182
(b) CONFORMING AMENDMENTS.—Section 1877 of
such Act is further amended—
(1) in subsection (d)(2), by striking ‘‘labora-
tory’’ and inserting ‘‘entity’’,
(2) in subsection (g)(1), by striking ‘‘clinical
laboratory service’’ and inserting ‘‘designated health
service’’, and
(3) in subsection (h)(7)(B), by striking ‘‘clinical
laboratory service’’ and inserting ‘‘designated health
service’’.
SEC. 353. CHANGES IN EXCEPTIONS AND OTHER PROVI-
SIONS RELATING TO COMPENSATION AR-
RANGEMENTS.
(a) MULTIPLE
LOCATIONS
FOR
GROUP
PRAC-
TICES.—Section 1877(b)(2)(A)(ii)(II) of the Social Secu-
rity Act is amended by striking ‘‘centralized provision’’
and inserting ‘‘provision of some or all’’.
(b) TREATMENT
OF
COMPENSATION
ARRANGE-
MENTS.—
(1) RENTAL
OF
OFFICE
SPACE
AND
EQUIP-
MENT.—Paragraph (1) of section 1877(e) of such
Act is amended to read as follows:
‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF
EQUIPMENT.—
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‘‘(A) OFFICE SPACE.—Payments made by
a lessee to a lessor for the use of premises if—
‘‘(i) the lease is set out in writing,
signed by the parties, and specifies the
premises covered by the lease,
‘‘(ii) the aggregate space rented or
leased is reasonable and necessary for the
legitimate business purposes of the lease or
rental,
‘‘(iii) the lease provides for a term of
rental or lease for at least one year,
‘‘(iv) in the case of a lease that is in-
tended to provide the lessee with access to
the premises for periodic intervals of time,
rather than on a full-time basis, the lease
specifies exactly the schedule of such inter-
vals, their length, and the rent for such in-
tervals,
‘‘(v) the rental charges over the term
of the lease are set in advance, are consist-
ent with fair market value, and are not de-
termined in a manner that takes into ac-
count the volume or value of any referrals
or other business generated between the
parties,
184
‘‘(vi) the lease would be commercially
reasonable even if no referrals were made
between the parties, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.
‘‘(B) EQUIPMENT.—Payments made by a
lessee of equipment to the lessor of the equip-
ment for the use of the equipment if—
‘‘(i) the lease is set out in writing,
signed by the parties, and specifies the
equipment covered by the lease,
‘‘(ii) the equipment rented or leased is
reasonable and necessary for the legitimate
business purposes of the lease or rental,
‘‘(iii) the lease provides for a term of
rental or lease of at least one year,
‘‘(iv) in the case of a lease that is in-
tended to provide the lessee with use of the
equipment for periodic intervals of time,
rather than on a full-time basis, the lease
specifies exactly the schedule of such inter-
185
vals, their length, and the rent for such in-
tervals,
‘‘(v) the rental charges over the term
of the lease are set in advance, are consist-
ent with fair market value, and are not de-
termined in a manner that takes into ac-
count the volume or value of any referrals
or other business generated between the
parties,
‘‘(vi) the lease would be commercially
reasonable even if no referrals were made
between the parties, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.’’.
(2) BONA
FIDE
EMPLOYMENT
RELATION-
SHIPS.—Paragraph (2) of such section is amended—
(A) by striking ‘‘WITH HOSPITALS’’,
(B) by striking ‘‘An arrangement’’ and all
that follows through ‘‘if’’ and inserting ‘‘Any
amount paid by an employer to an employee
who has a bona fide employment relationship
with the employer for employment, or paid by
186
a hospital pursuant to an arrangement with a
physician (or immediate family member) for the
provision of administrative services, if’’,
(C) in subparagraphs (A), (B), and (D), by
striking ‘‘arrangement’’ and inserting ‘‘employ-
ment relationship or arrangement’’, and
(D) in subparagraph (C), by striking ‘‘to
the hospital’’.
(3) 
ADDITIONAL
EXCEPTIONS.—Such 
sub-
section is further amended by adding at the end the
following new paragraphs:
‘‘(7) PAYMENTS TO A PHYSICIAN FOR OTHER
ITEMS OR SERVICES.—
‘‘(A) IN GENERAL.—Payments made by an
entity to a physician (or family member) who is
not employed by the entity as compensation for
services specified in subparagraph (B), if—
‘‘(i) the compensation agreement is
set out in writing and specifies the services
to be provided by the parties, the com-
pensation for each unit of service provided
under the agreement, and the schedule for
the provision of such services,
‘‘(ii) the compensation paid over the
term of the agreement is consistent with