Group Practice DHS Revenue Allocation under the Stark Law

The latest phase of the Stark Law, known as Stark III, does not alter the basic premise that a group practice can pay a physician a share of overall profits or a productivity bonus provided that such share or bonus is not based on the volume or value of Designated Health Services (DHS) referrals by the physician.


Under Stark III, allocation of DHS revenue is deemed not to be based on the volume or value of DHS referrals, i.e. is permissible, only on certain limited bases, including per capita (i.e., in equal shares), or in accordance with production if DHS revenues are less than 5% of the group’s total revenue and less than 5% of each physician’s total compensation.   Special rules apply for productivity bonuses.


It is also vital to note that Stark III retains the requirement that allocation be done according to a methodology set down in advance.  Compensation methodology can always be changed prospectively, but not retroactively under Stark.


   © 2008 Parsonage Vandenack Williams LLC

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