Reforms to the Florida Patient Self-Referral Act: A Closer Look at the Impact of SB 768 - McDermott Will & Emery

Reforms to the Florida Patient Self-Referral Act: A Closer Look at the Impact of SB 768


Florida Senate Bill 768 (SB 768) amends the Florida Patient Self-Referral Act of 1992 (PSRA), which regulates referrals from healthcare providers, including physicians, to entities in which they have ownership and other investment interests. This amendment, which became effective July 1, 2023, has important implications for Florida physicians subject to the PSRA by making the physician supervision requirements less onerous. Although this change offers potential benefits, Florida physicians, including those who do not currently participate in the Medicare program but are subject to the PSRA, must ensure they understand and implement the revised supervision requirements, which are identical to Medicare’s supervision requirements.

In Depth

Background: The Florida PSRA and Its Interplay with the Federal Stark Law

The PSRA restricts certain health care providers, including physicians, from referring patients to an entity in which they hold a financial interest for the provision of designated health services (DHS) or any other healthcare item or service unless an exception applies.

Specifically, the PSRA sets forth a number of scenarios that are excluded from the definition of a “referral” and thus are not implicated by the PSRA. In relevant part, the PSRA excludes from the definition of a “referral” an order, recommendation, or plan of care by a member of a group practice (as defined by the PSRA) for DHS or other health care items or services that are prescribed or provided solely for patients of the group practice and, prior to the passage of SB 768, are provided or performed “by or under the direct supervision” of the referring health care provider or a member of the referring health care provider’s group practice (the “Florida In-Office Ancillary Services Exception” or the “FL IOASE”). The PSRA defined “direct supervision” in this context as “supervision by a physician who is present in the office suite and immediately available to provide assistance and direction throughout the time services are being performed.”

Physicians who have ownership in or compensation arrangements with their group practices and refer patients within the group for the provision of DHS billable to Medicare are also required to comply with the PSRA’s federal counterpart: the Ethics in Patient Referrals Act, known commonly as the Stark Law. The Stark Law’s definition of “DHS” varies from the PSRA’s definition of “DHS,” as it encompasses additional categories of services. However, in addition to “DHS,” the PSRA also applies to “any other health care item or service,” thus encompassing all other categories of services considered to be “DHS” under the Stark Law.

Similar to the PSRA, the Stark Law contains an exception for DHS referred within the group practice (as “group practice” is defined in the Stark Law), referred to as the In-Office Ancillary Services Exception (“Stark IOASE”). This exception requires that the DHS be furnished by the referring physician, by a member (i.e., physician owner or employee) of the referring physician’s group practice, or under the supervision of the referring physician or another physician in the group practice (i.e., physician owner, employee or independent contractor of the group practice), provided that the supervision complies with “all other applicable Medicare payment and coverage rules.”

The varying supervision standards between the FL IOASE and the Stark IOASE have created difficulties for Florida physicians who must comply with both laws in order to refer DHS within their group practices in which they have ownership interests. As a result, because the FL IOASE is stricter than the Stark IOASE, it has always been possible that services (such as certain diagnostic tests) that may not require direct supervision under applicable Medicare payment and coverage rules must still be performed under direct physician supervision in order to comply with the FL IOASE.

SB 768: What the Amendment Changes

In an effort to align the FL IOASE more closely with the Stark IOASE, SB 768 eliminates Florida’s requirement for direct physician supervision and the need for a physician to be in the same office suite, allowing for remote physician supervision of such services under certain circumstances. Under this amended requirement, Florida health care providers will have greater flexibility with the supervision they provide as long as they comply with applicable Medicare payment and coverage rules for the service being provided, in accordance with the Stark IOASE.

Implications for Florida Physicians

SB 768 provides potentially significant benefits for Florida physicians. For example, easing supervision requirements may result in cost savings because the need is reduced for a physician’s constant presence during the provision of services. Eliminating the direct supervision requirement will also afford referring physicians in solo practices and group practices enhanced flexibility in their scheduling.

Additionally, prior to the amendment, there was a risk of inadvertent noncompliance by physicians who billed for services rendered under supervision they believed was appropriate from a Medicare perspective, without being aware that the PSRA contained stricter standards. To the extent this occurred, any claims for payment would have been prohibited under the PSRA, a strict liability statute, even if otherwise permissible under the Stark Law. Aligning Florida’s supervision requirements with the Stark IOASE mitigates the risk of physicians violating the PSRA as long as they adhere to all applicable Medicare supervision requirements. However, this could be potentially problematic for physicians who do not participate in the Medicare program and are not familiar with its supervision requirements.

Although SB 768 offers potential benefits to physicians, it also necessitates careful oversight to ensure that the correct level of supervision is provided for each service requiring it. Failure to meet the supervision requirements can result in the submission of a prohibited claim, creating overpayment liability, at a minimum, and potentially False Claims Act liability, if the patient is a federal health care program participant. Additionally, submitting a prohibited claim or making a prohibited referral could result in disciplinary action against the physician’s license. Florida physicians and their practices should carefully review and understand the Medicare coverage and payment rules (which require adherence to state licensure supervision requirements – possibly stricter than Medicare supervision requirements) applicable to the services they provide in order to ensure compliance with SB 768 and its amended supervision requirement.