Mid-Atlantic Health Law TOPICS

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Grandfathering Period Ends for Maryland's Self-Referral Law

Maryland's self-referral law, enacted in 1993, generally prohibits health care practitioners from referring patients to entities in which they have an ownership interest, or with which they have a compensation arrangement as defined by the law. The penalties for violation of this law are serious, ranging from non-payment for the services referred to the issuance of sanctions by the referring practitioner's licensing board.

The self-referral law contains a number of exemptions, allowing for referrals in certain circumstances which otherwise would be prohibited by the law. One of these exemptions is a "grandfathering" provision that allowed practitioners who had certain arrangements in place at the time the law was enacted to continue those arrangements for a period of time. The Grandfathering provision expired on March 15, 1997.

Accordingly Maryland practitioners may no longer rely on the grandfathering exemption to the State self-referral law. Unless another exemption is available, arrangements falling within the scope of Maryland's self-referral law must now be discontinued or restructured to comply with the law.

Examples of typical arrangements that are covered by the law, and may have been grandfathered, include the following:

1. Space rental arrangements between practitioners and other health care providers where patients are cross-referred;

2. Physician owners who refer patients to separately incorporated surgical centers when they do not also follow the patients and provide services at the center;

3. Cardiologists who refer patients for stress tests to companies in which they have an ownership interest; and

4. Ophthalmologists who refer patients to optical shops in which they have an ownership interest.


June 21, 1997




Rosen, Barry F.


Health Care