add
noncontiguous zip codes in decreasing order of percentage of
inpatients.
(iv) A physician will be considered to have relocated his or her
medical practice if the medical practice was located outside the
geographic area served by the hospital and--
(A) The physician moves his or her medical practice at least 25
miles and into the geographic area served by the hospital; or
(B) The physician moves his medical practice into the geographic
area served by the hospital, and the physician's new medical practice
derives at least 75 percent of its revenues from professional services
furnished to patients (including hospital inpatients) not seen or
treated by the physician at his or her prior medical practice site
during the preceding 3 years, measured on an annual basis (fiscal or
calendar year). For the initial ``start up'' year of the recruited
physician's practice, the 75 percent test in the preceding sentence
will be satisfied if there is a reasonable expectation that the
recruited physician's medical practice for the year will derive at
least 75 percent of its revenues from professional services furnished
to patients not seen or treated by the physician at his or her prior
medical practice site during the preceding 3 years.
(3) The recruited physician will not be subject to the relocation
requirement of this paragraph, provided that he or she establishes his
or her medical practice in the geographic area served by the recruiting
hospital, if--
(i) He or she is a resident or physician who has been in practice 1
year or less;
(ii) He or she was employed on a full-time basis for at least 2
years immediately prior to the recruitment arrangement by one of the
following (and did not maintain a private practice in addition to such
full-time employment):
(A) A Federal or State bureau of prisons (or similar entity
operating one or more correctional facilities) to serve a prison
population;
(B) The Department of Defense or Department of Veterans Affairs to
serve active or veteran military personnel and their families; or
(C) A facility of the Indian Health Service to serve patients who
receive medical care exclusively through the Indian Health Service; or
(iii) The Secretary has deemed in an advisory opinion issued under
section 1877(g) of the Act that the physician does not have an
established medical practice that serves or could serve a significant
number of patients who are or could become patients of the recruiting
hospital.
(4) In the case of remuneration provided by a hospital to a
physician either indirectly through payments made to another physician
practice, or directly to a physician who joins a physician practice,
the following additional conditions must be met:
(i) The written agreement in paragraph (e)(1) is also signed by the
party to whom the payments are directly made.
(ii) Except for actual costs incurred by the physician practice in
recruiting the new physician, the remuneration is passed directly
through to or remains with the recruited physician.
(iii) In the case of an income guarantee of any type made by the
hospital to a recruited physician who joins a physician practice, the
costs allocated by the physician practice to the recruited physician do
not exceed the actual additional incremental costs attributable to the
recruited physician. With respect to a physician recruited to join a
physician practice located in a rural area or HPSA, if the physician is
recruited to replace a physician who, within the previous 12-month
period, retired, relocated outside of the geographic area served by the
hospital, or died, the costs allocated by the physician practice to the
recruited physician do not exceed either--
(A) The actual additional incremental costs attributable to the
recruited physician; or
(B) The lower of a per capita allocation or 20 percent of the
practice's aggregate costs.
(iv) Records of the actual costs and the passed-through amounts are
maintained for a period of at least 5 years and made available to the
Secretary upon request.
(v) The remuneration from the hospital under the arrangement is not
determined in a manner that takes into account (directly or indirectly)
the volume or value of any actual or anticipated referrals by the
recruited physician or the physician practice (or any physician
affiliated with the physician practice) receiving the direct payments
from the hospital.
(vi) The physician practice may not impose on the recruited
physician practice restrictions that unreasonably restrict the
recruited physician's ability to practice medicine in the geographic
area served by the hospital.
(vii) 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.
(5) Recruitment of a physician by a hospital located in a rural
area (as defined at Sec. 411.351) to an area outside the geographic
area served by the hospital is permitted under this exception if the
Secretary determines in an advisory opinion issued under section
1877(g) of the Act that the area has a demonstrated need for the
recruited physician and all other requirements of this paragraph (e)
are met.
