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What Physicians Need to Know About the Stark In-Office Ancillary Services Exception

Stark LawThe Federal Stark Law generally prohibits physicians from referring Medicare/Medicaid payable Designated Health Services (DHS) to any organization in which they have a financial interest, including their own medical practice. Because the Stark prohibition applies when physicians refer their patients within their own practice to obtain DHS, such an arrangement must meet the requirements of an exception in order to comply with the law.

If you are a physician practice that intends to offer to your patients related services which are also DHS, for example, imaging or laboratory services, you might be able to rely upon the In-Office Ancillary Services (IOAS) exception. This exception is designed to protect the provision of Designated Health Services that are truly ancillary to the medical services being provided by your physician practice.

In order to take advantage of this exception, your practice must meet three specific requirements related to

  1. supervision
  2. location
  3. billing

Additionally, multi-physician practices must be considered a “group practice” as provided in the Stark Law.

Physicians providing MRIs, CT and PET scans through their medical practices must also provide a disclosure and notice to patients. Such notice must be in writing and provided at the time of the referral. The notice must disclose to the patient that he or she may obtain those services from other suppliers and provide a list of those suppliers in close proximity to the physician’s office.

Although this exception enables physicians to offer a number of ancillary services and still maintain compliance with the Stark Law, this exception is likely to be restricted in the future. The Department of Health and Humans Services’ (HHS) FY ‘16 proposed budget indicates that HHS intends to limit which practices may offer therapy services, advanced imaging, radiation therapy and anatomic pathology services. Only “clinically integrated” practices that demonstrate cost containment would be able to use the IOAS exception when offering such services.

Additional information on the HHS FY ‘16 Budget Proposal can be found at http://www.hhs.gov/budget/fy2016-hhs-budget-in-brief/hhs-fy2016budget-in-brief-cms-medicare.html.

If you have any questions about the IOAS exception or need legal advice with respect to offering ancillary services through your practice please contact DJ Jeyaram at DJ@jeylaw.com or Danielle Hildebrand at Dhildebrand@jeylaw.com.

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