From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
January 23, 2000 and December 4, 2001]
[CITE: 42USC1395nn]
TITLE 42--THE PUBLIC HEALTH AND WELFARE
CHAPTER 7--SOCIAL SECURITY
SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
Part D--Miscellaneous Provisions
Sec. 1395nn. Limitation on certain physician referrals
(a) Prohibition of certain referrals
(1) In general
Except as provided in subsection (b) of this section, if a
physician (or an immediate family member of such physician) has a
financial relationship with an entity specified in paragraph (2),
then--
(A) the physician may not make a referral to the entity for
the furnishing of designated health services for which payment
otherwise may be made under this subchapter, and
(B) the entity may not present or cause to be presented a
claim under this subchapter or bill to any individual, third
party payor, or other entity for designated health services
furnished pursuant to a referral prohibited under subparagraph
(A).
(2) Financial relationship specified
For purposes of this section, a financial relationship of a
physician (or an immediate family member of such physician) with an
entity specified in this paragraph is--
(A) except as provided in subsections (c) and (d) of this
section, an ownership or investment interest in the entity, or
(B) except as provided in subsection (e) of this section, a
compensation arrangement (as defined in subsection (h)(1) of
this section) between the physician (or an immediate family
member of such physician) and the entity.
An ownership or investment interest described in subparagraph (A)
may be through equity, debt, or other means and includes an interest
in an entity that holds an ownership or investment interest in any
entity providing the designated health service.
(b) General exceptions to both ownership and compensation arrangement
prohibitions
Subsection (a)(1) of this section shall not apply in the following
cases:
(1) Physicians' services
In the case of physicians' services (as defined in section
1395x(q) of this title) provided personally by (or under the
personal supervision of) another physician in the same group
practice (as defined in subsection (h)(4) of this section) as the
referring physician.
(2) In-office ancillary services
In the case of services (other than durable medical equipment
(excluding infusion pumps) and parenteral and enteral nutrients,
equipment, and supplies)--
(A) that are furnished--
(i) personally by the referring physician, personally by
a physician who is a member of the same group practice as
the referring physician, or personally by individuals who
are directly supervised by the physician or by another
physician in the group practice, and
(ii)(I) in a building in which the referring physician
(or another physician who is a member of the same group
practice) furnishes physicians' services unrelated to the
furnishing of designated health services, or
(II) in the case of a referring physician who is a
member of a group practice, in another building which is
used by the group practice--
(aa) for the provision of some or all of the group's
clinical laboratory services, or
(bb) for the centralized provision of the group's
designated health services (other than clinical
laboratory services),
unless the Secretary determines other terms and conditions
under which the provision of such services does not present
a risk of program or patient abuse, and
(B) that are billed by the physician performing or
supervising the services, by a group practice of which such
physician is a member under a billing number assigned to the
group practice, or by an entity that is wholly owned by such
physician or such group practice,
if the ownership or investment interest in such services meets such
other requirements as the Secretary may impose by regulation as
needed to protect against program or patient abuse.
(3) Prepaid plans
In the case of services furnished by an organization--
(A) with a contract under section 1395mm of this title to an
individual enrolled with the organization,
(B) described in section 1395l(a)(1)(A) of this title to an
individual enrolled with the organization,
(C) receiving payments on a prepaid basis, under a
demonstration project under section 1395b-1(a) of this title or
under section 222(a) of the Social Security Amendments of 1972,
to an individual enrolled with the organization,
(D) that is a qualified health maintenance organization
(within the meaning of section 300e-9(d) \1\ of this title) to
an individual enrolled with the organization, or
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\1\ See References in Text note below.
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(E) that is a Medicare+Choice organization under part C of
this subchapter that is offering a coordinated care plan
described in section 1395w-21(a)(2)(A) of this title to an
individual enrolled with the organization.
(4) Other permissible exceptions
In the case of any other financial relationship which the
Secretary determines, and specifies in regulations, does not pose a
risk of program or patient abuse.
(c) General exception related only to ownership or investment
prohibition for ownership in publicly traded securities and
mutual funds
Ownership of the following shall not be considered to be an
ownership or investment interest described in subsection (a)(2)(A) of
this section:
(1) Ownership of investment securities (including shares or
bonds, debentures, notes, or other debt instruments) which may be
purchased on terms generally available to the public and which are--
(A)(i) securities listed on the New York Stock Exchange, the
American Stock Exchange, or any regional exchange in which
quotations are published on a daily basis, or foreign securities
listed on a recognized foreign, national, or regional exchange
in which quotations are published on a daily basis, or
(ii) traded under an automated interdealer quotation system
operated by the National Association of Securities Dealers, and
(B) in a corporation that had, at the end of the
corporation's most recent fiscal year, or on average during the
previous 3 fiscal years, stockholder equity exceeding
$75,000,000.
