What constitutes a 'referral' under Stark, and how might it relate to services offered at a C3 Wellness Spa?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
A "physician" includes a Doctor of Medicine or Doctor of Osteopathic Medicine, a Doctor of Dental Surgery or Doctor of Dental Medicine, a Doctor of Podiatric Medicine, a Doctor of Optometry, or a Doctor of Chiropractic, but does not include physician assistants, nurse practitioners, or other mid-level licensed non-physician providers. A "referral" includes a request by a physician for an item or service for which payment may be made under Medicare or Medicaid, a request for a consultation with another physician, the performance or ordering of any test or procedure by that consulting physician, the request or establishment of a plan of care by a physician that includes a DHS, and the certifying or recertifying of the need for any DHS for which payment may be made under Medicare or Medicaid. A "financial relationship" under Stark includes any direct or indirect "ownership or investment interest" in an entity or direct or indirect "compensation arrangement" with an entity. At this time, Spas will not accept any patients paid by Medicare, Medicaid, TRICARE or other federally funded government programs. Accordingly, Stark would not be implicated with respect to any physician (or immediate family member) becoming an owner of a Spa. States often incorporate Stark framework into their own rules which are payor indifferent (as discussed below). Accordingly, it is important to review and be familiar with Stark's impact on your Spa Location Franchise.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 8–14)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, a 'referral' under the Stark law includes several actions by a physician. These actions encompass a physician's request for an item or service that could be paid for by Medicare or Medicaid. It also includes a request for a consultation with another physician, along with the performance or ordering of any test or procedure by that consulting physician. Furthermore, the establishment of a plan of care by a physician that includes Designated Health Services (DHS), and the act of certifying or recertifying the need for any DHS that could be paid for by Medicare or Medicaid, are also considered referrals.
For a C3 Wellness Spa, this definition is relevant because the Stark law generally prohibits a physician from making referrals for Designated Health Services (DHS) payable by Medicare or Medicaid to an entity with whom the referring physician (or an immediate family member) has a financial relationship. However, the FDD states that C3 Wellness Spas will not accept any patients paid by Medicare, Medicaid, TRICARE, or other federally funded government programs. Therefore, Stark would not be implicated with respect to any physician (or immediate family member) becoming an owner of a Spa.
However, the document also notes that states often incorporate the Stark framework into their own rules, which are payor indifferent. This means that even if a C3 Wellness Spa does not directly bill Medicare or Medicaid, state laws mirroring Stark could still apply. Therefore, it is important for a prospective franchisee to review and be familiar with Stark's impact on their C3 Wellness Spa location. This includes understanding what constitutes a financial relationship under Stark, which includes any direct or indirect ownership or investment interest in an entity or direct or indirect compensation arrangement with an entity.
In practical terms, a C3 Wellness Spa franchisee needs to be aware of both federal and state regulations regarding physician referrals, especially if the spa offers services that could be considered DHS under state law. They should consult with their own legal counsel to ensure compliance with all applicable laws and regulations, particularly those related to financial relationships with referring physicians. This is crucial to avoid potential violations and penalties.