(6) This paragraph (e) applies to remuneration provided by a
federally qualified health center or a rural health clinic in the same
manner as it applies to remuneration provided by a hospital, provided
that 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.
(f) Isolated transactions. Isolated financial transactions, such as
a one-time sale of property or a practice, if all of the following
conditions are met:
(1) The amount of remuneration under the isolated transaction is--
(i) Consistent with the fair market value of the transaction; and
(ii) Not determined in a manner that takes into account (directly
or indirectly) the volume or value of any referrals by the referring
physician or other business generated between the parties.
(2) The remuneration is provided under an agreement that would be
commercially reasonable even if the physician made no referrals to the
entity.
(3) There are no additional transactions between the parties for 6
months after the isolated transaction, except for transactions that are
specifically excepted under the other provisions in Sec. 411.355
through Sec. 411.357 and except for commercially reasonable post-
closing adjustments that do not take into account (directly or
indirectly) the volume or value of referrals or other business
generated by the referring physician.
(g) Certain arrangements with hospitals. Remuneration provided by a
hospital to a physician if the remuneration does not relate, directly
or indirectly, to the furnishing of DHS. To qualify as ``unrelated,''
remuneration must be wholly unrelated to the furnishing of DHS and must
not in any way take into account the volume or value of a physician's
referrals. Remuneration relates to the furnishing of DHS if it--
(1) Is an item, service, or cost that could be allocated in whole
or in part to Medicare or Medicaid under cost reporting principles;
(2) Is furnished, directly or indirectly, explicitly or implicitly,
in a selective, targeted, preferential, or conditioned manner to
medical staff or other persons in a position to make or influence
referrals; or
(3) Otherwise takes into account the volume or value of referrals
or other business generated by the referring physician.
(h) Group practice arrangements with a hospital. An arrangement
between a hospital and a group practice under which DHS are furnished
by the group but are billed by the hospital if the following conditions
are met:
(1) With respect to services furnished to an inpatient of the
hospital, the arrangement is pursuant to the provision of inpatient
hospital services under section 1861(b)(3) of the Act.
(2) The arrangement began before, and has continued in effect
without interruption since, December 19, 1989.
(3) With respect to the DHS covered under the arrangement, at least
75 percent of these services furnished to patients of the hospital are
furnished by the group under the arrangement.
(4) The arrangement is in accordance with a written agreement that
specifies the services to be furnished by the parties and the
compensation for services furnished under the agreement.
(5) The compensation paid over the term of the agreement is
consistent with fair market value, and the compensation per unit of
service is fixed in advance and is not determined in a manner that
takes into account the volume or value of any referrals or other
business generated between the parties.
(6) The compensation is provided in accordance with an agreement
that would be commercially reasonable even if no referrals were made to
the entity.
(i) Payments by a physician. Payments made by a physician (or his
or her immediate family member)--
(1) To a laboratory in exchange for the provision of clinical
laboratory services; or
(2) To an entity as compensation for any other items or services
that are furnished at a price that is consistent with fair market
value, and that are not specifically addressed by another provision in
Sec. 411.355 through Sec. 411.357 (including, but not limited to,
Sec. 411.357(l)). ``Services'' in this context means services of any
kind (not merely those defined as ``services'' for purposes of the
Medicare program in Sec. 400.202 of this chapter).
(j) Charitable donations by a physician. Bona fide charitable
donations made by a physician (or immediate family member) to an entity
if all of the following conditions are satisfied:
(1) The charitable donation is made to an organization exempt from
taxation under the Internal Revenue Code (or to a supporting
organization);
(2) The donation is neither solicited, nor offered, in any manner
that takes into account the volume or value of referrals or other
business generated between the physician and the entity; and
(3) The donation 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.
