2023 New York Laws › PBH - Public Health › Article 2 - The Department of Health › Title 2-D - Health Care Practitioner Referrals › 238-A - Prohibition of Financial Arrangements and Referrals.

§  238-a. Prohibition of financial arrangements and referrals.  1. (a)
A  practitioner  authorized  to  order  clinical  laboratory   services,
pharmacy services, radiation therapy services, physical therapy services
or  x-ray  or imaging services may not make a referral for such services
to a health care provider authorized to provide such services where such
practitioner or immediate family  member  of  such  practitioner  has  a
financial relationship with such health care provider.
(b) A health care provider or a referring practitioner may not present
or cause to be presented to any individual or third party payor or other
entity  a  claim,  bill,  or  other  demand  for  payment  for  clinical
laboratory services,  pharmacy  services,  radiation  therapy  services,
physical  therapy  services  or  x-ray  or  imaging  services  furnished
pursuant to a referral prohibited by this subdivision.
2. Subdivision one of this section shall  not  apply  in  any  of  the
following cases:
(a)  practitioners'  services - in the case of practitioners' services
provided  personally  by,  or  under   the   supervision   of,   another
practitioner in the same group practice as the referring practitioner;
(b)  in-office  ancillary  services  - in the case of health or health
related items or services (i)  that  are  furnished  personally  by  the
referring  practitioner, personally by a practitioner who is a member of
the same group practice as the referring practitioner, or personally  by
individuals  who are employed by such practitioner or group practice and
who are supervised by the practitioner or by another practitioner in the
group practice; and in a building in which the  referring  practitioner,
or  another  practitioner  who  is  a member of the same group practice,
furnishes practitioners' services unrelated to the  furnishing  of  such
items  or  services, or in the case of a referring practitioner who is a
member of a group practice, in another building which  is  used  by  the
group  practice  for the centralized provision of such items or services
of the group; and (ii) that are billed by the practitioner performing or
supervising the services, by a group practice of which such practitioner
is a member, or by an entity that is wholly owned by  such  practitioner
or such group practice;
(c)  in  the  case  of  health  or  health  related  items or services
furnished to subscribers of a health maintenance organization  operating
pursuant  to  article  forty-three  of  the  insurance  law  or  article
forty-four of this chapter,  participants  in  a  managed  care  program
operating  pursuant  to section three hundred sixty-four-j of the social
services law or persons enrolled  in  a  prepaid  health  services  plan
authorized by law;
(d)  in  the  case  of  a  referral  for  inpatient hospital services,
including services by  hospital  staff  practitioners  provided  in  the
hospital;
(e)  in  the case of a referral of a hospital inpatient, outpatient or
emergency services patient for clinical  laboratory  services,  pharmacy
services, radiation therapy services, physical therapy services or x-ray
or  imaging  services  provided  by  the hospital, including services by
hospital staff practitioners provided in the hospital;
(f) in the case of a financial relationship with a general hospital if
the financial relationship does not relate specifically to the provision
of clinical laboratory services, pharmacy  services,  radiation  therapy
services,  physical  therapy  services  or x-ray or imaging services for
which the referral was made; and
(g) in the case of any other financial relationship which  the  public
health  council  determines  and  specifies  in  regulations, subject to
approval by the commissioner, does not pose a substantial risk of  payor
or  patient  abuse  in  relation  to patient benefits consistent, to the

extent  practicable,   with   financial   relationships   specified   in
regulations  adopted pursuant to federal law applicable to reimbursement
pursuant to title XVIII of the federal social  security  act  (medicare)
for  clinical  laboratory  services  provided  to beneficiaries of title
XVIII of the federal social security act (medicare).
3. For the purposes of this  section,  an  ownership  interest  or  an
investment interest:
(a) may be through equity, debt or other means; but
(b)  shall  not  include ownership of investment securities, including
shares or bonds, debentures, notes or other debt instruments, which were
purchased on terms generally available to the public and which are in  a
corporation that is listed for trading on the New York stock exchange or
on  the American stock exchange, or is a national market system security
traded under an automated interdealer quotation system operated  by  the
national  association  of securities dealers, and had, at the end of the
corporation's most  recent  fiscal  year,  total  assets  exceeding  one
hundred  million  dollars  or  to  the  extent  such  ownership would be
permitted by federal law or regulation if  the  services  rendered  were
clinical laboratory services provided to beneficiaries of title XVIII of
the federal social security act (medicare).
