TABLE A

OVERLAPPING ANTI-KICKBACK SAFE HARBORS AND STARK GENERAL EXCEPTIONS

Description of Safe Harbor/ General Exception / Anti-Kickback Safe Harbor
Sources: 42 U.S.C. Section 1320a-7b(b) and 42 C.F.R. § 1001.952 / Stark General Exception
Sources: 42 U.S.C. Section 1395nn and 42 C.F.R. Section 411.350 et seq.
1. Publicly Traded Securities
42 C.F.R. § 1001.952(a)(1)
42 C.F.R. § 411.356(a)
42 C.F.R. § 411.356(b) / Returns on investments (e.g., dividends and interest) in securities of entities with net tangible assets related to the furnishing of health care items or services > $50 million provided:
1. the securities are registered with the Securities and Exchange Commission;
2.. referring investors’ securities are obtained at the same price as is available to the general public trading on a registered securities exchange through a broker and referring investors’ securities are not subject to restrictions on transferability;
3. entity and referring investors do not favor passive investors over non-investors in promoting and/or furnishing the entity’s items or services;
4. entity and its investors (and persons acting on their behalf) do not finance (or guarantee financing of) any purchase of the entity’s securities by a person who could make or influence referrals; and
5. returns (e.g., dividend payments) are directly proportional to capital investment. / A. Returns on investments (e.g., dividends and interest) in securities of entities which, at the time the DHS referral is made:*
1. are traded on recognized foreign, national or regional exchange or on an electronic stock market or over-the-counter quotation system; and
2. are securities of a corporation that had shareholder equity > $75 million at the end of its most recent fiscal year or on average during the previous 3 fiscal years.
B. Returns on investments in mutual fund that had, at the end of its most recent fiscal year or on average during the previous 3 fiscal years, total assets > $75 million.
*Securities acquired by a referring physician (or his immediate family member) prior to a public offering of the securities will fit in this exception if they are available to the public at the time the DHS referral is made.
Note that stock options received by a referring physician as compensation will not be considered to be an investment (for purposes of determining whether the Stark law is implicated) until exercised.
2. Space Rental
42 C.F.R. § 1001.952(b)
42 C.F.R. § 411.357(a)
/ Remuneration paid for the lease of space as long as all of the following six standards are met:
1. The lease agreement is set out in writing and signed by the parties.
2. The lease covers all of the premises leased between the parties for the term of the lease and specifies the premises covered by the lease.
3. If the lease is intended to provide the lessee with access to the premises for periodic intervals of time, rather than on a full-time basis for the term of the lease, the lease specifies exactly the schedule of such intervals, their precise length, and the exact rent for such intervals.
4. The term of the lease is for not less than one year.
5. The aggregate rental charge 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, Medicaid or other Federal health care programs.
6. The aggregate space rented does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental. / Similar to the six standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:
1. The lease arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the premises it covers.
2. The duration of the lease arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).
3. The space rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease arrangement and is used exclusively by the lessee when being used by the lessee (but see separate exception for timeshare arrangements in Item 17 below).
4. The rental charges over the term of the lease arrangement are set in advance and are consistent with fair market value.
5. The rental charges over the term of the lease arrangement are not determined—
(i) In a manner that takes into account the volume or value of any referrals or other business generated between the parties; or
(ii) Using a formula based on—
(A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services performed or business generated in the office space; or
(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.
6. The lease arrangement would be commercially reasonable even if no referrals were made between the lessee and the lessor.
7. If the lease arrangement expires after a term of at least 1 year, a holdover lease arrangement immediately following the expiration of the lease arrangement satisfies this exception if the following conditions are met:
(i) The lease arrangement met the six conditions above when the arrangement expired;
(ii) The holdover lease arrangement is on the same terms and conditions as the immediately preceding arrangement; and
(iii) The holdover lease arrangement continues to satisfy the six conditions above.
3. Equipment Rental
42 C.F.R. § 1001.952(c)
42 C.F.R. § 411.357(b)
/ Any payment made by a lessee of equipment to the lessor of the equipment for the use of the equipment, as long as all of the following six standards are met:
1. The lease agreement is set out in writing and signed by the parties.
2. The lease covers all of the equipment leased between the parties for the term of the lease and specifies the equipment covered by the lease.