(k) Nonmonetary compensation. (1) Compensation from an entity in
the form of items or services (not including cash or cash equivalents)
that does not exceed an aggregate of $300 per calendar year, as
adjusted for inflation in accordance with paragraph (k)(2) of this
section, if all of the following conditions are satisfied:
(i) The compensation is not determined in any manner that takes
into account the volume or value of referrals or other business
generated by the referring physician.
(ii) The compensation may not be solicited by the physician or the
physician's practice (including employees and staff members).
(iii) The 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 annual aggregate nonmonetary compensation limit in this
paragraph (k) is adjusted each calendar year to the nearest whole
dollar by the increase in the Consumer Price Index--Urban All Items
(CPI-U) for the 12-month period ending the preceding September 30. CMS
displays after September 30 each year both the increase in the CPI-U
for the 12-month period and the new nonmonetary compensation limit on
the physician self-referral Web site:
http://www.cms.hhs.gov/PhysicianSelfReferral/10_CPI-U_Updates.asp.
(3) Where an entity has inadvertently provided nonmonetary
compensation to a physician in excess of the limit (as set forth in
paragraph (k)(1) of this section), such compensation is deemed to be
within the limit if--
(i) The value of the excess nonmonetary compensation is no more
than 50 percent of the limit; and
(ii) The physician returns to the entity the excess nonmonetary
compensation (or an amount equal to the value of the excess nonmonetary
compensation) by the end of the calendar year in which the excess
nonmonetary compensation was received or within 180 consecutive
calendar days following the date the excess nonmonetary compensation
was received by the physician, whichever is earlier.
(iii) Paragraph (k)(3) may be used by an entity only once every 3
years with respect to the same referring physician.
(4) In addition to nonmonetary compensation up to the limit
described in paragraph (k)(1) of this section, an entity that has a
formal medical staff may provide one local medical staff appreciation
event per year for the entire medical staff. Any gifts or gratuities
provided in connection with the medical staff appreciation event are
subject to the limit in paragraph (k)(1).
(l) Fair market value compensation. Compensation resulting from an
arrangement between an entity and a
physician (or an immediate family member) or any group of physicians
(regardless of whether the group meets the definition of a group
practice set forth in Sec. 411.352) for the provision of items or
services (other than the rental of office space) by the physician (or
an immediate family member) or group of physicians to the entity, or by
the entity to the physician (or an immediate family member) or a group
of physicians, if the arrangement is set forth in an agreement that
meets the following conditions:
(1) The arrangement is in writing, signed by the parties, and
covers only identifiable items or services, all of which are specified
in the agreement.
(2) The writing specifies the timeframe for the arrangement, which
can be for any period of time and contain a termination clause,
provided that the parties enter into only one arrangement for the same
items or services during the course of a year. An arrangement made for
less than 1 year may be renewed any number of times if the terms of the
arrangement and the compensation for the same items or services do not
change.
(3) The writing specifies the compensation that will be provided
under the arrangement. The compensation must be set in advance,
consistent with fair market value, and not determined in a manner that
takes into account the volume or value of referrals or other business
generated by the referring physician.
(4) The arrangement is commercially reasonable (taking into account
the nature and scope of the transaction) and furthers the legitimate
business purposes of the parties.
(5) 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.
(6) The services to be performed under the arrangement do not
involve the counseling or promotion of a business arrangement or other
activity that violates a Federal or State law.
(m) Medical staff incidental benefits. Compensation in the form of
items or services (not including cash or cash equivalents) from a
hospital to a member of its medical staff when the item or service is
used on the hospital's campus, if all of the following conditions are
met:
(1) The compensation is offered to all members of the medical staff
practicing in the same specialty (but not necessarily accepted by every
member to whom it is offered) without regard to the volume or value of
referrals or other business generated between the parties.
(2) Except with respect to identification of medical staff on a
hospital web site or in hospital advertising, the compensation is
provided only during periods when the medical staff members are making
rounds or are engaged in other services or activities that benefit the
hospital or its patients.