4.  An  ownership  interest  or  an  investment  interest shall not be
subject to subdivision one of this section if:
(a) the health care provider authorized to provide clinical laboratory
services,  pharmacy  services,  radiation  therapy  services,   physical
therapy services or x-ray or imaging services is in a rural area and the
referring practitioner or the patient is in such rural area; or
(b)  the  clinical  laboratory  services, pharmacy services, radiation
therapy services, physical therapy services or x-ray or imaging services
are provided by  a  general  hospital,  the  referring  practitioner  is
authorized  to  perform  services  at  such  general  hospital  and  the
ownership or investment interest is in the general hospital  itself  and
not merely in a subdivision thereof; or
(c)  the  clinical  laboratory  services, pharmacy services, radiation
therapy services, physical therapy services or x-ray or imaging services
are provided by  an  ambulatory  surgical  center  issued  an  operating
certificate   pursuant  to  article  twenty-eight  of  this  chapter  in
conjunction  with  a  surgical  procedure  performed  by  the  referring
practitioner at the ambulatory surgical center;
(d) and if each practitioner who is an interested investor in a health
care  provider  within a category specified in paragraph (a), (b) or (c)
of this subdivision and who makes a referral of a patient to such health
care provider discloses to the patient, in a brief and  reasonable  form
and  manner  specified in regulations proposed by the commissioner after
consultation   with   representatives   of   consumer   and    physician
organizations  and  adopted  by  the  public  health council, subject to
approval by the commissioner, the  practitioner's,  or  family  member's
ownership  interest  or  investment interest in the health care provider
and the patient's right to utilize a specifically identified alternative
health care provider if any such alternative is reasonably available.
5. (a) For the purposes of this section,  a  compensation  arrangement
means any arrangement involving any remuneration between a practitioner,
or  immediate  family  member,  and  a  health  care  provider. The term
remuneration includes any remuneration, directly or indirectly,  overtly
or covertly, in cash or in kind.
(b)  For the purposes of this section a compensation arrangement shall
not include:
(i) payments made for the rental or lease  of  office  space,  if  (A)
there  is  a written agreement, signed by the parties, for the rental or

lease of the space, which agreement specifies the space covered  by  the
agreement  and  dedicated for the use of the lessee, provides for a term
of rental or lease of at least one year, provides for  a  payment  on  a
periodic  basis  of an amount that is consistent with fair market value,
provides for an  amount  of  aggregate  payments  that  does  not  vary,
directly or indirectly, based on the volume or value of any referrals of
business between the parties, and would be considered to be commercially
reasonable even if no referrals were made between the parties; or (B) in
the  case of rental or lease of office space in which a practitioner who
is an interested investor, or an interested investor who is an immediate
family member of  the  practitioner,  has  an  ownership  or  investment
interest,  the  office  space is in the same building as the building in
which the practitioner or group practice of which the practitioner is  a
member has a practice;
(ii)  an arrangement between a general hospital and a practitioner, or
immediate family member, for the  employment  of  the  practitioner,  or
immediate   family  member,  or  for  the  provision  of  administrative
services, if the arrangement is for identifiable services, the amount of
remuneration under the arrangement is consistent with  the  fair  market
value  of  the  services, the remuneration is not determined in a manner
that takes into account, directly or indirectly, the volume or value  of
any  referrals  by  the  referring practitioner and such remuneration is
provided pursuant to an agreement which would be commercially reasonable
even if no referrals were made to the general hospital;
(iii) an arrangement between a  health  care  provider  other  than  a
general  hospital  and  a  practitioner  if  (A)  the arrangement is for
specific identifiable services as the medical director or as a member of
a medical advisory board at  the  provider,  for  specific  identifiable
practitioner services to be furnished to an individual receiving hospice
care  payable  as  hospice  care,  for  specific practitioners' services
furnished to a non-profit blood center,  or  for  specific  identifiable
administrative  services,  other  than direct patient care services, but
only under exceptional circumstances; and (B) the amount of remuneration
under the arrangement is consistent with the fair market  value  of  the
services, the remuneration is not determined in a manner that takes into
account, directly or indirectly, the volume or value of any referrals by
the referring practitioner and such remuneration is provided pursuant to
an agreement which would be commercially reasonable even if no referrals
were made;
(iv)  remuneration  which  is  provided  by  a  general  hospital to a
practitioner to induce the practitioner to relocate  to  the  geographic
area  served  by  the  general  hospital  in order to be a member of the
medical staff of  the  general  hospital  if  the  practitioner  is  not
required  to  refer  patients  to  the  hospital  and  the amount of the
remuneration under the arrangement is not determined in  a  manner  that