(2) Ownership of shares in a regulated investment company as
defined in section 851(a) of the Internal Revenue Code of 1986, if
such company had, at the end of the company's most recent fiscal
year, or on average during the previous 3 fiscal years, total assets
exceeding $75,000,000.
(d) Additional exceptions related only to ownership or investment
prohibition
The following, if not otherwise excepted under subsection (b) of
this section, shall not be considered to be an ownership or investment
interest described in subsection (a)(2)(A) of this section:
(1) Hospitals in Puerto Rico
In the case of designated health services provided by a hospital
located in Puerto Rico.
(2) Rural provider
In the case of designated health services furnished in a rural
area (as defined in section 1395ww(d)(2)(D) of this title) by an
entity, if substantially all of the designated health services
furnished by such entity are furnished to individuals residing in
such a rural area.
(3) Hospital ownership
In the case of designated health services provided by a hospital
(other than a hospital described in paragraph (1)) if--
(A) the referring physician is authorized to perform
services at the hospital, and
(B) the ownership or investment interest is in the hospital
itself (and not merely in a subdivision of the hospital).
(e) Exceptions relating to other compensation arrangements
The following shall not be considered to be a compensation
arrangement described in subsection (a)(2)(B) of this section:
(1) Rental of office space; rental of equipment
(A) Office space
Payments made by a lessee to a lessor for the use of
premises if--
(i) the lease is set out in writing, signed by the
parties, and specifies the premises covered by the lease,
(ii) 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,
except that the lessee may make payments for the use of
space consisting of common areas if such payments do not
exceed the lessee's pro rata share of expenses for such
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 such common areas,
(iii) the lease provides for a term of rental or lease
for at least 1 year,
(iv) the rental charges over the term of the lease 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,
(v) the lease would be commercially reasonable even if
no referrals were made between the parties, and
(vi) the lease meets such other requirements as the
Secretary may impose by regulation as needed to protect
against program or patient abuse.
(B) Equipment
Payments made by a lessee of equipment to the lessor of the
equipment for the use of the equipment if--
(i) the lease is set out in writing, signed by the
parties, and specifies the equipment covered by the lease,
(ii) 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,
(iii) the lease provides for a term of rental or lease
of at least 1 year,
(iv) the rental charges over the term of the lease 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,
(v) the lease would be commercially reasonable even if
no referrals were made between the parties, and
(vi) the lease meets such other requirements as the
Secretary may impose by regulation as needed to protect
against program or patient abuse.
(2) Bona fide employment relationships
Any amount paid by an employer to a physician (or an immediate
family member of such physician) who has a bona fide employment
relationship with the employer for the provision of services if--
(A) the employment is for identifiable services,
(B) the amount of the remuneration under the employment--
(i) is consistent with the fair market value of the
services, and
(ii) is not determined in a manner that takes into
account (directly or indirectly) the volume or value of any
referrals by the referring physician,
(C) the remuneration is provided pursuant to an agreement
which would be commercially reasonable even if no referrals were
made to the employer, and
(D) the employment meets such other requirements as the
Secretary may impose by regulation as needed to protect against
program or patient abuse.
Subparagraph (B)(ii) shall not prohibit the payment of remuneration
in the form of a productivity bonus based on services performed
personally by the physician (or an immediate family member of such
physician).
(3) Personal service arrangements
(A) In general
Remuneration from an entity under an arrangement (including
remuneration for specific physicians' services furnished to a
nonprofit blood center) if--
(i) the arrangement is set out in writing, signed by the
parties, and specifies the services covered by the
arrangement,
(ii) the arrangement covers all of the services to be
provided by the physician (or an immediate family member of
such physician) to the entity,
(iii) the aggregate services contracted for do not
exceed those that are reasonable and necessary for the
legitimate business purposes of the arrangement,
(iv) the term of the arrangement is for at least 1 year,
(v) the compensation to be paid over the term of the
arrangement is set in advance, does not exceed fair market
value, and except in the case of a physician incentive plan
described in subparagraph (B), 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 performed under the arrangement
do not involve the counseling or promotion or a business
arrangement or other activity that violates any State or
Federal law, and
(vii) the arrangement meets such other requirements as
the Secretary may impose by regulation as needed to protect
against program or patient abuse.
(B) Physician incentive plan exception
(i) In general
In the case of a physician incentive plan (as defined in
clause (ii)) between a physician and an entity, 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 provided with respect to a specific
individual enrolled with the entity.
(II) In the case of a plan that places a physician
or a physician group at substantial financial risk as
determined by the Secretary pursuant to section
1395mm(i)(8)(A)(ii) of this title, the plan complies
with any requirements the Secretary may impose pursuant
to such section.
