Definition of a Group Practice (Stark)

The Group Practice Definition (courtesy of

Under Stark, a group practice is a physician practice that meets the following conditions:

Single Legal Entity.

The group practice must consist of a single legal entity operating primarily for the purpose of being a physician group practice in any organizational form recognized by the State in which the group practice achieves its legal status.


The group practice must have at least two physicians who are members of the group (whether employees, or direct or indirect owners). Stark defines a member of the group as a direct or indirect owner of a group practice (including a physician whose interest is held by his or her individual professional corporation or by another entity), a physician employee of the group practice, a locum tenens physician, or an on-call physician while the physician is providing on call services for members of the practice. An independent contractor is not a member of the group.

Range of Care.

Each physician who is a member of the group, must furnish substantially the full range of patient care services that the physician routinely furnishes, including medical care, consultation, diagnosis, and treatment, through the joint use of shared office space, facilities, equipment, and personnel.

Services Furnished by Group Practice Members.

Substantially all of the patient care services of the physicians who are members of the group (that is, at least 75% of the total patient care services of the group practice members) must be furnished through the group and billed under a billing number assigned to the group, and the amounts received must be treated as receipts of the group. Patient care services must be measured by one of the following:

  • The total time each member spends on patient care services documented by any reasonable means (for example, time cards and appointment schedules.)
  • Any alternative measure that is reasonable, fixed in advance of the performance of the services being measured, uniformly applied over time, verifiable, and documented.

Distribution of Expenses and Income.

The overhead expenses of, and income from, the practice must be distributed according to methods that are determined before the receipt of payment for the services giving rise to the overhead expense or producing the income.

Unified Business.

The group practice must be a unified business having at least the following features:

Centralized decision making by a body representative of the group practice that maintains effective control over the group’s assets and liabilities; and

Consolidated billing, accounting, and financial reporting.

Volume or Value of Referrals.

No physician who is member of the group practice directly or indirectly receives compensation based on the volume or value of referrals except as provided under the specialty rules for productivity and profit shares.

Physician-Patient Encounters.

Members of the group must personally conduct no less than 75 percent of the physician-patient encounters of the group practice.

Special Rules for Productivity Bonuses and Profit Shares

The special rules for productivity bonuses and profit shares allow a physician who is in the group practice to be paid a share of overall profits of the group or a productivity bonus based on services that he/she has personally performed (including services “incident to” those personally performed services), provided that the share or bonus is not determined in any manner that is directly related to the volume or value of referrals of DHS by the physician. CMS now takes the position that diagnostic-testing services cannot be billed as “incident to” but practices that provide physical therapy can, however, bill physical therapy services as “incident to” services (provided that all of the “incident to” requirements are met).

The Stark regulations specifically set forth examples of formulas that will be deemed not to relate directly to the volume or value of referrals. For example, a group’s profits will be deemed not to relate directly to the volume or value of referrals if revenues derived from DHS are distributed based on the distribution of the group practice’s revenue attributed to services that are not DHS payable by any Federal health care program or private payer.

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