                                 CODE OF VIRGINIA

PROHIBITED REFERRALS AND PAYMENTS; EXCEPTIONS (§ 54.1-2411)

A. Unless the practitioner directly provides health services within the entity
and will be personally involved with the provision of care to the referred
patient, or has been granted an exception by the Department or satisfies the
provisions of subsections D or E of this section or of subsections D or E of
&#xA7; 54.1-2413, a practitioner shall not refer a patient for health services
to an entity outside the practitioner&#8217;s office or group practice if the
practitioner or any of the practitioner&#8217;s immediate family members is an
investor in such entity.

B. The Department may grant an exception to the prohibitions in this chapter,
and may permit a practitioner to invest in and refer to an entity, regardless of
whether the practitioner provides direct services within such entity, if there
is a demonstrated need in the community for the entity and all of the following
conditions are met:

   1. Individuals other than practitioners are afforded a bona fide opportunity
   to invest in the entity on the same and equal terms as those offered to any
   referring practitioner;

   2. No investor-practitioner is required or encouraged to refer patients to the
   entity or otherwise generate business as a condition of becoming or remaining
   an investor;

   3. The services of the entity are marketed and furnished to
   practitioner-investors and other investors on the same and equal terms;

   4. The entity does not issue loans or guarantee any loans for practitioners
   who are in a position to refer patients to such entity;

   5. The income on the practitioner&#8217;s investment is based on the
   practitioner&#8217;s equity interest in the entity and is not tied to referral
   volumes; and

   6. The investment contract between the entity and the practitioner does not
   include any covenant or clause limiting or preventing the practitioner&#8217;s
   investment in other entities.
   				Unless the Department, the practitioner, or the entity requests a hearing,
   the Department shall determine whether to grant or deny an exception within 90
   days of the receipt of a written request from the practitioner or entity,
   stating the facts of the particular circumstances and certifying compliance
   with the conditions required by this subsection. The Department&#8217;s
   decision shall be a final administrative decision and shall be subject to
   judicial review pursuant to the Administrative Process Act (&#xA7; 2.2-4000 et
   seq.).

C. When an exception is granted pursuant to subsection B:

   1. The practitioner shall disclose his investment interest in the entity to
   the patient at the time of referral. If alternative entities are reasonably
   available, the practitioner shall provide the patient with a list of such
   alternative entities and shall inform the patient of the option to use an
   alternative entity. The practitioner shall also inform the patient that
   choosing another entity will not affect his treatment or care;

   2. Information on the practitioner&#8217;s investment shall be provided if
   requested by any third party payor;

   3. The entity shall establish and utilize an internal utilization review
   program to ensure that practitioner-investors are engaging in appropriate and
   necessary utilization; and

   4. In the event of a conflict of interests between the practitioner&#8217;s
   ownership interests and the best interests of any patient, the practitioner
   shall not make a referral to such entity, but shall make alternative
   arrangements for the referral.

D. Further, a practitioner may refer patients for health services to a publicly
traded entity in which such practitioner has an investment interest without
applying for or receiving an exception from the Department if all of the
following conditions are met:

   1. The entity&#8217;s stock is listed for trading on the New York Stock
   Exchange or the American Stock Exchange or is a national market system
   security traded under an automated interdealer quotation system operated by
   the National Association of Securities Dealers;

   2. The entity had, at the end of the corporation&#8217;s most recent fiscal
   year, total net assets of at least $50 million related to the furnishing of
   health services;

   3. The entity markets and furnishes its services to practitioner-investors and
   other practitioners on the same and equal terms;

   4. All stock of the entity, including the stock of any predecessor privately
   held company, is one class without preferential treatment as to status or
   remuneration;

   5. The entity does not issue loans or guarantee any loans for practitioners
   who are in a position to refer patients to such entity;

   6. The income on the practitioner&#8217;s investment is not tied to referral
   volumes and is based on the practitioner&#8217;s equity interest in the
   entity; and

   7. The practitioner&#8217;s investment interest does not exceed one-half of
   one percent of the entity&#8217;s total equity.

E. In addition, a practitioner may refer a patient to such practitioner&#8217;s
immediate family member or such immediate family member&#8217;s office or group
practice for health services if all of the following conditions are met:

   1. The health services to be received by the patient referred by the
   practitioner are within the scope of practice of the practitioner&#8217;s
   immediate family member or the treating practitioner within such immediate
   family member&#8217;s office or group practice;

   2. The practitioner&#8217;s immediate family member or the treating
   practitioner within such immediate family member&#8217;s office or group
   practice is qualified and duly licensed to provide the health services to be
   received by the patient referred to the practitioner;

   3. The primary purpose of any such referral is to obtain the appropriate
   professional health services for the patient being referred, which are to be
   rendered by the referring practitioner&#8217;s immediate family member or by
   the treating practitioner within such immediate family member&#8217;s office
   or group practice who is qualified and licensed to provide such professional
   health services; and

   4. The primary purpose of the referral shall not be for the provision of
   designated health services as defined in 42 U.S.C. &#xA7; 1395nn and the
   regulations promulgated thereunder.

HISTORY: 1993, c. 869; 2005, c. 402; 2025, c. 341.