(III) Upon request by the Secretary, the entity
provides the Secretary with access to descriptive
information regarding the plan, in order to permit the
Secretary to determine whether the plan is in compliance
with the requirements of this clause.
(ii) ``Physician incentive plan'' defined
For purposes of this subparagraph, the term ``physician
incentive plan'' means any compensation arrangement between
an entity and a physician or physician group that may
directly or indirectly have the effect of reducing or
limiting services provided with respect to individuals
enrolled with the entity.
(4) Remuneration unrelated to the provision of designated
health services
In the case of remuneration which is provided by a hospital to a
physician if such remuneration does not relate to the provision of
designated health services.
(5) Physician recruitment
In the case of remuneration which is provided by a hospital to a
physician to induce the physician to relocate to the geographic area
served by the hospital in order to be a member of the medical staff
of the hospital, if--
(A) the physician is not required to refer patients to the
hospital,
(B) the amount of the remuneration under the arrangement is
not determined in a manner that takes into account (directly or
indirectly) the volume or value of any referrals by the
referring physician, and
(C) the arrangement meets such other requirements as the
Secretary may impose by regulation as needed to protect against
program or patient abuse.
(6) Isolated transactions
In the case of an isolated financial transaction, such as a one-
time sale of property or practice, if--
(A) the requirements described in subparagraphs (B) and (C)
of paragraph (2) are met with respect to the entity in the same
manner as they apply to an employer, and
(B) the transaction meets such other requirements as the
Secretary may impose by regulation as needed to protect against
program or patient abuse.
(7) Certain group practice arrangements with a hospital
(A) \2\ In general
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\2\ So in original. No subpar. (B) has been enacted.
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An arrangement between a hospital and a group under which
designated health services are provided by the group but are
billed by the hospital if--
(i) with respect to services provided to an inpatient of
the hospital, the arrangement is pursuant to the provision
of inpatient hospital services under section 1395x(b)(3) of
this title.
(ii) the arrangement began before December 19, 1989, and
has continued in effect without interruption since such
date,
(iii) with respect to the designated health services
covered under the arrangement, substantially all of such
services furnished to patients of the hospital are furnished
by the group under the arrangement,
(iv) the arrangement is pursuant to an agreement that is
set out in writing and that specifies the services to be
provided by the parties and the compensation for services
provided under the agreement,
(v) the compensation paid over the term of the agreement
is consistent with fair market value and the compensation
per unit of services 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,
(vi) the compensation is provided pursuant to an
agreement which would be commercially reasonable even if no
referrals were made to the entity, and
(vii) the arrangement between the parties meets such
other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.
(8) Payments by a physician for items and services
Payments made by a physician--
(A) to a laboratory in exchange for the provision of
clinical laboratory services, or
(B) to an entity as compensation for other items or services
if the items or services are furnished at a price that is
consistent with fair market value.
(f) Reporting requirements
Each entity providing covered items or services for which payment
may be made under this subchapter shall provide the Secretary with the
information concerning the entity's ownership, investment, and
compensation arrangements, including--
(1) the covered items and services provided by the entity, and
(2) the names and unique physician identification numbers of all
physicians with an ownership or investment interest (as described in
subsection (a)(2)(A) of this section), or with a compensation
arrangement (as described in subsection (a)(2)(B) of this section),
in the entity, or whose immediate relatives have such an ownership
or investment interest or who have such a compensation relationship
with the entity.
Such information shall be provided in such form, manner, and at such
times as the Secretary shall specify. The requirement of this subsection
shall not apply to designated health services provided outside the
United States or to entities which the Secretary determines provides \3\
services for which payment may be made under this subchapter very
infrequently.
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\3\ So in original. Probably should be ``provide''.
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(g) Sanctions
(1) Denial of payment
No payment may be made under this subchapter for a designated
health service which is provided in violation of subsection (a)(1)
of this section.
(2) Requiring refunds for certain claims
If a person collects any amounts that were billed in violation
of subsection (a)(1) of this section, the person shall be liable to
the individual for, and shall refund on a timely basis to the
individual, any amounts so collected.
(3) Civil money penalty and exclusion for improper claims
Any person that presents or causes to be presented a bill or a
claim for a service that such person knows or should know is for a
service for which payment may not be made under paragraph (1) or for
which a refund has not been made under paragraph (2) shall be
subject to a civil money penalty of not more than $15,000 for each
such service. The provisions of section 1320a-7a of this title
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions apply to a
penalty or proceeding under section 1320a-7a(a) of this title.