(3) The compensation is provided by the hospital and used by the
medical staff members only on the hospital's campus. Compensation,
including, but not limited to, internet access, pagers, or two-way
radios, used away from the campus only to access hospital medical
records or information or to access patients or personnel who are on
the hospital campus, as well as the identification of the medical staff
on a hospital web site or in hospital advertising, meets the ``on
campus'' requirement of this paragraph (m) of this section.
(4) The compensation is reasonably related to the provision of, or
designed to facilitate directly or indirectly the delivery of, medical
services at the hospital.
(5) The compensation is of low value (that is, less than $25) with
respect to each occurrence of the benefit (for example, each meal given
to a physician while he or she is serving patients who are hospitalized
must be of low value). The $25 limit in this paragraph (m)(5) is
adjusted each calendar year to the nearest whole dollar by the increase
in the Consumer Price Index--Urban All Items (CPI-I) for the 12 month
period ending the preceding September 30. CMS displays after September
30 each year both the increase in the CPI-I for the 12 month period and
the new limits on the physician self-referral web site:
http://www.cms.hhs.gov/PhysicianSelfReferral/10_CPI-U_Updates.asp.
(6) The compensation is not determined in any manner that takes
into account the volume or value of referrals or other business
generated between the parties.
(7) The 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.
(8) Other facilities and health care clinics (including, but not
limited to, federally qualified health centers) that have bona fide
medical staffs may provide compensation under this paragraph (m) on the
same terms and conditions applied to hospitals under this paragraph
(m).
(n) Risk-sharing arrangements. Compensation pursuant to a risk-
sharing arrangement (including, but not limited to, withholds, bonuses,
and risk pools) between a MCO or an IPA and a physician (either
directly or indirectly through a subcontractor) for services provided
to enrollees of a health plan, provided that 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. For purposes of this paragraph (n), ``health plan'' and
``enrollees'' have the meanings set forth in Sec. 1001.952(l) of this
title.
(o) Compliance training. Compliance training provided by an entity
to a physician (or to the physician's immediate family member or office
staff) who practices in the entity's local community or service area,
provided that the training is held in the local community or service
area. For purposes of this paragraph (o), ``compliance training'' means
training regarding the basic elements of a compliance program (for
example, establishing policies and procedures, training of staff,
internal monitoring, or reporting); specific training regarding the
requirements of Federal and State health care programs (for example,
billing, coding, reasonable and necessary services, documentation, or
unlawful referral arrangements); or training regarding other Federal,
State, or local laws, regulations, or rules governing the conduct of
the party for whom the training is provided. For purposes of this
paragraph, ``compliance training'' includes programs that offer
continuing medical education credit, provided that compliance training
is the primary purpose of the program.
(p) Indirect compensation arrangements. Indirect compensation
arrangements, as defined at Sec. 411.354(c)(2), if all of the
following conditions are satisfied:
(1) The compensation received by the referring physician (or
immediate family member) described in Sec. 411.354(c)(2)(ii) is fair
market value for services and items actually provided and not
determined in any manner that takes into account the volume or value of
referrals or other business generated by the referring physician for
the entity furnishing DHS.
(2) The compensation arrangement described in Sec.
411.354(c)(2)(ii) is set out in writing, signed by the parties, and
specifies the services covered by the arrangement, except in the case
of a bona fide employment relationship between an employer and an
employee, in which case the arrangement need not be set out in a
written contract, but must be for identifiable services and be
commercially reasonable even if no referrals are made to the employer.
(3) The 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.
(q) Referral services. Remuneration that meets all of the
conditions set forth in Sec. 1001.952(f) of this title.
(r) Obstetrical malpractice insurance subsidies. Remuneration to
the referring physician that meets all of the conditions set forth in
Sec. 1001.952(o) of this title.
