Arnold & Porter

BLOG: Well being Rules 101: Doctor Self-Refer Proper: Group Observe Definition

April 18, 2023

4 minute learn

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Key factors:

  • A bunch of physicians working collectively can’t be thought-about a “group research” below the Stark Act.
  • There are eight parts {that a} group should meet to qualify as a “group follow”.

Most physicians who work along with different medical colleagues – resembling co-owners, workers and/or unbiased contractors – in the identical group contemplate themselves a part of a medical follow.

In all sensible phrases, that is more likely to be the case. However as we all know, the Doctor Self-Referral Regulation (often known as the Stark Regulation) is not precisely sensible, and the truth that a gaggle of physicians working collectively is taken into account a “group follow” below the Stark Regulation can have an effect vital impression on the follow’s compliance with the legislation and the follow’s means to be reimbursed by Medicare for sure designated well being care companies (DHS).


Most physicians who work along with different medical colleagues – resembling co-owners, workers and/or unbiased contractors – in the identical group contemplate themselves a part of a medical follow.
Supply: AdobeStock

There are eight parts that have to be met to qualify as a “group follow” below the Stark Regulation:

1. Single authorized entity: The group can take any authorized type (together with partnership, restricted legal responsibility firm, company or skilled firm), however should encompass just one authorized entity. It’s value noting that the one entity could also be organized or owned (in complete or partly) by one other follow however provided that that different follow shouldn’t be an working follow (whether or not or not that different follow meets itself the definition of a gaggle follow).

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Allison W. Shuren

2. Not less than two medical doctors: There have to be a minimum of two staff “members” who’re medical doctors. W-2 stockholders, companions, and workers who’re physicians are thought-about group members. On-call and locum physicians qualify as members whereas filling in for different members, however unbiased contractors and mid-level professionals don’t rely as members.

3. Full vary of care: Every medical member should present considerably the complete vary of affected person care companies that it routinely supplies. Which means the member ought to carry out the identical scope of companies throughout the group as he does outdoors the group for one more employer or in his personal unbiased follow.


Michael C. Wooden

4. Seventy-five p.c of conferences: Group members should personally conduct a minimum of 75% of the doctor-patient conferences of the group follow. Practices the place unbiased contractors carry out the next variety of doctor-patient conferences could wrestle to fulfill this requirement.

5. Seventy-five p.c of affected person care companies: Not less than 75 p.c of affected person care companies supplied by members have to be supplied by the group and billed below the group billing quantity. This evaluation requires calculating the proportion of every member’s time that’s spent offering affected person care companies for the group, after which averaging these percentages for all members. “Affected person assist companies” will be any exercise that meets the medical wants of sufferers, whether or not or not such companies contain face-to-face encounters with sufferers. Affected person assist companies could embody scientific companies, consultations with different physicians, workers training and coaching, gear ordering, group administration actions, high quality assurance actions, and different group profit actions. Outdoors actions resembling instructing and analysis don’t rely as affected person care companies for the group. Be aware that this rule doesn’t apply to group practices in areas of healthcare skilled scarcity.

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Loreli Wright

6. Distribution of bills and revenue: The bills and revenue of the group have to be distributed based on formulation established earlier than the receipt of fee for the companies which give rise to the bills or produce the revenue.

7. Unified enterprise: The group shall function as a unified enterprise with centralized decision-making by a gaggle consultant physique that maintains efficient management over the group’s property and liabilities, together with, however not restricted to, budgets, compensation and salaries. The group should additionally show established billing, accounting and monetary reporting practices. Location-based and specialty-based compensation practices are usually permitted solely in relation to non-DHS derived revenues, though there could also be some exceptions the place the particular guidelines for productiveness bonuses and revenue shares (described under) are be happy.

8. Remuneration: All group medical doctors, together with workers and collaborators, in the event that they obtain a revenue share or a productiveness bonus, have to be remunerated based on a formulation that complies with the particular remuneration guidelines:

  • Revenue Sharing: A bunch doctor could obtain a share of the general earnings of the group, supplied that the share shouldn’t be decided in any approach that’s straight associated to the amount or worth of the doctor’s DHS reporting. Revenue-sharing compensation buildings are compliant if group earnings are break up per capita or if DHS-derived revenues are apportioned primarily based on the distribution of group non-DHS-derived revenues.
  • Productiveness Bonus: A Group Doctor could also be paid a productiveness bonus provided that the bonus is predicated on companies he personally carried out or companies associated to his personally carried out companies, or each. Productiveness Bonus is probably not decided in any approach that’s straight associated to the amount or worth of DHS Referrals (apart from DHS Referrals for Companies Associated to Self-Carried out Companies). For instance, compensating a doctor primarily based on the technical element of a DHS diagnostic take a look at carried out by a technician could also be in battle with this rule.

Errors associated to those particular guidelines for doctor charges are the commonest approach doctor teams encounter issues assembly the definition of “group follow.” Whereas comparatively uncommon, some practices could qualify for an exemption from a few of these clearing restrictions. Compliance with revenue sharing and productiveness bonus guidelines shouldn’t be required for practices the place (1) all DHS revenues represent lower than 5% of the follow’s whole revenues, and (2) for every doctor, the share of his compensation from DHS constitutes lower than 5% of his whole compensation.

Given the complexities and ongoing refinement of laws implementing the Stark Regulation and the monetary impression non-compliance can have on physicians, it’s good enterprise hygiene to have your follow construction and compensation methodologies reviewed by authorized counsel whether or not or not your agency is contemplating a gross sales course of. Additionally, at all times affirm that the particular person or group you might have delegated to calculate compensation in your follow completely understands your compensation methodology. We have now encountered many cases the place a follow believed they’d arrange a compliant pay construction solely to search out that when the numbers had been accomplished, it was accomplished incorrectly.

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