§ 238-A — Prohibition of financial arrangements and referrals

§ 238-a. Prohibition of financial arrangements and referrals. 1. (a)\nA practitioner authorized to order clinical laboratory services,\npharmacy services, radiation therapy services, physical therapy services\nor x-ray or imaging services may not make a referral for such services\nto a health care provider authorized to provide such services where such\npractitioner or immediate family member of such practitioner has a\nfinancial relationship with such health care provider.\n (b) A health care provider or a referring practitioner may not present\nor cause to be presented to any individual or third party payor or other\nentity a claim, bill, or other demand for payment for clinical\nlaboratory services, pharmacy services, radiation therapy services,\nphysical therapy services or x-ray or imaging services furnished\npursuant to a referral prohibited by this subdivision.\n 2. Subdivision one of this section shall not apply in any of the\nfollowing cases:\n (a) practitioners' services - in the case of practitioners' services\nprovided personally by, or under the supervision of, another\npractitioner in the same group practice as the referring practitioner;\n (b) in-office ancillary services - in the case of health or health\nrelated items or services (i) that are furnished personally by the\nreferring practitioner, personally by a practitioner who is a member of\nthe same group practice as the referring practitioner, or personally by\nindividuals who are employed by such practitioner or group practice and\nwho are supervised by the practitioner or by another practitioner in the\ngroup practice; and in a building in which the referring practitioner,\nor another practitioner who is a member of the same group practice,\nfurnishes practitioners' services unrelated to the furnishing of such\nitems or services, or in the case of a referring practitioner who is a\nmember of a group practice, in another building which is used by the\ngroup practice for the centralized provision of such items or services\nof the group; and (ii) that are billed by the practitioner performing or\nsupervising the services, by a group practice of which such practitioner\nis a member, or by an entity that is wholly owned by such practitioner\nor such group practice;\n (c) in the case of health or health related items or services\nfurnished to subscribers of a health maintenance organization operating\npursuant to article forty-three of the insurance law or article\nforty-four of this chapter, participants in a managed care program\noperating pursuant to section three hundred sixty-four-j of the social\nservices law or persons enrolled in a prepaid health services plan\nauthorized by law;\n (d) in the case of a referral for inpatient hospital services,\nincluding services by hospital staff practitioners provided in the\nhospital;\n (e) in the case of a referral of a hospital inpatient, outpatient or\nemergency services patient for clinical laboratory services, pharmacy\nservices, radiation therapy services, physical therapy services or x-ray\nor imaging services provided by the hospital, including services by\nhospital staff practitioners provided in the hospital;\n (f) in the case of a financial relationship with a general hospital if\nthe financial relationship does not relate specifically to the provision\nof clinical laboratory services, pharmacy services, radiation therapy\nservices, physical therapy services or x-ray or imaging services for\nwhich the referral was made; and\n (g) in the case of any other financial relationship which the public\nhealth council determines and specifies in regulations, subject to\napproval by the commissioner, does not pose a substantial risk of payor\nor patient abuse in relation to patient benefits consistent, to the\nextent practicable, with financial relationships specified in\nregulations adopted pursuant to federal law applicable to reimbursement\npursuant to title XVIII of the federal social security act (medicare)\nfor clinical laboratory services provided to beneficiaries of title\nXVIII of the federal social security act (medicare).\n 3. For the purposes of this section, an ownership interest or an\ninvestment interest:\n (a) may be through equity, debt or other means; but\n (b) shall not include ownership of investment securities, including\nshares or bonds, debentures, notes or other debt instruments, which were\npurchased on terms generally available to the public and which are in a\ncorporation that is listed for trading on the New York stock exchange or\non the American stock exchange, or is a national market system security\ntraded under an automated interdealer quotation system operated by the\nnational association of securities dealers, and had, at the end of the\ncorporation's most recent fiscal year, total assets exceeding one\nhundred million dollars or to the extent such ownership would be\npermitted by federal law or regulation if the services rendered were\nclinical laboratory services provided to beneficiaries of title XVIII of\nthe federal social security act (medicare).\n 4. An ownership interest or an investment interest shall not be\nsubject to subdivision one of this section if:\n (a) the health care provider authorized to provide clinical laboratory\nservices, pharmacy services, radiation therapy services, physical\ntherapy services or x-ray or imaging services is in a rural area and the\nreferring practitioner or the patient is in such rural area; or\n (b) the clinical laboratory services, pharmacy services, radiation\ntherapy services, physical therapy services or x-ray or imaging services\nare provided by a general hospital, the referring practitioner is\nauthorized to perform services at such general hospital and the\nownership or investment interest is in the general hospital itself and\nnot merely in a subdivision thereof; or\n (c) the clinical laboratory services, pharmacy services, radiation\ntherapy services, physical therapy services or x-ray or imaging services\nare provided by an ambulatory surgical center issued an operating\ncertificate pursuant to article twenty-eight of this chapter in\nconjunction with a surgical procedure performed by the referring\npractitioner at the ambulatory surgical center;\n (d) and if each practitioner who is an interested investor in a health\ncare provider within a category specified in paragraph (a), (b) or (c)\nof this subdivision and who makes a referral of a patient to such health\ncare provider discloses to the patient, in a brief and reasonable form\nand manner specified in regulations proposed by the commissioner after\nconsultation with representatives of consumer and physician\norganizations and adopted by the public health council, subject to\napproval by the commissioner, the practitioner's, or family member's\nownership interest or investment interest in the health care provider\nand the patient's right to utilize a specifically identified alternative\nhealth care provider if any such alternative is reasonably available.\n 5. (a) For the purposes of this section, a compensation arrangement\nmeans any arrangement involving any remuneration between a practitioner,\nor immediate family member, and a health care provider. The term\nremuneration includes any remuneration, directly or indirectly, overtly\nor covertly, in cash or in kind.\n (b) For the purposes of this section a compensation arrangement shall\nnot include:\n (i) payments made for the rental or lease of office space, if (A)\nthere is a written agreement, signed by the parties, for the rental or\nlease of the space, which agreement specifies the space covered by the\nagreement and dedicated for the use of the lessee, provides for a term\nof rental or lease of at least one year, provides for a payment on a\nperiodic basis of an amount that is consistent with fair market value,\nprovides for an amount of aggregate payments that does not vary,\ndirectly or indirectly, based on the volume or value of any referrals of\nbusiness between the parties, and would be considered to be commercially\nreasonable even if no referrals were made between the parties; or (B) in\nthe case of rental or lease of office space in which a practitioner who\nis an interested investor, or an interested investor who is an immediate\nfamily member of the practitioner, has an ownership or investment\ninterest, the office space is in the same building as the building in\nwhich the practitioner or group practice of which the practitioner is a\nmember has a practice;\n (ii) an arrangement between a general hospital and a practitioner, or\nimmediate family member, for the employment of the practitioner, or\nimmediate family member, or for the provision of administrative\nservices, if the arrangement is for identifiable services, the amount of\nremuneration under the arrangement is consistent with the fair market\nvalue of the services, the remuneration is not determined in a manner\nthat takes into account, directly or indirectly, the volume or value of\nany referrals by the referring practitioner and such remuneration is\nprovided pursuant to an agreement which would be commercially reasonable\neven if no referrals were made to the general hospital;\n (iii) an arrangement between a health care provider other than a\ngeneral hospital and a practitioner if (A) the arrangement is for\nspecific identifiable services as the medical director or as a member of\na medical advisory board at the provider, for specific identifiable\npractitioner services to be furnished to an individual receiving hospice\ncare payable as hospice care, for specific practitioners' services\nfurnished to a non-profit blood center, or for specific identifiable\nadministrative services, other than direct patient care services, but\nonly under exceptional circumstances; and (B) the amount of remuneration\nunder the arrangement is consistent with the fair market value of the\nservices, the remuneration is not determined in a manner that takes into\naccount, directly or indirectly, the volume or value of any referrals by\nthe referring practitioner and such remuneration is provided pursuant to\nan agreement which would be commercially reasonable even if no referrals\nwere made;\n (iv) remuneration which is provided by a general hospital to a\npractitioner to induce the practitioner to relocate to the geographic\narea served by the general hospital in order to be a member of the\nmedical staff of the general hospital if the practitioner is not\nrequired to refer patients to the hospital and the amount of the\nremuneration under the arrangement is not determined in a manner that\ntakes into account directly or indirectly the volume or value of any\nreferrals by the referring practitioner;\n (v) an isolated financial transaction, such as a one-time sale of\nproperty, if the amount of remuneration under the arrangement is\nconsistent with the fair market value, the remuneration is not\ndetermined in a manner that takes into account, directly or indirectly,\nthe volume or value of any referrals by the referring practitioner and\nsuch remuneration is provided pursuant to an agreement which would be\ncommercially reasonable even if no referrals were made;\n (vi) a compensation arrangement involving payment by a group practice\nof the salary of a practitioner member of the group practice;\n (vii) and provided that any arrangement specified in subparagraphs (i)\nthrough (vi) of this paragraph meets such other requirements as the\npublic health council may impose by regulation, subject to approval by\nthe commissioner, as needed to protect against payor or patient abuse\nconsistent with requirements imposed by regulations adopted pursuant to\nfederal law applicable to reimbursement pursuant to title XVIII of the\nfederal social security act (medicare) for clinical laboratory services\nprovided to beneficiaries of title XVIII of the federal social security\nact (medicare);\n (viii) an arrangement between a health care provider and an immediate\nfamily member of a practitioner for the employment of the immediate\nfamily member which the commissioner determines on application by the\nparties does not pose a substantial risk of payor or patient abuse in\nrelation to patient benefits subject to such requirements as the\ncommissioner shall determine necessary to protect the public interest,\nand which for a clinical laboratory that provides services to\nbeneficiaries to title XVIII of the federal social security act\n(medicare) qualifies for an exception from the prohibitions on such\ncompensation arrangements for purposes of reimbursement of clinical\nlaboratory services pursuant to title XVIII of the federal social\nsecurity act (medicare). Such application shall be in a form and content\nspecified by the commissioner after consultation with representatives of\nconsumer and physician organizations. The commissioner shall make such\ndetermination within sixty days of receipt of a complete application.\n 6. For the purposes of this title:\n (a) in the case of clinical laboratory services, pharmacy services,\nradiation therapy services, physical therapy services or x-ray or\nimaging services, the request by a practitioner for such services,\nincluding the request by a practitioner for a consultation with another\npractitioner, and any test or procedure ordered by, or to be performed\nby or under the supervision of that other practitioner, shall constitute\na referral by a referring practitioner; and\n (b) in the case of clinical laboratory services, pharmacy services,\nradiation therapy services, physical therapy services or x-ray or\nimaging services, the request or establishment of a plan of care by a\npractitioner which includes the provision of clinical laboratory\nservices, pharmacy services, radiation therapy services, physical\ntherapy services or x-ray or imaging services shall constitute a\nreferral by a referring practitioner;\n (c) provided further, however, that the following shall not constitute\na referral by a referring practitioner:\n (i) a request by a practitioner for practitioners' services consisting\nsolely of professional services to be furnished personally by that\npractitioner, or under that practitioner's supervision;\n (ii) a request by a pathologist for clinical diagnostic laboratory\ntests and pathological examination services, if such services are\nfurnished by or under the supervision of such pathologist pursuant to a\nconsultation requested by another practitioner; and\n (iii) a request by a radiologist for diagnostic x-ray or imaging\nservices, if such services are furnished by or under the supervision of\nsuch radiologist pursuant to a consultation requested by another\npractitioner.\n 7. If a referring practitioner or a health care provider furnishing\nclinical laboratory services, pharmacy services, radiation therapy\nservices, physical therapy services or x-ray or imaging services or any\nother person or entity collects any amounts that were billed in\nviolation of this section, such referring practitioner and health care\nprovider and other person or entity shall be jointly and severally\nliable to the payor for any amounts so collected.\n 8. Each health care provider furnishing clinical laboratory services,\npharmacy services, radiation therapy services, physical therapy services\nor x-ray or imaging services shall submit such information as reasonably\nmay be required by the department for purposes of this title.\n 9. Subdivision one of this section shall apply to an arrangement or\nscheme, such as a cross-referral arrangement, which the practitioner or\nhealth care provider knows or should know has a principal purpose of\nassuring referrals by the practitioner for clinical laboratory services,\npharmacy services, radiation therapy services, physical therapy services\nor x-ray or imaging services to a particular health care provider which,\nif the practitioner directly made referrals to such health care\nprovider, would be in violation of subdivision one of this section.\n 10. The public health council shall adopt rules and regulations,\nsubject to approval by the commissioner, necessary to effectuate the\nprovisions and purposes of this title.\n