C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER B—MEDICARE PROGRAM › PART 411—EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT › Subpart J—Financial Relationships Between Physicians and Entities Furnishing Designated Health Services

42 C.F.R. § 411.353

Prohibition on certain referrals by physicians and limitations on billing

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(a) Prohibition on referrals. Except as provided in this subpart, a physician who has a direct or indirect financial relationship with an entity, or who has an immediate family member who has a direct or indirect financial relationship with the entity, may not make a referral to that entity for the furnishing of DHS for which payment otherwise may be made under Medicare. A physician's prohibited financial relationship with an entity that furnishes DHS is not imputed to his or her group practice or its members or its staff. However, a referral made by a physician's group practice, its members, or its staff may be imputed to the physician if the physician directs the group practice, its members, or its staff to make the referral or if the physician controls referrals made by his or her group practice, its members, or its staff.

(b) Limitations on billing. An entity that furnishes DHS pursuant to a referral that is prohibited by paragraph (a) of this section may not present or cause to be presented a claim or bill to the Medicare program or to any individual, third party payer, or other entity for the DHS performed pursuant to the prohibited referral.

(c) Denial of payment for services furnished under a prohibited referral. (1) Except as provided in paragraph (e) of this section, no Medicare payment may be made for a designated health service that is furnished pursuant to a prohibited referral.

(2) When payment for a designated health service is denied on the basis that the service was furnished pursuant to a prohibited referral, and such payment denial is appealed—

(i) The ultimate burden of proof (burden of persuasion) at each level of appeal is on the entity submitting the claim for payment to establish that the service was not furnished pursuant to a prohibited referral (and not on CMS or its contractors to establish that the service was furnished pursuant to a prohibited referral); and

(ii) The burden of production on each issue at each level of appeal is initially on the claimant, but may shift to CMS or its contractors during the course of the appellate proceeding, depending on the evidence presented by the claimant.

(d) Refunds. An entity that collects payment for a designated health service that was performed pursuant to a prohibited referral must refund all collected amounts on a timely basis, as defined at § 1003.110 of this title.

(e) Exception for certain entities. Payment may be made to an entity that submits a claim for a designated health service if—

(1) The entity did not have actual knowledge of, and did not act in reckless disregard or deliberate ignorance of, the identity of the physician who made the referral of the designated health service to the entity; and

(2) The claim otherwise complies with all applicable Federal and State laws, rules, and regulations.

(f) Exception for certain arrangements involving temporary noncompliance. (1) Except as provided in paragraphs (f)(2) through (4) of this section, an entity may submit a claim or bill and payment may be made to an entity that submits a claim or bill for a designated health service if—

(i) The financial relationship between the entity and the referring physician fully complied with an applicable exception under § 411.355, 411.356, or 411.357 for at least 180 consecutive calendar days immediately preceding the date on which the financial relationship became noncompliant with the exception; and

(ii) The financial relationship has fallen out of compliance with the exception for reasons beyond the control of the entity, and the entity promptly takes steps to rectify the noncompliance.

(2) Paragraph (f)(1) of this section applies only to DHS furnished during the period of time it takes the entity to rectify the noncompliance, which must not exceed 90 consecutive calendar days following the date on which the financial relationship became noncompliant with an exception.

(3) Paragraph (f)(1) may be used by an entity only once every 3 years with respect to the same referring physician.

(4) Paragraph (f)(1) does not apply if the exception with which the financial relationship previously complied was § 411.357(k) or (m).

(g) [Reserved]

(h) Special rule for reconciling compensation. An entity may submit a claim or bill and payment may be made to an entity that submits a claim or bill for a designated health service if—

(1) No later than 90 consecutive calendar days following the expiration or termination of a compensation arrangement, the entity and the physician (or immediate family member of a physician) that are parties to the compensation arrangement reconcile all discrepancies in payments under the arrangement such that, following the reconciliation, the entire amount of remuneration for items or services has been paid as required under the terms and conditions of the arrangement; and

(2) Except for the discrepancies in payments described in paragraph (h)(1) of this section, the compensation arrangement fully complies with an applicable exception in this subpart.

