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05/01/2025 Name Withheld
DME, Stark and Designated Health Services (DHS)
I found this interesting article on the Stark law
changes that occurred in Jan 1, 2022 and it also
provides detailed explanation regarding designated
health services (DHS) with respect to physician
compensation in a group practice. After being in
solo practice for nearly three decades, the only
time I knew about the Stark Law was regarding the
exception of self-referral and in office x-ray and
that was it. Boy, was I in for a rude awakening.
So, this is a rather eye-opening article indeed
and should be considered a warning to any new
resident or fellow graduate or any who is planning
on signing an employee contract in a hospital
based or group practice. Do your due diligence
before signing the contract.
Outside of the volume of physician services that
are a basis of compensation for physician (usually
a contracted percentage minus collection and non-
claim overhead expenses), these ancillary services
provided by a physician in a group practice better
known as DHS are paid to the physician via the
profits generated and then divided per capita in
the group.
I never knew about DHS until just last year after
I became an employed physician and shockingly
understood that even if I was a high generator of
these ancillary services in the group that I was
not compensated for my efforts based on the volume
of the DHS generated, but rather the revenues
collected were divided equally among my colleagues
in the group.
So, if you are collecting a large monthly revenue
in a group practice and opine that the percentage
and possible bonus that you will be paid as per
the contract, then think again! A large chunk of
that will be removed and split among the group
leaving nothing but physician services and
possibly other collected revenues outside of DHS.
Therefore, before you sign an employment contract
in a large group practice have it meticulously
reviewed by a well versed health care attorney.
Because at first glance, It may sound great that
you will make an annual base salary (usually an
advance in lieu of collection) and will be paid a
percentage of collection after you reach the
monthly advance goal. You will probably think that
you can certainly generate the required monthly
advance and then some allowing you to make a
tremendous income.
But, I say think again because after the DHS,
collection expenses, and non-claim overhead is
removed leaving net physician services collected
amount your compensation may not be a lucrative as
you assumed.
Physician services (office visits, injections,
surgery, etc.) will have to be your main driver
for high competition in lieu of DHS. Sounds good,
but there are many variables that come into play
regarding providing and receiving compensation for
physician services. The biggest thing is insurance
coverage, proper patient selection when it comes
to surgery and the possible liability involved.
So, you must use sound judgment and integrity
regarding providing certain physician services
that may ultimately increase compensation.
If anyone can shed some light or provide an
opinion on this important topic that has not been
well reported or discussed in these types of
forums that would be appreciated. I would also
appreciate their experience on how to properly
negotiate a physician employment contract
regarding compensation that is not minimized by
DHS.
Also, any information on the current Alternative
Payment Model (ADM) and Value-Based Medicine and
if DHS is handled differently regarding physician
employment compensation.
https://www.hklaw.com/en/insights/publications/202
1/09/stark-law-changes-may-require-group-
practices-to-change-how-they-pay-t
Name Withheld
Other messages in this thread:
05/01/2025 Name Withheld
DME, Stark and Designated Health Services (DHS)
I found this interesting article on the Stark law
changes that occurred in Jan 1, 2022 and it also
provides detailed explanation regarding designated
health services (DHS) with respect to physician
compensation in a group practice. After being in
solo practice for nearly three decades, the only
time I knew about the Stark Law was regarding the
exception of self-referral and in office x-ray and
that was it. Boy, was I in for a rude awakening.
So, this is a rather eye-opening article indeed
and should be considered a warning to any new
resident or fellow graduate or any who is planning
on signing an employee contract in a hospital
based or group practice. Do your due diligence
before signing the contract.
Outside of the volume of physician services that
are a basis of compensation for physician (usually
a contracted percentage minus collection and non-
claim overhead expenses), these ancillary services
provided by a physician in a group practice better
known as DHS are paid to the physician via the
profits generated and then divided per capita in
the group.
I never knew about DHS until just last year after
I became an employed physician and shockingly
understood that even if I was a high generator of
these ancillary services in the group that I was
not compensated for my efforts based on the volume
of the DHS generated, but rather the revenues
collected were divided equally among my colleagues
in the group.
So, if you are collecting a large monthly revenue
in a group practice and opine that the percentage
and possible bonus that you will be paid as per
the contract, then think again! A large chunk of
that will be removed and split among the group
leaving nothing but physician services and
possibly other collected revenues outside of DHS.
Therefore, before you sign an employment contract
in a large group practice have it meticulously
reviewed by a well versed health care attorney.
Because at first glance, It may sound great that
you will make an annual base salary (usually an
advance in lieu of collection) and will be paid a
percentage of collection after you reach the
monthly advance goal. You will probably think that
you can certainly generate the required monthly
advance and then some allowing you to make a
tremendous income.
But, I say think again because after the DHS,
collection expenses, and non-claim overhead is
removed leaving net physician services collected
amount your compensation may not be a lucrative as
you assumed.
Physician services (office visits, injections,
surgery, etc.) will have to be your main driver
for high competition in lieu of DHS. Sounds good,
but there are many variables that come into play
regarding providing and receiving compensation for
physician services. The biggest thing is insurance
coverage, proper patient selection when it comes
to surgery and the possible liability involved.
So, you must use sound judgment and integrity
regarding providing certain physician services
that may ultimately increase compensation.
If anyone can shed some light or provide an
opinion on this important topic that has not been
well reported or discussed in these types of
forums that would be appreciated. I would also
appreciate their experience on how to properly
negotiate a physician employment contract
regarding compensation that is not minimized by
DHS.
Also, any information on the current Alternative
Payment Model (ADM) and Value-Based Medicine and
if DHS is handled differently regarding physician
employment compensation.
https://www.hklaw.com/en/insights/publications/202
1/09/stark-law-changes-may-require-group-
practices-to-change-how-they-pay-t
Name Withheld
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