By Fisher, JD, CHC, CCEP

When Employed Physicians be Required to Make Referrals for Designated Health Services

The Stark Law Regulations include a provision that dictates the conditions under which an employer of a physician may mandate referrals for designated health services.  Certain specific conditions must be met if an employer wishes to require its employed physicians to make referrals to the employer’s designated health services.  Many institutions assume that an employer may always require an employed physician to make referrals to its ancillary services.  That assumption is not correct.

The Stark regulations provides that a physician’s compensation from a bona fide employer or under a managed care contract or other contract for personal services may be conditioned on the physician’s referrals to a particular provider, practitioner, or supplier.    There are a number of specific requirements that must be present to permit referral requirements including:

1.  The required referrals can only relate to the physician’s services covered by the scope of the employment or the contract.
2. The referral requirement must be reasonably necessary to effectuate the legitimate business purposes of the compensation arrangement.
3. The physician’s compensation must be set in advance for the term of the agreement requiring referrals.
4.  The physician’s compensation must be consistent with fair market value for servicesRead more here: Health Law Blog