Insights & Resources

Medicare/Medicaid Fraud & Abuse Resource Center

    Back To Medicare/Medicaid Fraud & Abuse Resource Center

    Comparison Chart of Anti-Kickback Safe Harbors and Stark Exceptions -- Personal Service Arrangements and Physician Incentive Plans

    Personal Service Arrangements/Personal Services and Management Contracts and Outcomes-Based Payment Arrangements – Current as of March 2021

    Stark
    Stark exception to the referral prohibition related to compensation arrangements for personal service arrangements 42 CFR 411.357(d)

    Anti-Kickback
    Safe harbor for remuneration from an entity under a personal service arrangement, management contract, or outcomes-based payment arrangement 42 CFR 1001.952(d)

    The arrangement is set out in writing, is signed by the parties, and specifies the services covered by the arrangement.

    The agency agreement is set out in writing and signed by the parties.

    Except for services provided under an arrangement that satisfies all of the conditions of the Limited Remuneration to a Physician exception, 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 of HHS upon request. The master list must be maintained in a manner that preserves the historical record of contracts. A physician or family member may "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, except that the regular physician need not be a member of a group practice.

    The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent. 

    The aggregate services covered by the arrangement do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement(s).

    The aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services.

    The duration of each arrangement is for at least 1 year. To meet this requirement, if an arrangement is terminated with or without cause, the parties may not enter into the same or substantially the same arrangement during the first year of the original arrangement.

    The term of the agreement is for not less than one year.

    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, is not determined in any manner that takes into account the volume or value of referrals or other business generated between the parties.

    The methodology for determining the compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare or a State health care program.

    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.

    The services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law.

    If the arrangement expires after a term of least 1 year, a holdover arrangement immediately following the expiration of the agreement satisfies the requirements, if the following conditions are met: i) the arrangement met all the conditions of this section when the arrangement expired; ii) the holdover arrangement is on the same terms and conditions as the immediately preceding arrangement; and iii) the holdover arrangement continues to satisfy all the conditions of this section.

     

    If remuneration to the physician is conditioned on the physician’s referrals to a particular provider, practitioner, or supplier, the arrangement must also meet the following requirements (a) the compensation or formula for determining the compensation is set in advance for the duration of the arrangement (changes to the compensation or formula must be prospective); (b) the compensation must be consistent with the fair market value of the physician’s services, (c) the referral requirement must be set out in writing and signed by the parties, (d) the requirement to make referrals to a particular provider does not apply if the patient expresses a preference for a different provider, the patient’s insurer determines the provider, or the referral is not in the patient’s best medical interest in the physician’s judgment, (e) the required referrals relate solely to the physician’s scope of services covered by the employment, personal service, or managed care arrangement, and (f) neither the existence of the compensation arrangement nor the amount of compensation can be contingent on the number or value of the physician’s referrals to a particular provider, practitioner, or supplier, but the referral requirement may require the physician to refer an established percentage or ratio of the physician’s referrals to a particular provider, practitioner, or supplier.  

    Physician Incentive Plans

    In the case of a physician incentive plan between a physician and an entity (or downstream contractor) that meets the requirements for a personal service arrangement, 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.

    Outcomes-based Payment Arrangements

    “Remuneration” does not include any outcomes-based payment as long as the following are met:

    The term of the agreement is not less than 1 year.

    The services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law.

    The agreement between the parties is set out in writing and signed by the parties in advance of, or contemporaneous with, the commencement of the terms of the outcomes-based payment arrangement.

    The writing states at a minimum: A general description of the services to be performed by the parties for the term of the agreement; the outcome measure(s) the agent must achieve to receive an outcomes-based payment; the clinical evidence or credible medical support relied upon by the parties to select the outcome measure(s); and the schedule for the parties to regularly monitor and assess the outcome measure(s).

