Sources: 42 C.F.R. § 411.357(p) and 42 C.F.R. § 411.354(c)

11. Indirect Compensation Arrangements

“Indirect compensation arrangements”* between physicians (or their immediate family members) and DHS providers to whom they refer if:
 

  1. The compensation received by the referring physician (or her wholly-owned professional corporation) is fair market value and not determined in any manner that takes into account the volume or value of any referrals or other business generated by the referring physician for the entity furnishing DHS;

  2. The compensation arrangement is in writing, signed by the parties, and specifies the services covered by the arrangement (except in the case of a bona fide employment relationship, in which case the arrangement need not be set out in a written contract, but must be for identifiable services and be commercially reasonable even if no referrals are made to the employer); and

  3. The compensation arrangement does not violate the anti-kickback statute or any laws or regulations governing billing or claims submission.


*An “indirect compensation arrangement” exists if:
 

  1. between the referring physician or a member of his or her immediate family (with the physician being deemed to “stand in the shoes” of—i.e., to have the same compensation arrangements as--his group practice or other physician organization) and the entity furnishing DHS, there exists an unbroken chain of any number (but not fewer than one) of persons or entities that have financial relationships—i.e., either direct or indirect ownership or investment interest or direct or indirect compensation arrangements--between them (that is, each link in the chain has either an ownership or investment interest or a compensation arrangement with the preceding link);

  2. the referring physician or immediate family member receives aggregate compensation from the person or entity in the chain with which the physician (or immediate family member) has a direct financial relationship that varies with, or takes into account, the volume or value of referrals or other business generated by the referring physician for the entity furnishing the DHS; and

  3. the entity furnishing DHS has actual knowledge of, or acts in reckless disregard or deliberate ignorance of, the fact that the referring physician (or immediate family member) receives aggregate compensation that varies with, or takes into account, the volume or value of referrals or other business generated by the referring physician for the entity furnishing the DHS.

Stark General Exception