(4) Civil money penalty and exclusion for circumvention
schemes
Any physician or other entity that enters into an arrangement or
scheme (such as a cross-referral arrangement) which the physician or
entity knows or should know has a principal purpose of assuring
referrals by the physician to a particular entity which, if the
physician directly made referrals to such entity, would be in
violation of this section, shall be subject to a civil money penalty
of not more than $100,000 for each such arrangement or scheme. The
provisions of section 1320a-7a of this title (other than the first
sentence of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under the previous sentence in the
same manner as such provisions apply to a penalty or proceeding
under section 1320a-7a(a) of this title.
(5) Failure to report information
Any person who is required, but fails, to meet a reporting
requirement of subsection (f) of this section is subject to a civil
money penalty of not more than $10,000 for each day for which
reporting is required to have been made. The provisions of section
1320a-7a of this title (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a civil money
penalty under the previous sentence in the same manner as such
provisions apply to a penalty or proceeding under section 1320a-
7a(a) of this title.
(6) Advisory opinions
(A) In general
The Secretary shall issue written advisory opinions
concerning whether a referral relating to designated health
services (other than clinical laboratory services) is prohibited
under this section. Each advisory opinion issued by the
Secretary shall be binding as to the Secretary and the party or
parties requesting the opinion.
(B) Application of certain rules
The Secretary shall, to the extent practicable, apply the
rules under subsections (b)(3) and (b)(4) of this section and
take into account the regulations promulgated under subsection
(b)(5) of section 1320a-7d of this title in the issuance of
advisory opinions under this paragraph.
(C) Regulations
In order to implement this paragraph in a timely manner, the
Secretary may promulgate regulations that take effect on an
interim basis, after notice and pending opportunity for public
comment.
(D) Applicability
This paragraph shall apply to requests for advisory opinions
made after the date which is 90 days after August 5, 1997, and
before the close of the period described in section 1320a-
7d(b)(6) of this title.
(h) Definitions and special rules
For purposes of this section:
(1) Compensation arrangement; remuneration
(A) The term ``compensation arrangement'' means any arrangement
involving any remuneration between a physician (or an immediate
family member of such physician) and an entity other than an
arrangement involving only remuneration described in subparagraph
(C).
(B) The term ``remuneration'' includes any remuneration,
directly or indirectly, overtly or covertly, in cash or in kind.
(C) Remuneration described in this subparagraph is any
remuneration consisting of any of the following:
(i) The forgiveness of amounts owed for inaccurate tests or
procedures, mistakenly performed tests or procedures, or the
correction of minor billing errors.
(ii) The provision of items, devices, or supplies that are
used solely to--
(I) collect, transport, process, or store specimens for
the entity providing the item, device, or supply, or
(II) order or communicate the results of tests or
procedures for such entity.
(iii) A payment made by an insurer or a self-insured plan to
a physician to satisfy a claim, submitted on a fee for service
basis, for the furnishing of health services by that physician
to an individual who is covered by a policy with the insurer or
by the self-insured plan, if--
(I) the health services are not furnished, and the
payment is not made, pursuant to a contract or other
arrangement between the insurer or the plan and the
physician,
(II) the payment is made to the physician on behalf of
the covered individual and would otherwise be made directly
to such individual,
(III) the amount of the payment is set in advance, does
not exceed fair market value, and is not determined in a
manner that takes into account directly or indirectly the
volume or value of any referrals, and
(IV) the payment meets such other requirements as the
Secretary may impose by regulation as needed to protect
against program or patient abuse.
(2) Employee
An individual is considered to be ``employed by'' or an
``employee'' of an entity if the individual would be considered to
be an employee of the entity under the usual common law rules
applicable in determining the employer-employee relationship (as
applied for purposes of section 3121(d)(2) of the Internal Revenue
Code of 1986).
(3) Fair market value
The term ``fair market value'' means the value in arms length
transactions, consistent with the general market value, and, with
respect to rentals or leases, the value of rental property for
general commercial purposes (not taking into account its intended
use) and, in the case of a lease of space, not adjusted to reflect
the additional value the prospective lessee or lessor would
attribute to the proximity or convenience to the lessor where the
lessor is a potential source of patient referrals to the lessee.
(4) Group practice
(A) Definition of group practice
The term ``group practice'' means a group of 2 or more
physicians legally organized as a partnership, professional
corporation, foundation, not-for-profit corporation, faculty
practice plan, or similar association--
(i) in which each physician who is a member of the group
provides substantially the full range of services which the
physician routinely provides, including medical care,
consultation, diagnosis, or treatment, through the joint use
of shared office space, facilities, equipment and personnel,
(ii) for which substantially all of the services of the
physicians who are members of the group are provided through
the group and are billed under a billing number assigned to
the group and amounts so received are treated as receipts of
the group,
(iii) in which the overhead expenses of and the income
from the practice are distributed in accordance with methods
previously determined,
(iv) except as provided in subparagraph (B)(i), in which
no physician who is a member of the group directly or
indirectly receives compensation based on the volume or
value of referrals by the physician,
(v) in which members of the group personally conduct no
less than 75 percent of the physician-patient encounters of
the group practice, and
(vi) which meets such other standards as the Secretary
may impose by regulation.
