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Medical practices continue to be confused about two key issues they often face on a daily basis, especially as they combine practices into larger enterprises: allocation of ancillary service profits and the ability to require physician employees to utilize practice personal and resources. These issues are progressively more important in a time of increasing mega practice emergence. Requiring physician employees to “refer within the group” or to use group services/resources or personnel is an issue that practices, even large ones, shy away from in the belief that it is not a lawful requirement. And yet, the law (federal law anyway) is pretty settled on the issue. In particular, 42 C.F.R 411.357(d)(4) states that an employed physician’s compensation may be conditioned on his/her referral to the employer. The regs allow such a requirement (in writing) unless (1) the patient expresses a preference for a provider other than the employer; (2) the patient’s insurer determines another provider; or (3) the doctor determines that the referral (to the employer) is not in the patient’s best medical interest. Practices also remain confused about how to divvy up “designated health service” (“DHS”) profits. The federal Stark law prohibits, for instance, the attribution of profits from DHS (e.g. physical therapy, diagnostic imaging, clinical laboratory, durable medical equipment) based on which physician in a practice ordered it. Florida law, as interpreted by First District Court in the Bakarania case anyway, takes an even broader view that adversely impacts the ability of physicians in a practice to receive income from ancillary services (not just DHS) they order. As such, physicians are looking closely at lawful ways to attribute profits for DHS and other ancillary revenues. Physicians in large practices need also to consider the so called “five physician” provision of Stark (69 Fed. Reg. 16054, 16081 (March 26, 2004), which allows subgroups of five or more physicians in a practice to receive the profits from DHS ordered by those physicians. The law does not permit allocation within the subgroup based on who ordered the DHS, but this subgrouping is an important option for many physicians. The emergence of large single specialty practices continues to march steadily on in 2015. And as that occurs, physicians and advisors need to consider their options in creating practices that work well. Submit your questions to Attorney Jeffrey L. Cohen of FHLF
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medical practice, IOAS, ancillary services, safe harbor, healthcare law, medical law, Stark law, physician issues, physician law, healthcare agreement,
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