takes  into  account  directly  or indirectly the volume or value of any
referrals by the referring practitioner;
(v) an isolated financial transaction, such  as  a  one-time  sale  of
property,  if  the  amount  of  remuneration  under  the  arrangement is
consistent  with  the  fair  market  value,  the  remuneration  is   not
determined  in a manner that takes into account, directly or indirectly,
the volume or value of any referrals by the referring  practitioner  and
such  remuneration  is  provided pursuant to an agreement which would be
commercially reasonable even if no referrals were made;
(vi) a compensation arrangement involving payment by a group  practice
of the salary of a practitioner member of the group practice;
(vii) and provided that any arrangement specified in subparagraphs (i)
through  (vi)  of  this  paragraph  meets such other requirements as the

public health council may impose by regulation, subject to  approval  by
the  commissioner,  as  needed to protect against payor or patient abuse
consistent with requirements imposed by regulations adopted pursuant  to
federal  law  applicable to reimbursement pursuant to title XVIII of the
federal social security act (medicare) for clinical laboratory  services
provided  to beneficiaries of title XVIII of the federal social security
act (medicare);
(viii) an arrangement between a health care provider and an  immediate
family  member  of  a  practitioner  for the employment of the immediate
family member which the commissioner determines on  application  by  the
parties  does  not  pose a substantial risk of payor or patient abuse in
relation to  patient  benefits  subject  to  such  requirements  as  the
commissioner  shall  determine necessary to protect the public interest,
and  which  for  a  clinical  laboratory  that  provides   services   to
beneficiaries  to  title  XVIII  of  the  federal  social  security  act
(medicare) qualifies for an exception  from  the  prohibitions  on  such
compensation  arrangements  for  purposes  of  reimbursement of clinical
laboratory services pursuant  to  title  XVIII  of  the  federal  social
security act (medicare). Such application shall be in a form and content
specified by the commissioner after consultation with representatives of
consumer  and  physician organizations. The commissioner shall make such
determination within sixty days of receipt of a complete application.
6. For the purposes of this title:
(a) in the case of clinical laboratory  services,  pharmacy  services,
radiation  therapy  services,  physical  therapy  services  or  x-ray or
imaging services, the request  by  a  practitioner  for  such  services,
including  the request by a practitioner for a consultation with another
practitioner, and any test or procedure ordered by, or to  be  performed
by or under the supervision of that other practitioner, shall constitute
a referral by a referring practitioner; and
(b)  in  the  case of clinical laboratory services, pharmacy services,
radiation therapy  services,  physical  therapy  services  or  x-ray  or
imaging  services,  the  request or establishment of a plan of care by a
practitioner  which  includes  the  provision  of  clinical   laboratory
services,   pharmacy  services,  radiation  therapy  services,  physical
therapy services  or  x-ray  or  imaging  services  shall  constitute  a
referral by a referring practitioner;
(c) provided further, however, that the following shall not constitute
a referral by a referring practitioner:
(i) a request by a practitioner for practitioners' services consisting
solely  of  professional  services  to  be  furnished personally by that
practitioner, or under that practitioner's supervision;
(ii) a request by a pathologist  for  clinical  diagnostic  laboratory
tests  and  pathological  examination  services,  if  such  services are
furnished by or under the supervision of such pathologist pursuant to  a
consultation requested by another practitioner; and
(iii)  a  request  by  a  radiologist  for diagnostic x-ray or imaging
services, if such services are furnished by or under the supervision  of
such  radiologist  pursuant  to  a  consultation  requested  by  another
practitioner.
7. If a referring practitioner or a health  care  provider  furnishing
clinical  laboratory  services,  pharmacy  services,  radiation  therapy
services, physical therapy services or x-ray or imaging services or  any
other  person  or  entity  collects  any  amounts  that  were  billed in
violation of this section, such referring practitioner and  health  care
provider  and  other  person  or  entity  shall be jointly and severally
liable to the payor for any amounts so collected.
8. Each health care provider furnishing clinical laboratory  services,
pharmacy services, radiation therapy services, physical therapy services
or x-ray or imaging services shall submit such information as reasonably
may be required by the department for purposes of this title.
9.  Subdivision  one  of this section shall apply to an arrangement or
scheme, such as a cross-referral arrangement, which the practitioner  or
health  care  provider  knows  or should know has a principal purpose of
assuring referrals by the practitioner for clinical laboratory services,
pharmacy services, radiation therapy services, physical therapy services
or x-ray or imaging services to a particular health care provider which,
if  the  practitioner  directly  made  referrals  to  such  health  care
provider, would be in violation of subdivision one of this section.
10.  The  public  health  council  shall  adopt rules and regulations,
subject to approval by the commissioner,  necessary  to  effectuate  the
provisions and purposes of this title.