(B) Special rules
(i) Profits and productivity bonuses
A physician in a group practice may be paid a share of
overall profits of the group, or a productivity bonus based
on services personally performed or services incident to
such personally performed services, so long as the share or
bonus is not determined in any manner which is directly
related to the volume or value of referrals by such
physician.
(ii) Faculty practice plans
In the case of a faculty practice plan associated with a
hospital, institution of higher education, or medical school
with an approved medical residency training program in which
physician members may provide a variety of different
specialty services and provide professional services both
within and outside the group, as well as perform other tasks
such as research, subparagraph (A) shall be applied only
with respect to the services provided within the faculty
practice plan.
(5) Referral; referring physician
(A) Physicians' services
Except as provided in subparagraph (C), in the case of an
item or service for which payment may be made under part B of
this subchapter, the request by a physician for the item or
service, including the request by a physician for a consultation
with another physician (and any test or procedure ordered by, or
to be performed by (or under the supervision of) that other
physician), constitutes a ``referral'' by a ``referring
physician''.
(B) Other items
Except as provided in subparagraph (C), the request or
establishment of a plan of care by a physician which includes
the provision of the designated health service constitutes a
``referral'' by a ``referring physician''.
(C) Clarification respecting certain services integral to a
consultation by certain specialists
A request by a pathologist for clinical diagnostic
laboratory tests and pathological examination services, a
request by a radiologist for diagnostic radiology services, and
a request by a radiation oncologist for radiation therapy, if
such services are furnished by (or under the supervision of)
such pathologist, radiologist, or radiation oncologist pursuant
to a consultation requested by another physician does not
constitute a ``referral'' by a ``referring physician''.
(6) Designated health services
The term ``designated health services'' means any of the
following items or services:
(A) Clinical laboratory services.
(B) Physical therapy services.
(C) Occupational therapy services.
(D) Radiology services, including magnetic resonance
imaging, computerized axial tomography scans, and ultrasound
services.
(E) Radiation therapy services and supplies.
(F) Durable medical equipment and supplies.
(G) Parenteral and enteral nutrients, equipment, and
supplies.
(H) Prosthetics, orthotics, and prosthetic devices and
supplies.
(I) Home health services.
(J) Outpatient prescription drugs.
(K) Inpatient and outpatient hospital services.
(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1877, as added Pub. L. 101-
239, title VI, Sec. 6204(a), Dec. 19, 1989, 103 Stat. 2236; amended Pub.
L. 101-508, title IV, Sec. 4207(e)(1)-(3), (k)(2), formerly
Sec. 4027(e)(1)-(3), (k)(2), Nov. 5, 1990, 104 Stat. 1388-121, 1388-122,
1388-124, renumbered Pub. L. 103-432, title I, Sec. 160(d)(4), Oct. 31,
1994, 108 Stat. 4444; Pub. L. 103-66, title XIII, Sec. 13562(a), Aug.
10, 1993, 107 Stat. 596; Pub. L. 103-432, title I, Sec. 152(a), (b),
Oct. 31, 1994, 108 Stat. 4436; Pub. L. 105-33, title IV, Sec. 4314, Aug.
5, 1997, 111 Stat. 389; Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title
V, Sec. 524(a)], Nov. 29, 1999, 113 Stat. 1536, 1501A-387.)
References in Text
Section 222(a) of the Social Security Amendments of 1972, referred
to in subsec. (b)(3)(C), is section 222(a) of Pub. L. 92-603, Oct. 30,
1972, 86 Stat. 1329, which is set out as a note under section 1395b-1 of
this title.
Section 300e-9(d) of this title, referred to in subsec. (b)(3)(D),
was redesignated section 300e-9(c) of this title by Pub. L. 100-517,
Sec. 7(b), Oct. 24, 1988, 102 Stat. 2580.
Part C of this subchapter, referred to in subsec. (b)(3)(E), is
classified to section 1395w-21 et seq. of this title.
The Internal Revenue Code, referred to in subsecs. (c)(2) and
(h)(2), is classified generally to Title 26, Internal Revenue Code.
Part B of this subchapter, referred to in subsec. (h)(5)(A), is
classified to section 1395j et seq. of this title.
