pLAn AheAD FOr ChAngeS TO phySiCiAn grOup prACTiCe prOFiT ShAring
Health Care law Section
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profits ,” provided that the payment is not “ directly related to the volume or value of referrals ” by the physician and other requirements are met . 4 Effective January 1 , 2022 , the new rule redefines “ overall profits ” as “ the profits derived from all the [ DHS ] of any component of the group that consists of at least five physicians . . . .” 5
CMS intends this change to clarify that “ the profits from all the [ DHS ] of any component of the group . . . must be aggregated before distribution ” and “ a group practice may not distribute profits from [ DHS ] on a service-by-service basis .” 6 For example , a group practice “ may not distribute the profits from clinical laboratory services to one subset of its physicians and distribute the profits from diagnostic imaging to a different subset of its physicians .”
The rule includes several other important changes related to group practice compensation . For instance , the rule clarifies that group practices may use different profit-sharing methodologies for different components ( consisting of at least five physicians each ) so long as certain requirements are met . Additionally , profits from partici - pation in a “ value-based enterprise ” under a new exception created by the rule may be distributed directly to the participating physician in some instances . 7
Practitioners advising group practices should consider these changes carefully as it could be necessary for group practices to change their compensation models ahead of next year . The rule points out that group practices must establish their compensation models “ prospectively ” and notes CMS ’ s concern that group practices that relied on interpretations of the current regulatory text may need “ to adjust their compensation methodologies ” before the new rule takes effect . 8 n
1
Medicare Program ; Modernizing and Clarifying the Physician Self- Referral Regulations , 85 Fed . Reg . 77,492 , 77,492 ( Dec . 2 , 2020 ) [ hereinafter Final Rule ].
2
42 U . S . C . § 1395nn ; 42 C . F . R . § 411.350 et seq .; Final Rule at 77,492 .
3
For instance , the in-office ancillary services exception is applicable to DHS furnished by the referring physician or a physician who is a member of the same group practice if certain requirements are met . 42 U . S . C . § 1395nn ( b )( 2 ); 42 C . F . R . § 411.355 ( b ).
4
42 C . F . R . § 411.352 ( i )( 1 ).
5
Final Rule at 77,561 , 77,682 ( to be codified at 42 C . F . R . § 411.352 ( i )( 1 )( iii )). A component “ may include all physicians in the group ,” and “[ i ] f there are fewer than five physicians in the group , overall profits means the profits derived from all the [ DHS ] of the group .” Id .
6
Id . at 77,561 .
7
Id . at 77,653 , 77,559 . 8
Id . at 77,561 ( citing 42 C . F . R . § 411.352 ( e )).
Author : Jason P . Mehta & John C . Hood - Bradley Arant Boult Cummings LLP
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