Title: Section 34-1.7 - Exceptions from compensation arrangement prohibitions.

Effective Date

12/26/2001

34-1.7 Exceptions from compensation arrangement prohibitions.
The following shall not be considered to be compensation arrangements subject to Public Health Law section 238-a(1)(a) or to section 34-1.3 of this Subpart:

(a) Rental of equipment: Payments made by a lessee of equipment to the lessor of the equipment for the use of the equipment, if:

(1) the lease is set out in writing, signed by the parties, and specifies the equipment covered by the lease;

(2) the equipment rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease or rental and is used exclusively by the lessee when being used by the lessee;

(3) the lease provides for a term of rental or lease of at least one year;

(4) the rental charges over the term of the lease are set in advance, are consistent with fair market value, and are not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties; and

(5) the lease would be commercially reasonable even if no referrals were made between the parties.

(b) Bona fide employment relationships: Any amount paid by an employer to a physician (or an immediate family member of such physician) who has a bona fide employment relationship with the employer for the provision of services, if:

(1) the employment is for identifiable services;

(2) the amount of the remuneration under the employment

(i) is consistent with the fair market value of the services; and

(ii) is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician; and

(3) the remuneration is provided pursuant to an agreement which would be commercially reasonable even if no referrals were made to the employer. Subparagraph (2)(ii) shall not prohibit the payment of remuneration in the form of a productivity bonus based on services performed personally by the physician (or an immediate family member of such physician).

(c) Personal service arrangements: Remuneration from an entity under an arrangement if

(1) the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement;

(2) the arrangement covers all of the services to be provided by the physician (or an immediate family member of such physician) to the entity;

(3) the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement;

(4) the term of the arrangement is for at least one year;

(5) the compensation to be paid over the term for the 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 performed under the arrangement do not involve the counseling or promotion or a business arrangement or other activity that violates any state or federal law.

(d) Payments by a physician for items and services: Payment made by a physician

(1) to a laboratory in exchange for the provision of clinical laboratory services, or

(2) to an entity as compensation for other items or services if the items or services are furnished at a price that is consistent with fair market value.

(e) Remuneration consisting of any of the following:

(1) the forgiveness of amounts owed for inaccurate tests or procedures, mistakenly performed tests or procedures, or the correction of minor billing errors;

(2) the provision of items, devices, or supplies that do not have any generally accepted use in health care practices other than to, and are actually used solely to

(i) collect, transport, process, or store specimens for the entity providing the item, device or supply, or

(ii) order or communicate the results of tests or procedures for such entity;

(3) a payment made by an insurer or a self-insured plan to a practitioner to satisfy a claim, submitted on a fee for service basis, for the furnishing of health services by that practitioner to an individual who is covered by a policy with the insurer or by the self-insured plan, if

(i) the health services are not furnished, and the payment is not made, pursuant to a contract or other arrangement between the insurer or the plan and the practitioner,

(ii) the payment is made to the practitioner on behalf of the covered individual and would otherwise be made directly to such individual, and

(iii) the amount of the payment is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account directly or indirectly the volume or value of any referrals.

(f) Payments for services furnished in an ambulatory surgical center or a chronic renal dialysis center facility issued an operating certificate pursuant to Article 28 of the Public Health Law, if payment for those services is included in a rate that is substantially similar or equivalent to the ambulatory surgical center (ASC) rate reimbursable by the Medicare Program pursuant to 42 CFR Part 416 Subpart E, or a rate substantially similar to the End Stage Renal Disease composite rate reimbursable by the Medicare Program pursuant to 42 CFR Part 413 Subpart H, respectively.

(g) Payments for services provided by a hospice licensed pursuant to Article 40 of the Public Health Law, if payment for those services is included in a rate that is substantially similar or equivalent to the per-diem hospice charge reimbursable by the Medicare program set forth in 42 CFR Part 418 Subpart G.

Volume

VOLUME A-1 (Title 10)

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