(s) Professional courtesy. Professional courtesy (as defined at
Sec. 411.351) offered by an entity with a formal medical staff to a
physician or a physician's immediate family member or office staff if
all of the following conditions are met:
(1) The professional courtesy is offered to all physicians on the
entity's bona fide medical staff or in such entity's local community or
service area without regard to the volume or value of referrals or
other business generated between the parties;
(2) The health care items and services provided are of a type
routinely provided by the entity;
(3) The entity has a professional courtesy policy that is set out
in writing and approved in advance by the entity's governing body;
(4) The professional courtesy is not offered to a physician (or
immediate family member) who is a Federal health care program
beneficiary, unless there has been a good faith showing of financial
need; and
(5) 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.
(t) Retention payments in underserved areas.
(1) Bona fide written offer. Remuneration provided by a hospital
directly to a physician on the hospital's medical staff to retain the
physician's medical practice in the geographic area served by the
hospital (as defined in paragraph (e)(2) of this section), if all of
the following conditions are met:
(i) The physician has a bona fide firm, written recruitment offer
or offer of employment from a hospital, academic medical center (as
defined at Sec. 411.355(e)), or physician organization (as defined at
Sec. 411.351) that is not related to the hospital making the payment,
and the offer specifies the remuneration being offered and requires the
physician to move the location of his or her medical practice at least
25 miles and outside of the geographic area served by the hospital
making the retention payment.
(ii) The requirements of Sec. 411.357(e)(1)(i) through Sec.
411.357(e)(1)(iv) are satisfied.
(iii) Any retention payment is subject to the same obligations and
restrictions, if any, on repayment or forgiveness of indebtedness as
the written recruitment offer or offer of employment.
(iv) The retention payment does not exceed the lower of--
(A) The amount obtained by subtracting the physician's current
income from physician and related services from the income the
physician would receive from comparable physician and related services
in the written recruitment or employment offer, provided that the
respective incomes are determined using a reasonable and consistent
methodology, and that they are calculated uniformly over no more than a
24-month period; or
(B) The reasonable costs the hospital would otherwise have to
expend to recruit a new physician to the geographic area served by the
hospital to join the medical staff of the hospital to replace the
retained physician.
(v) The requirements of paragraph (t)(3) are satisfied.
(2) Written certification from physician. Remuneration provided by
a hospital directly to a physician on the hospital's medical staff to
retain the physician's medical practice in the geographic area served
by the hospital (as defined in paragraph (e)(2) of this section), if
all of the following conditions are met:
(i) The physician furnishes to the hospital before the retention
payment is made a written certification that the physician has a bona
fide opportunity for future employment by a hospital, academic medical
center (as defined at Sec. 411.355(e)), or physician organization (as
defined at Sec. 411.351) that requires the physician to move the
location of his or her medical practice at least 25 miles and outside
the geographic area served by the hospital. The certification contains
at least the following--
(A) Details regarding the steps taken by the physician to
effectuate the employment opportunity;
(B) Details of the physician's employment opportunity, including
the identity and location of the physician's future employer or
employment location or both, and the anticipated income and benefits
(or a range for income and benefits);
(C) A certification that the future employer is not related to the
hospital making the payment;
(D) The date on which the physician anticipates relocating his or
medical practice outside of the geographic area served by the hospital;
and
(E) Information sufficient for the hospital to verify the
information included in the written certification.
(ii) The hospital takes reasonable steps to verify that the
physician has a bona fide opportunity for future employment that
requires the physician to relocate outside the geographic area served
by the hospital.
(iii) The requirements of Sec. 411.357(e)(1)(i) through Sec.
411.357(e)(1)(iv) are satisfied.
(iv) The retention payment does not exceed the lower of--
(A) An amount equal to 25 percent of the physician's current income
(measured over no more than a 24-month period), using a reasonable and
consistent methodology that is calculated uniformly; or
(B) The reasonable costs the hospital would otherwise have to
expend to recruit a new physician to the geographic area served by the
hospital to join the medical staff of the hospital to replace the
retained physician.
