‘‘(iii) A payment made by an insurer or a
self-insured plan to a physician to satisfy a
claim, submitted on a fee for service basis, for
the furnishing of health services by that physi-
cian 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 fur-
nished, and the payment is not made, pur-
suant to a contract or other arrangement
between the insurer or the plan and the
physician,
‘‘(II) the payment is made to the phy-
sician on behalf of the covered individual
and would otherwise be made directly to
such individual,
‘‘(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 indi-
rectly the volume or value of any referrals,
and
‘‘(IV) the payment meets such other
requirements as the Secretary may impose
by regulation as needed to protect against
program or patient abuse.
‘‘(2) EMPLOYEE.—An individual is considered
to be ‘employed by’ or an ‘employee’ of an entity if
the individual would be considered to be an employee
of the entity under the usual common law rules ap-
plicable in determining the employer-employee rela-
tionship (as applied for purposes of section
3121(d)(2) of the Internal Revenue Code of 1986).
‘‘(3) FAIR
MARKET
VALUE.—The term ‘fair
market value’ means the value in arms length trans-
actions, consistent with the general market value,
and, with respect to rentals or leases, the value of
rental property for general commercial purposes (not
taking into account its intended use) and, in the
case of a lease of space, not adjusted to reflect the
additional value the prospective lessee or lessor
would attribute to the proximity or convenience to
the lessor where the lessor is a potential source of
patient referrals to the lessee.
‘‘(4) GROUP PRACTICE.—
‘‘(A) DEFINITION OF GROUP PRACTICE.—
The term ‘group practice’ means a group of 2
or more physicians legally organized as a part-
nership, professional corporation, foundation,
not-for-profit corporation, faculty practice plan,
or similar association—
‘‘(i) in which each physician who is a
member of the group provides substantially
the full range of services which the physi-
cian routinely provides, including medical
care, consultation, diagnosis, or treatment,
through the joint use of shared office
space, facilities, equipment and personnel,
‘‘(ii) for which substantially all of the
services of the physicians who are members
of the group are provided through the
group and are billed under a billing num-
ber assigned to the group and amounts so
received are treated as receipts of the
group,
‘‘(iii) in which the overhead expenses
of and the income from the practice are
distributed in accordance with methods
previously determined,
‘‘(iv) except as provided in subpara-
graph (B)(i), in which no physician who is
a member of the group directly or indi-
rectly receives compensation based on the
volume or value of referrals by the physi-
cian,
‘‘(v) in which members of the group
personally conduct no less than 75 percent
of the physician-patient encounters of the
group practice, and
‘‘(vi) which meets such other stand-
ards as the Secretary may impose by regu-
lation.
‘‘(B) SPECIAL RULES.—
‘‘(i) PROFITS AND PRODUCTIVITY BO-
NUSES.—A physician in a group practice
may be paid a share of overall profits of
the group, or a productivity bonus based
on services personally performed or serv-
ices incident to such personally performed
services, so long as the share or bonus is
not determined in any manner which is di-
rectly related to the volume or value of re-
ferrals by such physician.
‘‘(ii) FACULTY PRACTICE PLANS.—In
the case of a faculty practice plan associ-
ated with a hospital, institution of higher
education, or medical school with an ap-
proved medical residency training program
in which physician members may provide a
variety of different specialty services and
provide professional services both within
and outside the group, as well as perform
other tasks such as research, subparagraph
(A) shall be applied only with respect to
the services provided within the faculty
practice plan.
‘‘(5) REFERRAL; REFERRING PHYSICIAN.—
‘‘(A) PHYSICIANS’ SERVICES.—Except as
provided in subparagraph (C), in the case of an
item or service for which payment may be made
under part B, the request by a physician for the
item or service, including the request by a phy-
sician for a consultation with another physician
(and any test or procedure ordered by, or to be
performed by (or under the supervision of) that
other physician), constitutes a ‘referral’ by a
‘referring physician’.
‘‘(B) OTHER ITEMS.—Except as provided
in subparagraph (C), the request or establish-
ment of a plan of care by a physician which in-
cludes the provision of the designated health
service constitutes a ‘referral’ by a ‘referring
physician’.