Prior Provisions
A prior section 1395nn, act Aug. 14, 1935, ch. 531, title XVIII,
Sec. 1877, as added and amended Oct. 30, 1972, Pub. L. 92-603, title II,
Secs. 242(b), 278(b)(8), 86 Stat. 1419, 1454; Oct. 25, 1977, Pub. L. 95-
142, Sec. 4(a), 91 Stat. 1179; Dec. 5, 1980, Pub. L. 96-499, title IX,
Sec. 917, 94 Stat. 2625; July 18, 1984, Pub. L. 98-369, div. B, title
III, Sec. 2306(f)(2), 98 Stat. 1073; Oct. 21, 1986, Pub. L. 99-509,
title IX, Sec. 9321(a)(1), 100 Stat. 2016; Aug. 18, 1987, Pub. L. 100-
93, Sec. 4(c), 101 Stat. 689, enumerated offenses relating to the
Medicare program and penalties for such offenses, prior to repeal by
Pub. L. 100-93, Secs. 4(e), 15(a), Aug. 18, 1987, 101 Stat. 689, 698,
effective at end of fourteen-day period beginning Aug. 18, 1987, and
inapplicable to administrative proceedings commenced before end of such
period.
Amendments
1999--Subsec. (b)(3)(C). Pub. L. 106-113, Sec. 1000(a)(6) [title V,
Sec. 524(a)(1)], struck out ``or'' at the end.
Subsec. (b)(3)(D). Pub. L. 106-113, Sec. 1000(a)(6) [title V,
Sec. 524(a)(2)], substituted ``, or'' for period at end.
Subsec. (b)(3)(E). Pub. L. 106-113, Sec. 1000(a)(6) [title V,
Sec. 524(a)(3)], which directed addition of provisions at end of par.
(3) but which separated directory language from language to be added
because of the apparent placement out of sequence of pars. (2) and (3)
of Sec. 524(a), was executed by adding subpar. (E) at end of par. (3) to
reflect the probable intent of Congress.
1997--Subsec. (g)(6). Pub. L. 105-33 added par. (6).
1994--Subsec. (f). Pub. L. 103-432, Sec. 152(a)(1), (4), (5), in
introductory provisions, substituted ``ownership, investment, and
compensation arrangements'' for ``ownership arrangements'', and in
closing provisions, substituted ``designated health services'' for
``covered items and services'' and struck out ``Such information shall
first be provided not later than October 1, 1991.'' after ``shall
specify.'' and ``The Secretary may waive the requirements of this
subsection (and the requirements of chapter 35 of title 44 with respect
to information provided under this subsection) with respect to reporting
by entities in a State (except for entities providing designated health
services) so long as such reporting occurs in at least 10 States, and
the Secretary may waive such requirements with respect to the providers
in a State required to report so long as such requirements are not
waived with respect to parenteral and enteral suppliers, end stage renal
disease facilities, suppliers of ambulance services, hospitals, entities
providing physical therapy services, and entities providing diagnostic
imaging services of any type.'' at end.
Subsec. (f)(2). Pub. L. 103-432, Sec. 152(a)(2), (3), inserted ``,
or with a compensation arrangement (as described in subsection (a)(2)(B)
of this section),'' after ``investment interest (as described in
subsection (a)(2)(A) of this section)'' and ``interest or who have such
a compensation relationship with the entity'' before period at end.
Subsec. (h)(6). Pub. L. 103-432, Sec. 152(b), in subpar. (D),
substituted ``services, including magnetic resonance imaging,
computerized axial tomography scans, and ultrasound services'' for ``or
other diagnostic services'', and in subpars. (E), (F), and (H), inserted
``and supplies'' before period at end.
1993--Subsecs. (a) to (e). Pub. L. 103-66, Sec. 13562(a)(1), amended
headings and text of subsecs. (a) to (e) generally, substituting present
provisions for provisions which related to: prohibition of certain
referrals in subsec. (a), general exceptions to both ownership and
compensation arrangement prohibitions in subsec. (b), general exception
related only to ownership or investment prohibition for ownership in
publicly-traded securities in subsec. (c), additional exceptions related
only to ownership or investment prohibition in subsec. (d), and
exceptions relating to other compensation arrangements in subsec. (e).
Subsec. (f). Pub. L. 103-66, Sec. 13562(a)(3), substituted
``designated health services'' for ``clinical laboratory services'' in
concluding provisions.
Subsec. (g)(1). Pub. L. 103-66, Sec. 13562(a)(4), substituted
``designated health service'' for ``clinical laboratory service''.
Subsec. (h). Pub. L. 103-66, Sec. 13562(a)(2), amended heading and
text of subsec. (h) generally, substituting pars. (1) to (6) for former
pars. (1) to (7) which defined ``compensation arrangement'',
``remuneration'', ``employee'', ``fair market value'', ``group
practice'', ``investor'', ``interested investor'', ``disinterested
investor'', ``referral'', and ``referring physician''.