    To receive an outcomes-based payment, the agent achieves one or more legitimate outcome measures that: (A) Are selected based on clinical evidence or credible medical support; and (B) Have benchmarks that are used to quantify: (1) Improvements in, or the maintenance of improvements in, the quality of patient care; (2) A material reduction in costs to or growth in expenditures of payors while maintaining or improving quality of care for patients; or (3) Both.

    The methodology for determining the aggregate compensation (including any outcomes-based payments) paid between or among the parties over the term of the agreement is: Set in advance; commercially reasonable; consistent with fair market value; and not determined in a manner that directly takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part by a Federal health care program.

    For each outcome measure under the agreement, the parties:

    (A) Regularly monitor and assess the agent's performance, including the impact of the outcomes-based payment arrangement on patient quality of care; and
    (B) Periodically assess, and as necessary revise, benchmarks and remuneration under the arrangement to ensure that the remuneration is consistent with fair market value in an arm's length transaction

    The principal has policies and procedures to promptly address and correct identified material performance failures or material deficiencies in quality of care resulting from the outcomes-based payment arrangement.

    An agent of a principal is any person other than a bona fide employee of the principal who has an agreement to perform services for or on behalf of the principal.

    Outcomes-based payments are limited to payments between or among a principal and an agent that:

    (A) Reward the agent for successfully achieving an outcome measure described in the safe harbor; or
    (B) Recoup from or reduce payment to an agent for failure to achieve an outcome measure described in the safe harbor.

    Outcomes-based payments exclude any payments:

    (A) Made directly or indirectly by the following entities:
              (1) A pharmaceutical manufacturer, distributor, or wholesaler;
              (2) A pharmacy benefit manager;
              (3) A laboratory company;
              (4) A pharmacy that primarily compounds drugs or primarily dispenses compounded drugs;
              (5) A manufacturer of a device or medical supply as defined in paragraph (ee)(14)(iv) of this section;
              (6) A medical device distributor or wholesaler that is not otherwise a manufacturer of a device or medical supply, as defined in paragraph (ee)(14)(iv) of this section; or
              (7) An entity or individual that sells or rents durable medical equipment, prosthetics, orthotics, or supplies covered by a Federal health care program (other than a pharmacy or a physician, provider, or other entity that primarily furnishes services); or

    (B) Related solely to the achievement of internal cost savings for the principal; or
    (C) Based solely on patient satisfaction or patient convenience measures.

    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.

    The agreement neither limits any party's ability to make decisions in their patients' best interest nor induces any party to reduce or limit medically necessary items or services.

    Upon request of the Secretary of HHS, the entity provides the Secretary with access to information regarding the plan (including any downstream subcontractor plans), in order to permit the Secretary to determine whether the plan is in compliance with this section.  
    In the case of a plan that places a physician or a physician group at substantial financial risk as defined in 42 CFR 422.208, the entity (and/or any downstream contractor) complies with the requirements concerning physician incentive plans set forth at 42 CFR 422.208 and 42 CFR 422.210 of this chapter.  
    If remuneration to the physician is conditioned on the physician’s referrals to a particular provider, practitioner, or supplier, the arrangement must also meet the following requirements (a) the compensation or formula for determining the compensation is set in advance for the duration of the arrangement (changes to the compensation or formula must be prospective); (b) the compensation must be consistent with the fair market value of the physician’s services, (c) the referral requirement must be set out in writing and signed by the parties, (d) the requirement to make referrals to a particular provider does not apply if the patient expresses a preference for a different provider, the patient’s insurer determines the provider, or the referral is not in the patient’s best medical interest in the physician’s judgment, (e) the required referrals relate solely to the physician’s scope of services covered by the employment, personal service, or managed care arrangement, and (f) neither the existence of the compensation arrangement nor the amount of compensation can be contingent on the number or value of the physician’s referrals to a particular provider, practitioner, or supplier, but the referral requirement may require the physician to refer an established percentage or ratio of the physician’s referrals to a particular provider, practitioner, or supplier.