vestigations showing that urology groups owning ra-
diation therapy machines have utilization rates that 
rise quickly and are well above national norms for 
radiation therapy treatment of prostate cancer. 
(12) According to a 2010 MedPAC report, only 
3 percent of outpatient physical therapy services 
were provided on the same day as an office visit, 
only 9 percent within 7 days of an office visit, and 
only 14 percent within 14 days of an office visit. 
These services are not integral to the physician’s ini-
tial diagnosis and do not improve patient conven-
ience because patients must return for physical ther-
apy treatments. 
(13) Those services intended to be covered 
under the IOAS exception are not affected by this 
legislation. 
(14) The exception to the ownership or invest-
ment prohibition for rural providers in the ‘‘Stark’’ 
rule is not affected by this legislation. 
(b) PURPOSES.—The purposes of this Act are the fol-
lowing: 
(1) Maintain the in-office ancillary services ex-
ception and preserve its original intent by removing 
certain complex services from the exception—specifi-
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cally, advanced imaging, anatomic pathology, radi-
ation therapy, and physical therapy. 
(2) Protect patients from misaligned provider 
financial incentives. 
(3) Protect Medicare resources by saving bil-
lions of dollars. 
(4) Accomplish the purposes described in para-
graphs (1), (2), and (3) in a manner that does not 
alter the existing exception to the ownership or in-
vestment prohibition for rural providers. 
SEC. 3. LIMITATION ON APPLICATION OF PHYSICIANS’ 
SERVICES AND IN-OFFICE ANCILLARY SERV-
ICES EXCEPTIONS. 
(a) IN GENERAL.—Section 1877(b) of the Social Se-
curity Act (42 U.S.C. 1395nn(b)) is amended— 
(1) in paragraph (1), by inserting ‘‘, other than 
specified non-ancillary services,’’ after ‘‘section 
1861(q))’’; and 
(2) in paragraph (2), by inserting ‘‘, specified 
non-ancillary services,’’ after ‘‘(excluding infusion 
pumps)’’. 
(b) INCREASE OF CIVIL MONEY PENALTIES.—Sec-
tion 1877(g) of the Social Security Act (42 U.S.C. 
1395nn(g)) is amended— 
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(1) in paragraph (3), by inserting ‘‘, unless 
such bill or claim included a bill or claim for a speci-
fied non-ancillary service, in which case the civil 
money penalty shall be not more than $25,000 for 
each such service’’ before the period at the end of 
the first sentence; and 
(2) in paragraph (4), by inserting ‘‘(or 
$150,000 if such referrals are for specified non-an-
cillary services)’’ after ‘‘$100,000’’. 
(c) ENHANCED SCREENING
OF CLAIMS.—Section 
1877(g) of the Social Security Act (42 U.S.C. 1395nn(g)) 
is further amended by adding at the end the following new 
paragraph: 
‘‘(7) COMPLIANCE
REVIEW
FOR
SPECIFIED 
NON-ANCILLARY SERVICES.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this 
paragraph, the Secretary, in consultation with 
the Inspector General of the Department of 
Health and Human Services, shall review com-
pliance with subsection (a)(1) with respect to 
referrals for specified non-ancillary services in 
accordance with procedures established by the 
Secretary. 
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‘‘(B) FACTORS IN COMPLIANCE REVIEW.— 
Such procedures— 
‘‘(i) shall, for purposes of targeting 
types of entities that the Secretary deter-
mines represent a high risk of noncompli-
ance with subsection (a)(1) with respect to 
such billing for such specified non-ancillary 
services, apply different levels of review 
based on such type; and 
‘‘(ii) may include prepayment reviews, 
claims audits, focused medical review, com-
puter algorithms designed to identify pay-
ment or billing anomalies.’’. 
(d) DEFINITION
OF
SPECIFIED
NON-ANCILLARY 
SERVICES.—Section 1877(h) of the Social Security Act 
(42 U.S.C. 1395nn(h)) is amended by adding at the end 
the following new paragraph: 
‘‘(8) SPECIFIED
NON-ANCILLARY
SERVICES.— 
The term ‘specified non-ancillary service’ means a 
service that the Secretary has determined is not usu-
ally provided and completed during an office visit to 
a physician’s office in which the service is deter-
mined to be necessary, and includes the following: 
‘‘(A) Anatomic pathology services, as de-
fined by the Secretary and including the tech-
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nical or professional component of the fol-
lowing: 
‘‘(i) Surgical pathology. 
‘‘(ii) Cytopathology. 
‘‘(iii) Hematology. 
‘‘(iv) Blood banking. 
‘‘(v) Pathology consultation and clin-
ical laboratory interpretation services. 
‘‘(B) Radiation therapy services and sup-
plies, as defined by the Secretary. 
‘‘(C) Advanced diagnostic imaging studies 
(as defined in section 1834(e)(1)(B)). 
‘‘(D) Physical therapy services (as de-
scribed in paragraph (6)(B)).’’. 
(e) CONSTRUCTION.—Nothing in this section (or the 
amendments made by this section) shall be construed to 
affect the authority of the Secretary of Health and Human 
Services to waive the requirements imposed under the pro-
visions of this section (or such amendments) under section 
1899 of the Social Security Act (42 U.S.C. 1395jjj). 
(f) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (b) shall apply to items and services 
furnished on or after the first day of the first month be-
ginning more than 12 months after the date of the enact-
ment of this Act. 
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