[85 FR 77656, Dec. 2, 2020, as amended at 88 FR 59328, Aug. 28, 2023]
Notes of Decisions
Cited in 12 cases (3 in the last 5 years), 1998–2025 · leading case: United States Ex Rel. Drakeford v. Tuomey Healthcare Sys., Inc., 675 F.3d 394 (4th Cir. 2012).
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United States Ex Rel. Drakeford v. Tuomey Healthcare Sys., Inc., 675 F.3d 394 (4th Cir. 2012). · cites it 6× “§ 1395nn(a)(1); 42 C.F.R. § 411.353 (a). [5] A hospital may not submit for payment a Medicare claim for services rendered pursuant *398 to a prohibited referral.”
United States v. Rogan, 459 F. Supp. 2d 692 (N.D. Ill. 2006). “” 42 C.F.R. § 411.353 . The “attending/operating” physician identified in Boxes 82 and 83 of Form UB-92 qualifies as a referring physician as that term is defined by the Stark Statute.”
United States Ex Rel. Thompson v. Columbia/HCA Healthcare Corp., 20 F. Supp. 2d 1017 (S.D. Tex. 1998). “” 42 C.F.R. 411.353. Thus, sums up Relator, certification of compliance on form 2552 is an absolute condition precedent to retaining the Medicare funds conditionally advanced by the government, not to mention a prerequisite to continued future participation in the program.”
United States ex rel. Drakeford v. Tuomey, 976 F. Supp. 2d 776 (D.S.C. 2013). · cites it 3× “§ 1395nn(a)(l); 42 C.F.R. § 411.353 (a). A hospital may not submit for payment a Medicare claim for services rendered pursuant to a prohibited referral.”
Tibor v. Michigan Orthopaedic Inst., 72 F. Supp. 3d 750 (E.D. Mich. 2014). “Specifically, Plaintiffs attorney concerns were related to Defendants’ position that Plaintiff was being asked to sign the backdated recruitment agreement that would be past the thirty (30) day period in which Defendants were supposed to have the agreement signed in order to be…”
US Ex Rel. Frazier v. IASIS Healthcare Corp., 554 F. Supp. 2d 966 (D. Ariz. 2008). “42 C.F.R. § 411.353 . The Anti-Kickback Statute prohibits a hospital from making or accepting payment to induce or reward any person for referring, recommending, or arranging for the purchase of any item for which payment may be made under a federally-funded health care program.”
United States v. Solinger, 457 F. Supp. 2d 743 (W.D. Ky. 2006). “§ 1395m, and 42 C.F.R. § 411.353 . Additionally, Villafane asserts a number of federal and state antitrust violations as well as common law claims.”
Longo v. Wheeling Hosp., Inc. (N.D.W. Va. 2019). · cites it 3× “§ 1395nn(a)(1); 42 C.F.R. § 411.353 (a). A hospital may not submit for payment a Medicare claim for services rendered pursuant to a prohibited referral.”
United States of Am. ex rel. v. ERMI, LLC (N.D. Ga. 2022). · cites it 2× “§ 1395nn(a)(1)(A); 42 C.F.R. § 411.353 (a). In turn, a hospital may not submit a Medicare claim for services rendered pursuant to a prohibited referral.”
Pro-Care Med. Ctr. & Injury Med. Grp. v. Quality Carriers, Inc., Gulf Coast Express Carriers, Inc., & Bobby Nixon (Tex. App. 2020). “See 42 C.F.R. §§ 411.353 (a), 411.357. 2 Approximately four months later, Pro-Care filed a motion to dismiss under the Texas Medical Liability Act (“TMLA”), asserting Quality Carriers failed to comply with the TMLA’s expert-report requirement.”
Kunin v. Saint Luke's Health Sys., Inc. (W.D. Mo. 2022). “§ 1395nn(1)(a); 42 C.F.R. § 411.353 (a). Further, under § 1395nn(a)(1)(B), the referral entity is prohibited from presenting or causing to be presented a claim for DHS furnished pursuant to a prohibited referral.”
United States v. Trihealth, Inc. (S.D. Ohio 2025). “See 42 C.F.R. § 411.353 (d). Beyond all that, Murphy’s reverse claim meets Rule 9(b)’s dictates for the same reasons his direct claims do.”
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