3. If the lease is intended to provide the lessee with use of the equipment for periodic intervals of time, rather than on a full-time basis for the term of the lease, the lease specifies exactly the schedule of such intervals, their precise length, and the exact rent for such interval.
4. The term of the lease is for not less than one year.
5. The aggregate rental charge 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.
6. The aggregate equipment rental does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental. / A. Similar to the six standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:
1. The lease arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the equipment it covers.
2. The equipment leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease arrangement and is used exclusively by the lessee when being used by the lessee (and is not shared with or used by the lessor or any person or entity related to the lessor) (but see separate exception for timeshare arrangements in Item 17 below).
3. The duration of the lease arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).
4. The rental charges over the term of the lease arrangement are set in advance, are consistent with fair market value, and are not determined—
(i) In a manner that takes into account the volume or value of any referrals or other business generated between the parties; or
(ii) Using a formula based on—
(A) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services performed on or business generated through the use of the equipment; or
(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.
5. The lease arrangement would be commercially reasonable even if no referrals were made between the parties.
6. If the lease arrangement expires after a term of at least 1 year, a holdover lease arrangement immediately following the expiration of the lease arrangement satisfies this exception if the following conditions are met:
(i) The lease arrangement met the five conditions above when the arrangement expired;
(ii) The holdover lease arrangement is on the same terms and conditions as the immediately preceding lease arrangement; and
(iii) The holdover lease arrangement continues to satisfy the five conditions above.
4. Personal Services and Management Contracts
42 C.F.R. § 1001.952(d)
42 C.F.R. § 411.357(d)
/ Any payment made by a principal to an agent as compensation for the services of the agent, as long as all of the following seven standards are met:
1. The agency agreement is set out in writing and signed by the parties.
2. 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.
3. If the agency agreement is intended to provide for the services of the agent on a periodic, sporadic or part-time basis, rather than on a full-time basis for the term of the agreement, the agreement specifies exactly the schedule of such intervals, their precise length, and the exact charge for such intervals.
4. The term of the agreement is for not less than one year.
5. The aggregate 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.
6. 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.
7. The aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services. / Similar to the seven standards for Anti-Kickback, and more flexible beginning Jan. 1, 2016:
1. Each arrangement is set out in writing (does not have to be a formal agreement), is signed by the parties, and specifies the services covered by the arrangement.
2. 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 (O.K. to incorporate each other by reference or cross-reference a master list of contracts).
3. 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).
4. The duration of each arrangement is at least 1 year (arrangement that in fact lasts for 1 year satisfies this requirement).
5. The compensation to be paid over the term of each arrangement is set in advance, does not exceed fair market value, 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.
6. 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.
7. If the arrangement expires after a term of at least 1 year, a holdover arrangement immediately following the expiration of the arrangement satisfies this exception if the following conditions are met:
(i) The arrangement met the six conditions above 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 the six conditions above.
5. Employees
42 U.S.C. §1320a-7b(b)(3)(B)
42 C.F.R. § 1001.952(i)
42 C.F.R. § 411.357(c)
/ Any amount paid to an employee, who has a bona fide employment relationship, for employment in the furnishing of any item or service.
Employment status is determined by courts under common law agency rules involving many factors including the right to control and direct the individual who performs the services, not only as to what shall be done but how it shall be done. / Stricter than Anti-Kickback:
Any amount paid by an employer to a physician (or immediate family member) who has a bona fide employment relationship with the employer for the provision of services if the following conditions are met:
1. The employment is for identifiable services.
2. The amount of the remuneration under the employment is—
(i) Consistent with the fair market value of the services; and
(ii) Except as provided in paragraph 4 below, is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician.
3. The remuneration is provided under an arrangement that would be commercially reasonable even if no referrals were made to the employer.
4. Paragraph 2(ii) above does not prohibit payment of remuneration in the form of a productivity bonus based on services performed personally by the physician (or immediate family member of the physician).
6. Sales of Physician Practices (encompassed by broader “Isolated Transactions” Stark regulatory exception)
42 C.F.R. § 1001.952(e)