1990--Subsec. (b)(4), (5). Pub. L. 101-508, Sec. 4207(e)(2),
formerly Sec. 4027(e)(2), as renumbered by Pub. L. 103-432,
Sec. 160(d)(4), added par. (4) and redesignated former par. (4) as (5).
Subsec. (f). Pub. L. 101-508, Sec. 4207(e)(3)(B), (C), formerly
Sec. 4027(e)(3)(B), (C), as renumbered by Pub. L. 103-432,
Sec. 160(d)(4), substituted ``October 1, 1991'' for ``1 year after
December 19, 1989'' in second sentence and inserted at end ``The
requirement of this subsection shall not apply to covered items and
services provided outside the United States or to entities which the
Secretary determines provides services for which payment may be made
under this subchapter very infrequently. The Secretary may waive the
requirements of this subsection (and the requirements of chapter 35 of
title 44 with respect to information provided under this subsection)
with respect to reporting by entities in a State (except for entities
providing clinical laboratory services) so long as such reporting occurs
in at least 10 States, and the Secretary may waive such requirements
with respect to the providers in a State required to report so long as
such requirements are not waived with respect to parenteral and enteral
suppliers, end stage renal disease facilities, suppliers of ambulance
services, hospitals, entities providing physical therapy services, and
entities providing diagnostic imaging services of any type.''
Subsec. (f)(2). Pub. L. 101-508, Sec. 4207(e)(3)(A), formerly
Sec. 4027(e)(3)(A), as renumbered by Pub. L. 103-432, Sec. 160(d)(4),
amended par. (2) generally. Prior to amendment, par. (2) read as
follows: ``the names and all of the medicare provider numbers of the
physicians who are interested investors or who are immediate relatives
of interested investors.''
Subsec. (g)(5). Pub. L. 101-508, Sec. 4207(k)(2), formerly
Sec. 4027(k)(2), as renumbered by Pub. L. 103-432, Sec. 160(d)(4),
inserted at end ``The provisions of section 1320a-7a of this title
(other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the previous
sentence in the same manner as such provisions apply to a penalty or
proceeding under section 1320a-7a(a) of this title.''
Subsec. (h)(6). Pub. L. 101-508, Sec. 4207(e)(1)(C), formerly
Sec. 4027(e)(1)(C), as renumbered by Pub. L. 103-432, Sec. 160(d)(4),
added par. (6). Former par. (6) redesignated (7).
Pub. L. 101-508, Sec. 4207(e)(1)(A), (B), formerly
Sec. 4027(e)(1)(A), (B), as renumbered by Pub. L. 103-432,
Sec. 160(d)(4), substituted ``in the case of an item or service for
which payment may be made under part B of this subchapter, the request
by a physician for the item or service,'' for ``in the case of a
clinical laboratory service which under law is required to be provided
by (or under the supervision of) a physician, the request by a physician
for the service,'' in subpar. (A) and struck out ``in the case of
another clinical laboratory service,'' after ``subparagraph (C),'' in
subpar. (B).
Subsec. (h)(7). Pub. L. 101-508, Sec. 4207(e)(1)(C), formerly
Sec. 4027(e)(1)(C), as renumbered by Pub. L. 103-432, Sec. 160(d)(4),
redesignated par. (6) as (7).
Effective Date of 1999 Amendment
Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title V, Sec. 524(b)],
Nov. 29, 1999, 113 Stat. 1536, 1501A-388, provided that: ``The amendment
made by this section [amending this section] shall apply to services
furnished on or after the date of the enactment of this Act [Nov. 29,
1999].''
Effective Date of 1994 Amendment
Section 152(d)(1) of Pub. L. 103-432 provided that: ``The amendments
made by subsections (a) and (b) [amending this section] shall apply to
referrals made on or after January 1, 1995.''
Effective Date of 1993 Amendment
Section 13562(b) of Pub. L. 103-66, as amended by Pub. L. 103-432,
title I, Sec. 152(c), Oct. 31, 1994, 108 Stat. 4437, provided that:
``(1) In general.--Except as provided in paragraph (2), the
amendments made by this section [amending this section] shall apply to
referrals--
``(A) made on or after January 1, 1992, in the case of clinical
laboratory services, and
``(B) made after December 31, 1994, in the case of other
designated health services.
``(2) Exceptions.--With respect to referrals made for clinical
laboratory services on or before December 31, 1994--
``(A) the second sentence of subsection (a)(2), and subsections
(b)(2)(B) and (d)(2), of section 1877 of the Social Security Act
[subsecs. (a)(2), (b)(2)(B), and (d)(2) of this section] (as in
effect on the day before the date of the enactment of this Act [Aug.
10, 1993]) shall apply instead of the corresponding provisions in
section 1877 (as amended by this Act);
``(B) section 1877(b)(4) of the Social Security Act [subsec.
(b)(4) of this section] (as in effect on the day before the date of
the enactment of this Act) shall apply;
``(C) the requirements of section 1877(c)(2) of the Social
Security Act [subsec. (c)(2) of this section] (as amended by this
Act) shall not apply to any securities of a corporation that meets
the requirements of section 1877(c)(2) of the Social Security Act
(as in effect on the day before the date of the enactment of this
Act);
``(D) section 1877(e)(3) of the Social Security Act [subsec.
(e)(3) of this section] (as amended by this Act) shall apply, except
that it shall not apply to any arrangement that meets the
requirements of subsection (e)(2) or subsection (e)(3) of section
1877 of the Social Security Act (as in effect on the day before the
date of the enactment of this Act);
``(E) the requirements of clauses (iv) and (v) of section
1877(h)(4)(A), and of clause (i) of section 1877(h)(4)(B), of the
Social Security Act [subsec. (h)(4)(A)(iv), (v), (B)(i) of this
section] (as amended by this Act) shall not apply; and
``(F) section 1877(h)(4)(B) of the Social Security Act [subsec.
(h)(4)(B) of this section] (as in effect on the day before the date
of the enactment of this Act) shall apply instead of section
1877(h)(4)(A)(ii) of such Act (as amended by this Act).''
[Section 152(d)(2) of Pub. L. 103-432 provided that: ``The amendment
made by subsection (c) [amending section 13562(b) of Pub. L. 103-66, set
out above] shall apply as if included in the enactment of OBRA-1993
[Pub. L. 103-66].'']
Effective Date of 1990 Amendment
Section 4207(e)(5), formerly 4027(e)(5), of Pub. L. 101-508, as
renumbered by Pub. L. 103-432, title I, Sec. 160(d)(4), Oct. 31, 1994,
108 Stat. 4444, provided that: ``The amendments made by this subsection
[amending this section and provisions set out below] shall be effective
as if included in the enactment of section 6204 of the Omnibus Budget
Reconciliation Act of 1989 [Pub. L. 101-239].''
Effective Date
Section 6204(c) of Pub. L. 101-239 provided that:
``(1) Except as provided in paragraph (2), the amendments made by
this section [enacting this section and amending section 1395l of this
title] shall become effective with respect to referrals made on or after
January 1, 1992.
``(2) The reporting requirement of section 1877(f) of the Social
Security Act [subsec. (f) of this section] shall take effect on October
1, 1990.''
Deadline for Certain Regulations
Section 6204(d) of Pub. L. 101-239, as amended by Pub. L. 101-508,
title IV, Sec. 4207(e)(4)(B), formerly Sec. 4027(e)(4)(B), Nov. 5, 1990,
104 Stat. 1388-122, renumbered Pub. L. 103-432, title I, Sec. 160(d)(4),
Oct. 31, 1994, 108 Stat. 4444, provided that: ``The Secretary of Health
and Human Services shall publish final regulations to carry out section
1877 of the Social Security Act [this section] by not later than October
1, 1991.''
GAO Study of Ownership by Referring Physicians
Section 6204(e) of Pub. L. 101-239 directed Comptroller General to
conduct a study of ownership of hospitals and other providers of
medicare services by referring physicians and, by not later than Feb. 1,
1991, report to Congress on results of such study, prior to repeal by
Pub. L. 104-316, title I, Sec. 122(h)(1), Oct. 19, 1996, 110 Stat. 3837.
Statistical Summary of Comparative Utilization
Section 6204(f) of Pub. L. 101-239, as amended by Pub. L. 101-508,
title IV, Sec. 4207(e)(4)(A), formerly Sec. 4027(e)(4)(A), Nov. 5, 1990,
104 Stat. 1388-122, renumbered Pub. L. 103-432, title I, Sec. 160(d)(4),
Oct. 31, 1994, 108 Stat. 4444; Pub. L. 104-316, title I, Sec. 122(h)(2),
Oct. 19, 1996, 110 Stat. 3837, directed Secretary of Health and Human
Services, not later than June 30, 1992, to submit to Congress a
statistical profile comparing utilization of items and services by
medicare beneficiaries served by entities in which the referring
physician has a direct or indirect financial interest and by medicare
beneficiaries served by other entities, for the States and entities
specified in subsec. (f) of this section (other than entities providing
clinical laboratory services).
Section Referred to in Other Sections
This section is referred to in section 1396b of this title.