Physician Self-Referral Clarifications

This article will overview 2020 revisions to The Centers for Medicare & Medicaid Services (CMS) Subpart J – Financial Relationships Between Physicians and Entities Furnishing Designated Health Services, 42 CFR 411.350 – 411.357, that explains requirements of and exceptions to the physician self-referral law for certain value-based compensation arrangements between or among physicians, providers, and suppliers. The 2020 final rule established a new exception for certain arrangements under which a physician receives limited remuneration for items or services provided by the physician; establishes an exception for donations of cybersecurity technology and related services; and amends the existing exception for electronic health records items and services.

411.351 – Definitions.

This section provides detailed definitions of terms for which an understanding will be necessary to comply with the requirements.

411.352 – Group practice.

This section provides very specific criteria that define a group practice and the types of physician compensation that are permitted (i.e., those that are not based on the volume or value of referrals of designated health services). The conditions that must be met and documentation requirements for permitted profit share or productivity bonuses are also provided.

411.353 – Prohibition on certain referrals by physicians and limitations on billing.

This section outlines prohibitions on submitting claims for payment under Medicare for designated health services (DHS) referred by a physician to an entity with which the physician has a direct or indirect financial relationship or has an immediate family member with a direct or indirect financial relationship. Certain exceptions, denial of payments, and refunds are explained.

411.354 – Financial relationship, compensation, and ownership or investment interest.

This section defines financial relationship and ownership or investment interests as they relate to prohibited physician referrals. Direct and indirect financial relationships, as well as compensation arrangements and related exceptions are discussed.

411.355 – General exceptions to the referral prohibitions related to both ownership/investment and compensation.

This section enumerates the exceptions to prohibited referrals concerning physician services, in-office ancillary services, services furnished by an organization (e.g., health plan) to enrollees, academic medical centers, implants furnished by an ASC, EPO and other dialysis-related drugs, preventive screening tests

and vaccines, eyeglasses and contact lenses following cataract surgery and intra-family rural referrals.

411.356 – Exceptions to the referral prohibition related to ownership or investment interests.

Requirements for exception of publicly traded securities, mutual funds, and specific providers are described.

411.357 – Exceptions to the referral prohibition related to compensation arrangements.

A description for each type of compensation arrangement that does not constitute a financial relationship (e.g., rental of office space, rental of equipment, group practice arrangements with a hospital, payments by a physician, charitable donations by a physician, nonmonetary compensation, cybersecurity technology and related services, arrangements that facilitate value-based health care delivery and payment, electronic health records items and services and many more), including specific requirements necessary to meet the exceptions, are provided.

If the modifications to this rule might apply to your practice, you may access the revised Self-Referral regulations here: