42 USC 1395 - Limitation on certain physician referrals

1 See References in Text note below.

of this title) to an individual enrolled with the organization, or

2 So in original. No subpar. (B) has been enacted.

In general

3 So in original. Probably should be “provide”.

services for which payment may be made under this subchapter very infrequently.

Editorial Notes

References in Text

Section 222(a) of the Social Security Amendments of 1972, referred to in subsec. (span)(3)(C), is section 222(a) of Puspan. L. 92–603, Oct. 30, 1972, 86 Stat. 1329, which is set out as a note under section 1395span–1 of this title.

Section 300e–9(d) of this title, referred to in subsec. (span)(3)(D), was redesignated section 300e–9(c) of this title by Puspan. L. 100–517, § 7(span), Oct. 24, 1988, 102 Stat. 2580.

Section 1395w–104(e)(6) of this title, referred to in subsec. (span)(5), was in the original “section 1860D–3(e)(6)”, and was translated as reading “section 1860D–4(e)(6)”, meaning section 1860D–4(e)(6) of the Social Security Act, to reflect the probable intent of Congress, because section 1860D–3, which is classified to section 1395w–103 of this title, does not contain a subsec. (e), and section 1860D–4(e)(6) relates to electronic prescription program regulations.

The Internal Revenue Code, referred to in subsecs. (c)(2) and (h)(2), is classified generally to Title 26, Internal Revenue Code.

Prior Provisions

A prior section 1395nn, act Aug. 14, 1935, ch. 531, title XVIII, § 1877, as added and amended Oct. 30, 1972, Puspan. L. 92–603, title II, §§ 242(span), 278(span)(8), 86 Stat. 1419, 1454; Oct. 25, 1977, Puspan. L. 95–142, § 4(a), 91 Stat. 1179; Dec. 5, 1980, Puspan. L. 96–499, title IX, § 917, 94 Stat. 2625; July 18, 1984, Puspan. L. 98–369, div. B, title III, § 2306(f)(2), 98 Stat. 1073; Oct. 21, 1986, Puspan. L. 99–509, title IX, § 9321(a)(1), 100 Stat. 2016; Aug. 18, 1987, Puspan. L. 100–93, § 4(c), 101 Stat. 689, enumerated offenses relating to the Medicare program and penalties for such offenses, prior to repeal by Puspan. L. 100–93, §§ 4(e), 15(a), Aug. 18, 1987, 101 Stat. 689, 698, effective at end of fourteen-day period beginning Aug. 18, 1987, and inapplicable to administrative proceedings commenced before end of such period.

Amendments

2022—Subsec. (e)(9). Puspan. L. 117–328 added par. (9).

2018—Subsec. (e)(1)(C). Puspan. L. 115–123, § 50404(span)(1), added subpar. (C).

Subsec. (e)(3)(C). Puspan. L. 115–123, § 50404(span)(2), added subpar. (C).

Subsec. (h)(1)(D). Puspan. L. 115–123, § 50404(a)(1), added subpar. (D).

Subsec. (h)(1)(E). Puspan. L. 115–123, § 50404(a)(2), added subpar. (E).

2010—Subsec. (span)(2). Puspan. L. 111–148, § 6003(a), inserted at end of concluding provisions “Such requirements shall, with respect to magnetic resonance imaging, computed tomography, positron emission tomography, and any other designated health services specified under subsection (h)(6)(D) that the Secretary determines appropriate, include a requirement that the referring physician inform the individual in writing at the time of the referral that the individual may obtain the services for which the individual is being referred from a person other than a person described in subparagraph (A)(i) and provide such individual with a written list of suppliers (as defined in section 1395x(d) of this title) who furnish such services in the area in which such individual resides.”

Subsec. (d)(2)(C). Puspan. L. 111–148, § 6001(a)(1), added subpar. (C).

Subsec. (d)(3)(D). Puspan. L. 111–148, § 6001(a)(2), added subpar. (D).

Subsec. (i). Puspan. L. 111–148, § 6001(a)(3), added subsec. (i).

Subsec. (i)(1)(A)(i). Puspan. L. 111–152, § 1106(1), substituted “December 31, 2010” for “August 1, 2010”.

Puspan. L. 111–148, § 10601(a)(1), substituted “August 1, 2010” for “February 1, 2010”.

Subsec. (i)(3)(A)(i). Puspan. L. 111–152, § 1106(2)(A), substituted “a hospital that is an applicable hospital (as defined in subparagraph (E)) or is a high Medicaid facility described in subparagraph (F)” for “an applicable hospital (as defined in subparagraph (E))”.

Subsec. (i)(3)(A)(iii). Puspan. L. 111–148, § 10601(a)(2)(A), substituted “February 1, 2012” for “August 1, 2011”.

Subsec. (i)(3)(A)(iv). Puspan. L. 111–148, § 10601(a)(2)(B), substituted “January 1, 2012” for “July 1, 2011”.

Subsec. (i)(3)(C)(iii). Puspan. L. 111–152, § 1106(2)(B), inserted “(or, in the case of a hospital that did not have a provider agreement in effect as of such date but does have such an agreement in effect on December 31, 2010, the effective date of such provider agreement)” after “March 23, 2010”.

Subsec. (i)(3)(F) to (I). Puspan. L. 111–152, § 1106(2)(C), (D), added subpar. (F) and redesignated former subpars. (F) to (H) as (G) to (I), respectively.

2008—Subsec. (h)(6)(L). Puspan. L. 110–275 added subpar. (L).

2003—Subsec. (span)(5). Puspan. L. 108–173, § 101(e)(8)(B), added par. (5).

Subsec. (d)(2). Puspan. L. 108–173, § 507(a)(2), amended span and text of par. (2) generally. Prior to amendment, text read as follows: “In the case of designated health services furnished in a rural area (as defined in section 1395ww(d)(2)(D) of this title) by an entity, if substantially all of the designated health services furnished by such entity are furnished to individuals residing in such a rural area.”

Subsec. (d)(3)(B), (C). Puspan. L. 108–173, § 507(a)(1)(A), added subpar. (B) and redesignated former subpar. (B) as (C).

Subsec. (h)(7). Puspan. L. 108–173, § 507(a)(1)(B), added par. (7).

1999—Subsec. (span)(3)(C). Puspan. L. 106–113, § 1000(a)(6) [title V, § 524(a)(1)], struck out “or” at the end.

Subsec. (span)(3)(D). Puspan. L. 106–113, § 1000(a)(6) [title V, § 524(a)(2)], substituted “, or” for period at end.

Subsec. (span)(3)(E). Puspan. L. 106–113, § 1000(a)(6) [title V, § 524(a)(3)], which directed addition of provisions at end of par. (3) but which separated directory language from language to be added because of the apparent placement out of sequence of pars. (2) and (3) of § 524(a), was executed by adding subpar. (E) at end of par. (3) to reflect the probable intent of Congress.

1997—Subsec. (g)(6). Puspan. L. 105–33 added par. (6).

1994—Subsec. (f). Puspan. L. 103–432, § 152(a)(1), (4), (5), in introductory provisions, substituted “ownership, investment, and compensation arrangements” for “ownership arrangements”, and in closing provisions, substituted “designated health services” for “covered items and services” and struck out “Such information shall first be provided not later than October 1, 1991.” after “shall specify.” and “The Secretary may waive the requirements of this subsection (and the requirements of chapter 35 of title 44 with respect to information provided under this subsection) with respect to reporting by entities in a State (except for entities providing designated health services) so long as such reporting occurs in at least 10 States, and the Secretary may waive such requirements with respect to the providers in a State required to report so long as such requirements are not waived with respect to parenteral and enteral suppliers, end stage renal disease facilities, suppliers of ambulance services, hospitals, entities providing physical therapy services, and entities providing diagnostic imaging services of any type.” at end.

Subsec. (f)(2). Puspan. L. 103–432, § 152(a)(2), (3), inserted “, or with a compensation arrangement (as described in subsection (a)(2)(B)),” after “investment interest (as described in subsection (a)(2)(A))” and “interest or who have such a compensation relationship with the entity” before period at end.

Subsec. (h)(6). Puspan. L. 103–432, § 152(span), in subpar. (D), substituted “services, including magnetic resonance imaging, computerized axial tomography scans, and ultrasound services” for “or other diagnostic services”, and in subpars. (E), (F), and (H), inserted “and supplies” before period at end.

1993—Subsecs. (a) to (e). Puspan. L. 103–66, § 13562(a)(1), amended headings and text of subsecs. (a) to (e) generally, substituting present provisions for provisions which related to: prohibition of certain referrals in subsec. (a), general exceptions to both ownership and compensation arrangement prohibitions in subsec. (span), general exception related only to ownership or investment prohibition for ownership in publicly-traded securities in subsec. (c), additional exceptions related only to ownership or investment prohibition in subsec. (d), and exceptions relating to other compensation arrangements in subsec. (e).

Subsec. (f). Puspan. L. 103–66, § 13562(a)(3), substituted “designated health services” for “clinical laboratory services” in concluding provisions.

Subsec. (g)(1). Puspan. L. 103–66, § 13562(a)(4), substituted “designated health service” for “clinical laboratory service”.

Subsec. (h). Puspan. L. 103–66, § 13562(a)(2), amended span and text of subsec. (h) generally, substituting pars. (1) to (6) for former pars. (1) to (7) which defined “compensation arrangement”, “remuneration”, “employee”, “fair market value”, “group practice”, “investor”, “interested investor”, “disinterested investor”, “referral”, and “referring physician”.

1990—Subsec. (span)(4), (5). Puspan. L. 101–508, § 4207(e)(2), formerly § 4027(e)(2), as renumbered by Puspan. L. 103–432, § 160(d)(4), added par. (4) and redesignated former par. (4) as (5).

Subsec. (f). Puspan. L. 101–508, § 4207(e)(3)(B), (C), formerly § 4027(e)(3)(B), (C), as renumbered by Puspan. L. 103–432, § 160(d)(4), substituted “October 1, 1991” for “1 year after December 19, 1989” in third sentence and inserted at end “The requirement of this subsection shall not apply to covered items and services provided outside the United States or to entities which the Secretary determines provides services for which payment may be made under this subchapter very infrequently. The Secretary may waive the requirements of this subsection (and the requirements of chapter 35 of title 44 with respect to information provided under this subsection) with respect to reporting by entities in a State (except for entities providing clinical laboratory services) so long as such reporting occurs in at least 10 States, and the Secretary may waive such requirements with respect to the providers in a State required to report so long as such requirements are not waived with respect to parenteral and enteral suppliers, end stage renal disease facilities, suppliers of ambulance services, hospitals, entities providing physical therapy services, and entities providing diagnostic imaging services of any type.”

Subsec. (f)(2). Puspan. L. 101–508, § 4207(e)(3)(A), formerly § 4027(e)(3)(A), as renumbered by Puspan. L. 103–432, § 160(d)(4), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “the names and all of the medicare provider numbers of the physicians who are interested investors or who are immediate relatives of interested investors.”

Subsec. (g)(5). Puspan. L. 101–508, § 4207(k)(2), formerly § 4027(k)(2), as renumbered by Puspan. L. 103–432, § 160(d)(4), inserted at end “The provisions of section 1320a–7a of this title (other than the first sentence of subsection (a) and other than subsection (span)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1320a–7a(a) of this title.”

Subsec. (h)(6). Puspan. L. 101–508, § 4207(e)(1)(C), formerly § 4027(e)(1)(C), as renumbered by Puspan. L. 103–432, § 160(d)(4), added par. (6). Former par. (6) redesignated (7).

Puspan. L. 101–508, § 4207(e)(1)(A), (B), formerly § 4027(e)(1)(A), (B), as renumbered by Puspan. L. 103–432, § 160(d)(4), substituted “in the case of an item or service for which payment may be made under part B of this subchapter, the request by a physician for the item or service,” for “in the case of a clinical laboratory service which under law is required to be provided by (or under the supervision of) a physician, the request by a physician for the service,” in subpar. (A) and struck out “in the case of another clinical laboratory service,” after “subparagraph (C),” in subpar. (B).

Subsec. (h)(7). Puspan. L. 101–508, § 4207(e)(1)(C), formerly § 4027(e)(1)(C), as renumbered by Puspan. L. 103–432, § 160(d)(4), redesignated par. (6) as (7).

Statutory Notes and Related Subsidiaries

Change of Name

References to Medicare+Choice deemed to refer to Medicare Advantage or MA, subject to an appropriate transition provided by the Secretary of Health and Human Services in the use of those terms, see section 201 of Puspan. L. 108–173, set out as a note under section 1395w–21 of this title.

Effective Date of 2010 Amendment

Puspan. L. 111–148, title VI, § 6003(span), Mar. 23, 2010, 124 Stat. 697, provided that: “The amendment made by this section [amending this section] shall apply to services furnished on or after January 1, 2010.”

Effective Date of 2008 Amendment

Amendment by Puspan. L. 110–275 applicable to services furnished on or after July 1, 2009, see section 143(c) of Puspan. L. 110–275, set out as a note under section 1395k of this title.

Effective Date of 1999 Amendment

Puspan. L. 106–113, div. B, § 1000(a)(6) [title V, § 524(span)], Nov. 29, 1999, 113 Stat. 1536, 1501A–388, provided that: “The amendment made by this section [amending this section] shall apply to services furnished on or after the date of the enactment of this Act [Nov. 29, 1999].”

Effective Date of 1994 Amendment

Puspan. L. 103–432, title I, § 152(d)(1), Oct. 31, 1994, 108 Stat. 4437, provided that: “The amendments made by subsections (a) and (span) [amending this section] shall apply to referrals made on or after January 1, 1995.”

Effective Date of 1993 Amendment

Puspan. L. 103–66, title XIII, § 13562(span), Aug. 10, 1993, 107 Stat. 604, as amended by Puspan. L. 103–432, title I, § 152(c), Oct. 31, 1994, 108 Stat. 4437, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to referrals—

“(A) made on or after January 1, 1992, in the case of clinical laboratory services, and

“(B) made after December 31, 1994, in the case of other designated health services.

“(2)Exceptions.—With respect to referrals made for clinical laboratory services on or before December 31, 1994—

“(A) the second sentence of subsection (a)(2), and subsections (span)(2)(B) and (d)(2), of section 1877 of the Social Security Act [42 U.S.C. 1395nn(a)(2), (span)(2)(B), (d)(2)] (as in effect on the day before the date of the enactment of this Act [Aug. 10, 1993]) shall apply instead of the corresponding provisions in section 1877 (as amended by this Act);

“(B) section 1877(span)(4) of the Social Security Act [42 U.S.C. 1395nn(span)(4)] (as in effect on the day before the date of the enactment of this Act) shall apply;

“(C) the requirements of section 1877(c)(2) of the Social Security Act [42 U.S.C. 1395nn(c)(2)] (as amended by this Act) shall not apply to any securities of a corporation that meets the requirements of section 1877(c)(2) of the Social Security Act (as in effect on the day before the date of the enactment of this Act);

“(D) section 1877(e)(3) of the Social Security Act [42 U.S.C. 1395nn(e)(3)] (as amended by this Act) shall apply, except that it shall not apply to any arrangement that meets the requirements of subsection (e)(2) or subsection (e)(3) of section 1877 of the Social Security Act (as in effect on the day before the date of the enactment of this Act);

“(E) the requirements of clauses (iv) and (v) of section 1877(h)(4)(A), and of clause (i) of section 1877(h)(4)(B), of the Social Security Act [42 U.S.C. 1395nn(h)(4)(A)(iv), (v), (B)(i)] (as amended by this Act) shall not apply; and

“(F) section 1877(h)(4)(B) of the Social Security Act [42 U.S.C. 1395nn(h)(4)(B)] (as in effect on the day before the date of the enactment of this Act) shall apply instead of section 1877(h)(4)(A)(ii) of such Act (as amended by this Act).”

[Puspan. L. 103–432, title I, § 152(d)(2), Oct. 31, 1994, 108 Stat. 4437, provided that: “The amendment made by subsection (c) [amending section 13562(span) of Puspan. L. 103–66, set out above] shall apply as if included in the enactment of OBRA–1993 [Puspan. L. 103–66].”]

Effective Date of 1990 Amendment

Puspan. L. 101–508, title IV, § 4207(e)(5), formerly § 4027(e)(5), Nov. 5, 1990, 104 Stat. 1388–123, as renumbered by Puspan. L. 103–432, title I, § 160(d)(4), Oct. 31, 1994, 108 Stat. 4444, provided that: “The amendments made by this subsection [amending this section and provisions set out below] shall be effective as if included in the enactment of section 6204 of the Omnibus Budget Reconciliation Act of 1989 [Puspan. L. 101–239].”

Effective Date

Puspan. L. 101–239, title VI, § 6204(c), Dec. 19, 1989, 103 Stat. 2242, provided that:

“(1) Except as provided in paragraph (2), the amendments made by this section [enacting this section and amending section 1395l of this title] shall become effective with respect to referrals made on or after January 1, 1992.

“(2) The reporting requirement of section 1877(f) of the Social Security Act [42 U.S.C. 1395nn(f)] shall take effect on October 1, 1990.”

Deadline for Certain Regulations

Puspan. L. 101–239, title VI, § 6204(d), Dec. 19, 1989, 103 Stat. 2242, as amended by Puspan. L. 101–508, title IV, § 4207(e)(4)(B), formerly § 4027(e)(4)(B), Nov. 5, 1990, 104 Stat. 1388–122, renumbered Puspan. L. 103–432, title I, § 160(d)(4), Oct. 31, 1994, 108 Stat. 4444, provided that: “The Secretary of Health and Human Services shall publish final regulations to carry out section 1877 of the Social Security Act [42 U.S.C. 1395nn] by not later than October 1, 1991.”

Enforcement

Puspan. L. 111–148, title VI, § 6001(span), Mar. 23, 2010, 124 Stat. 689, as amended by Puspan. L. 111–148, title X, § 10601(span), Mar. 23, 2010, 124 Stat. 1005, provided that:

“(1)Ensuring compliance.—The Secretary of Health and Human Services shall establish policies and procedures to ensure compliance with the requirements described in subsection (i)(1) of section 1877 of the Social Security Act [42 U.S.C. 1395nn(i)(1)], as added by subsection (a)(3), beginning on the date such requirements first apply. Such policies and procedures may include unannounced site reviews of hospitals.

“(2)Audits.—Beginning not later than May 1, 2012, the Secretary of Health and Human Services shall conduct audits to determine if hospitals violate the requirements referred to in paragraph (1).”

Medicare Self-Referral Disclosure Protocol

Puspan. L. 111–148, title VI, § 6409, Mar. 23, 2010, 124 Stat. 772, provided that:

“(a)Development of Self-Referral Disclosure Protocol.—

“(1)In general.—The Secretary of Health and Human Services, in cooperation with the Inspector General of the Department of Health and Human Services, shall establish, not later than 6 months after the date of the enactment of this Act [Mar. 23, 2010], a protocol to enable health care providers of services and suppliers to disclose an actual or potential violation of section 1877 of the Social Security Act (42 U.S.C. 1395nn) pursuant to a self-referral disclosure protocol (in this section referred to as an ‘SRDP’). The SRDP shall include direction to health care providers of services and suppliers on—

“(A) a specific person, official, or office to whom such disclosures shall be made; and

“(B) instruction on the implication of the SRDP on corporate integrity agreements and corporate compliance agreements.

“(2)Publication on internet website of srdp information.—The Secretary of Health and Human Services shall post information on the public Internet website of the Centers for Medicare & Medicaid Services to inform relevant stakeholders of how to disclose actual or potential violations pursuant to an SRDP.

“(3)Relation to advisory opinions.—The SRDP shall be separate from the advisory opinion process set forth in regulations implementing section 1877(g) of the Social Security Act [42 U.S.C. 1395nn(g)].

“(span)Reduction in Amounts Owed.—The Secretary of Health and Human Services is authorized to reduce the amount due and owing for all violations under section 1877 of the Social Security Act [42 U.S.C. 1395nn] to an amount less than that specified in subsection (g) of such section. In establishing such amount for a violation, the Secretary may consider the following factors:

“(1) The nature and extent of the improper or illegal practice.

“(2) The timeliness of such self-disclosure.

“(3) The cooperation in providing additional information related to the disclosure.

“(4) Such other factors as the Secretary considers appropriate.

“(c)Report.—Not later than 18 months after the date on which the SRDP protocol is established under subsection (a)(1), the Secretary shall submit to Congress a report on the implementation of this section. Such report shall include—

“(1) the number of health care providers of services and suppliers making disclosures pursuant to the SRDP;

“(2) the amounts collected pursuant to the SRDP;

“(3) the types of violations reported under the SRDP; and

“(4) such other information as may be necessary to evaluate the impact of this section.”

Application of Exception for Hospitals Under Development

Puspan. L. 108–173, title V, § 507(span), Dec. 8, 2003, 117 Stat. 2296, provided that: “For purposes of section 1877(h)(7)(B)(i)(II) of the Social Security Act [42 U.S.C. 1395nn(h)(7)(B)(i)(II)], as added by subsection (a)(1)(B), in determining whether a hospital is under development as of November 18, 2003, the Secretary [of Health and Human Services] shall consider—

“(1) whether architectural plans have been completed, funding has been received, zoning requirements have been met, and necessary approvals from appropriate State agencies have been received; and

“(2) any other evidence the Secretary determines would indicate whether a hospital is under development as of such date.”

Studies

Puspan. L. 108–173, title V, § 507(c), Dec. 8, 2003, 117 Stat. 2296, provided that:

“(1)MedPAC study.—The Medicare Payment Advisory Commission, in consultation with the Comptroller General of the United States, shall conduct a study to determine—

“(A) any differences in the costs of health care services furnished to patients by physician-owned specialty hospitals and the costs of such services furnished by local full-service community hospitals within specific diagnosis-related groups;

“(B) the extent to which specialty hospitals, relative to local full-service community hospitals, treat patients in certain diagnosis-related groups within a category, such as cardiology, and an analysis of the selection;

“(C) the financial impact of physician-owned specialty hospitals on local full-service community hospitals;

“(D) how the current diagnosis-related group system should be updated to better reflect the cost of delivering care in a hospital setting; and

“(E) the proportions of payments received, by type of payer, between the specialty hospitals and local full-service community hospitals.

“(2) HHS study.—The Secretary [of Health and Human Services] shall conduct a study of a representative sample of specialty hospitals—

“(A) to determine the percentage of patients admitted to physician-owned specialty hospitals who are referred by physicians with an ownership interest;

“(B) to determine the referral patterns of physician owners, including the percentage of patients they referred to physician-owned specialty hospitals and the percentage of patients they referred to local full-service community hospitals for the same condition;

“(C) to compare the quality of care furnished in physician-owned specialty hospitals and in local full-service community hospitals for similar conditions and patient satisfaction with such care; and

“(D) to assess the differences in uncompensated care, as defined by the Secretary, between the specialty hospital and local full-service community hospitals, and the relative value of any tax exemption available to such hospitals.

“(3)Reports.—Not later than 15 months after the date of the enactment of this Act [Dec. 8, 2003], the Commission and the Secretary, respectively, shall each submit to Congress a report on the studies conducted under paragraphs (1) and (2), respectively, and shall include any recommendations for legislation or administrative changes.”

GAO Study of Ownership by Referring Physicians

Puspan. L. 101–239, title VI, § 6204(e), Dec. 19, 1989, 103 Stat. 2242, directed Comptroller General to conduct a study of ownership of hospitals and other providers of medicare services by referring physicians and, by not later than Fespan. 1, 1991, report to Congress on results of such study, prior to repeal by Puspan. L. 104–316, title I, § 122(h)(1), Oct. 19, 1996, 110 Stat. 3837.

Statistical Summary of Comparative Utilization

Puspan. L. 101–239, title VI, § 6204(f), Dec. 19, 1989, 103 Stat. 2243, as amended by Puspan. L. 101–508, title IV, § 4207(e)(4)(A), formerly § 4027(e)(4)(A), Nov. 5, 1990, 104 Stat. 1388–122, renumbered Puspan. L. 103–432, title I, § 160(d)(4), Oct. 31, 1994, 108 Stat. 4444; Puspan. L. 104–316, title I, § 122(h)(2), Oct. 19, 1996, 110 Stat. 3837, directed Secretary of Health and Human Services, not later than June 30, 1992, to submit to Congress a statistical profile comparing utilization of items and services by medicare beneficiaries served by entities in which the referring physician has a direct or indirect financial interest and by medicare beneficiaries served by other entities, for the States and entities specified in subsec. (f) of this section (other than entities providing clinical laboratory services).