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Federal Register Insight - Using Hospital Resources - Split-Bill Remuneration - DHS Entity Woes

November 1, 2016
The publication of the federal registrar which issued the modifications to the Stark law that everyone is talking about also provides commentary (and ad libbing) from the government on a whole host of issues. One I found of note was clarification as to whether a doctor who performs cases at a hospital receives "remuneration" by benefiting from the equipment, staffing and supplies at the facility.  Tucked away in the federal register 80 Fed. Reg. 41918 the following was published -

United Stated ex rel. Kosenke v. Carlisle HMA, 554 F.3s 88 (3d Cir. 2009) held that a physician's use of a hospital's resources (for example, examination rooms, nursing personnel, and supplies) when treating hospital patients constitutes remuneration under the physician self-referral law, even when the hospital bills the appropriate payor for the resources and services it provides (including the examination room and other facility services, nursing and other personnel a, and supplies) and the physician bills the payor for his or her professional fees only.  

We do not believe that such an arrangement involves remuneration between the parties, because the physician and the DHS entity do not provide items, services, or other benefits to one another.  Rather, the physician provides services to the patient and bills the payor for his or her services, and the DHS entity provides its resources and services to the patient and bills the payor for the resources and services.  There is no remuneration between the parties for the purposes of section 1877 of the Act.  

In contrast, if a physician or a DHS entity bills a non-Medicare payor (that is, a commercial payor or self-pay patient) globally for both the physician's services and the hospital's resources and services, a benefit is conferred on the party receiving payment.  Specifically, the party that bills globally receives payment for items or services provided by the other party. Such a global billing arrangement involves remuneration between the parties that implicates the physician self-referral law.  


One clear indication from the discussionary tone and comments from the government is drawing a clear line of distinction between DHS entities - such as testing companies or labs - as opposed to a hospital - and indicating that the former sharing benefits is likely to have a higher degree or scrutiny upon review. For those of you reading who like being informed or insight into structure considerations, the language is interesting and will likely be referenced or considered by counsel in future relationships now that it is published.  

If you are a DHS entity, plan to work with or in collaboration with a DHS entity, be very careful in how you paper and engage in relationships.  The ramp up in activity is not all hype - it seems these days most players have their hand looking to catch healthcare dollars.  Work with competent counsel and ensure proper structuring at the start.  

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