(v) The requirements of paragraph (t)(3) are satisfied.
(3) Remuneration provided under paragraph (t)(1) or (t)(2) must
meet the following additional requirements:
(i)(A) The physician's current medical practice is located in a
rural area or HPSA (regardless of the physician's specialty) or is
located in an area with demonstrated need for the physician as
determined by the Secretary in an advisory opinion issued in accordance
with section 1877(g)(6) of the Act; or
(B) At least 75 percent of the physician's patients reside in a
medically underserved area or are members of a medically underserved
population.
(ii) The hospital does not enter into a retention arrangement with
a particular referring physician more frequently than once every 5
years.
(iii) The amount and terms of the retention payment are not altered
during the term of the arrangement in any manner that takes into
account the volume or value of referrals or other business generated by
the physician.
(iv) 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.
(4) The Secretary may waive the relocation requirement of
paragraphs (t)(1) and (t)(2) of this section for payments made to
physicians practicing in a HPSA or an area with demonstrated need for
the physician through an advisory opinion issued in accordance with
section 1877(g)(6) of the Act, if the
retention payment arrangement otherwise complies with all of the
conditions of this paragraph.
(5) This paragraph (t) applies to remuneration provided by a
federally qualified health center or a rural health clinic in the same
manner as it applies to remuneration provided by a hospital.
(u) Community-wide health information systems. Items or services of
information technology provided by an entity to a physician that allow
access to, and sharing of, electronic health care records and any
complementary drug information systems, general health information,
medical alerts, and related information for patients served by
community providers and practitioners, in order to enhance the
community's overall health, provided that--
(1) The items or services are available as necessary to enable the
physician to participate in a community-wide health information system,
are principally used by the physician as part of the community-wide
health information system, and are not provided to the physician in any
manner that takes into account the volume or value of referrals or
other business generated by the physician;
(2) The community-wide health information systems are available to
all providers, practitioners, and residents of the community who desire
to participate; and
(3) 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.
(v) Electronic prescribing items and services. Nonmonetary
remuneration (consisting of items and services in the form of hardware,
software, or information technology and training services) necessary
and used solely to receive and transmit electronic prescription
information, if all of the following conditions are met:
(1) The items and services are provided by a--
(i) Hospital to a physician who is a member of its medical staff;
(ii) Group practice (as defined at Sec. 411.352) to a physician
who is a member of the group (as defined at Sec. 411.351); or
(iii) PDP sponsor or MA organization to a prescribing physician.
(2) The items and services are provided as part of, or are used to
access, an electronic prescription drug program that meets the
applicable standards under Medicare Part D at the time the items and
services are provided.
(3) The donor (or any person on the donor's behalf) does not take
any action to limit or restrict the use or compatibility of the items
or services with other electronic prescribing or electronic health
records systems.
(4) For items or services that are of the type that can be used for
any patient without regard to payer status, the donor does not
restrict, or take any action to limit, the physician's right or ability
to use the items or services for any patient.
(5) Neither the physician nor the physician's practice (including
employees and staff members) makes the receipt of items or services, or
the amount or nature of the items or services, a condition of doing
business with the donor.
(6) Neither the eligibility of a physician for the items or
services, nor the amount or nature of the items or services, is
determined in a manner that takes into account the volume or value of
referrals or other business generated between the parties.
(7) The arrangement is set forth in a written agreement that--
(i) Is signed by the parties;
(ii) Specifies the items and services being provided and the
donor's cost of the items and services; and
(iii) Covers all of the electronic prescribing items and services
to be provided by the donor. This requirement is met if all separate
agreements between the donor and the physician (and the donor and any
family members of the physician) incorporate each other by reference or
if they cross-reference a master list of agreements that is maintained
and updated centrally and is available for review by the Secretary upon
request. The master list must be maintained in a manner that preserves
the historical record of agreements.
