Self-Referral

DHS and Safe Harbors

When a physician wants to enter any financial relationship with another health care entity, such as investing in imaging or ambulatory surgical centers, it is very important for the physician to understand the DHS and the exceptions to the law (safe harbors). The exceptions were developed in order to clarify ambiguities in the self-referral law, which then made it easier to decide if an investment was safe under the law. The exceptions are also called safe harbors, and the complete set of exceptions that were approved as of January 2001 are known as the final rule. The first self-referral law, also called the Stark law, was passed in 1989. The first final rule was passed in July 1991, in which 10 original safe harbors were described to clarify safe investments. These rules still left open ambiguities for investors, and further clarifications were added in 1992, 1993, 1994, 1996, and 1999, until the final rule was issued in January 2001. The final rule has made it relatively easier for physicians to invest in other health care entities.

The following is a list of the DHSs: clinical lab services; physical therapy, occupational therapy, and speech/language pathology services; radiology and other imaging services; durable medical equipment and supplies; prosthetics, orthotics, and prosthetic supplies; home health services; outpatient prescription drugs; inpatient hospital services; outpatient hospital services; and parental and enteral nutrients and related supplies and equipment.

The initial 10 safe harbors that were issued in July 1991 concerned the following 10 areas:

• 1.
  Investment interests
• 2.
  Space rentals
• 3.
  Equipment rentals
• 4.
  Personal services and management contracts
• 5.
  Sale of practice
• 6.
  Referral services
• 7.
  Warranties
• 8.
  Discounts
• 9.
  Employees
• 10.
  Group purchasing organization

To clarify ambiguities about “investment interests,” three additional safe harbors were approved in the final rule on July 29,

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