Academy Seeks Clarification on Stark Rule Involving Independent Contractors Making House Calls in a Group Practice

April 2002

By: C. Gresham Bayne, MD

The publication on January 4, 2001 of the final Stark rules provided clear guidance as to many of the existing controversies regarding the proper employment structure for a mobile physician practice. The document clearly defined the terms for a group practice and reassignment of benefits, including an important modifier for the "same building" rule. A group practice physician may be either a W-2 "member of the group" or a 1099 "physician in the group," but must provide essentially all of their services "in the building."

So that this requirement would not preclude organizations of physicians who make house calls, the Federal Register in 66 FR 856 declared that "a home care physician meets these same building tests if his or her principal medical practice consists of treating patients in their private homes (for purposes of determining whether a physician is principally a home care physician, private homes do not include nursing, long-term care, or other facilities)..."

In 66 FR 894, CMS officials discussed the confusion around supervision rules with regard to anti-kickback provisions in the absence of "no billing method applicable to supervising independent contractor physicians who are "physicians in the group"…but who are not members of the group." They go on to state "we believe the Congress intended the billing requirements of section [1877(b)(2)(B) of the Act to correspond with the supervision requirements of section [1877(b)(2)(a)(i) of the Act and that this omission was simply a legislative drafting oversight. Accordingly, we are interpreting the billing requirements to be consistent with the supervision requirements, which permit supervision by a "physician in the group." Therefore, the billing conditions will be satisfied if the [designated health services] are billed by the group practice when the supervising physician is a "physician in the group."

At present, this explanation has not led to clarifying rules in section 3060.3 in the Carrier's Manual or section 424.80 regulations in 42 CFR, which currently preclude acceptance of the 855R Reassignment of Benefits contract unless a physician is a W-2 employee or "member of the group."

In simple English, it would appear that house call physicians should be acceptable as independent contractors to a medical group practice under a common billing number, but the Carriers won't let them join as such. This becomes problematic for groups with lab, X-ray, or other designated health services, since a contracted employee billing under their own provider number would have to have their own CLIA and other licenses as individuals to avoid a Stark violation by referring the service to their own group employees. We are seeking clarification of the issue.