(8) The donor does not have actual knowledge of, and does not act
in reckless disregard or deliberate ignorance of, the fact that the
physician possesses or has obtained items or services equivalent to
those provided by the donor.
(w) Electronic health records items and services. Nonmonetary
remuneration (consisting of items and services in the form of software
or information technology and training services) necessary and used
predominantly to create, maintain, transmit, or receive electronic
health records, if all of the following conditions are met:
(1) The items and services are provided by an entity (as defined at
Sec. 411.351) to a physician.
(2) The software is interoperable (as defined at Sec. 411.351) at
the time it is provided to the physician. For purposes of this
paragraph, software is deemed to be interoperable if a certifying body
recognized by the Secretary has certified the software no more than 12
months prior to the date it is provided to the physician.
(3) The donor (or any person on the donor's behalf) does not take
any action to limit or restrict the use, compatibility, or
interoperability of the items or services with other electronic
prescribing or electronic health records systems.
(4) Before receipt of the items and services, the physician pays 15
percent of the donor's cost for the items and services. The donor (or
any party related to the donor) does not finance the physician's
payment or loan funds to be used by the physician to pay for the items
and services.
(5) Neither the physician nor the physician's practice (including
employees and staff members) makes the receipt of items or services, or
the amount or nature of the items or services, a condition of doing
business with the donor.
(6) Neither the eligibility of a physician for the items or
services, nor the amount or nature of the items or services, is
determined in a manner that directly takes into account the volume or
value of referrals or other business generated between the parties. For
purposes of this paragraph, the determination is deemed not to directly
take into account the volume or value of referrals or other business
generated between the parties if any one of the following conditions is
met:
(i) The determination is based on the total number of prescriptions
written by the physician (but not the volume or value of prescriptions
dispensed or paid by the donor or billed to the program);
(ii) The determination is based on the size of the physician's
medical practice (for example, total patients, total patient
encounters, or total relative value units);
(iii) The determination is based on the total number of hours that
the physician practices medicine;
(iv) The determination is based on the physician's overall use of
automated technology in his or her medical practice (without specific
reference to the use of technology in connection with referrals made to
the donor);
(v) The determination is based on whether the physician is a member
of the donor's medical staff, if the donor has a formal medical staff;
(vi) The determination is based on the level of uncompensated care
provided by the physician; or
(vii) The determination is made in any reasonable and verifiable
manner that does not directly take into account the volume or value of
referrals or other business generated between the parties.
(7) The arrangement is set forth in a written agreement that--
(i) Is signed by the parties;
(ii) Specifies the items and services being provided, the donor's
cost of the items and services, and the amount of the physician's
contribution; and
(iii) Covers all of the electronic health records items and
services to be provided by the donor. This requirement is met if all
separate agreements between the donor and the physician (and the donor
and any family members of the physician) incorporate each other by
reference or if they cross-reference a master list of agreements that
is maintained and updated centrally and is available for review by the
Secretary upon request. The master list must be maintained in a manner
that preserves the historical record of agreements.
(8) The donor does not have actual knowledge of, and does not act
in reckless disregard or deliberate ignorance of, the fact that the
physician possesses or has obtained items or services equivalent to
those provided by the donor.
(9) For items or services that are of the type that can be used for
any patient without regard to payer status, the donor does not
restrict, or take any action to limit, the physician's right or ability
to use the items or services for any patient.
(10) The items and services do not include staffing of physician
offices and are not used primarily to conduct personal business or
business unrelated to the physician's medical practice.
(11) The electronic health records software contains electronic
prescribing capability, either through an electronic prescribing
component or the ability to interface with the physician's existing
electronic prescribing system that meets the applicable standards under
Medicare Part D at the time the items and services are provided.
(12) 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.
(13) The transfer of the items or services occurs and all
conditions in this paragraph (w) are satisfied on or before December
31, 2013.