Do Non-Procedural Sources of Income Apply to the One-Third Rule?

Q: Federal guidelines state “at least one-third of the physician’s medical practice income from all sources for the previous fiscal year or previous 12-month period must be derived from the physician’s performance of procedures.” Does this exclude income derived from a “non-procedural” source?  An example would be ophthalmologists who own their own eye glasses shop. They receive a considerable income from the sale of eyeglasses, which adds up to more than one-third of their overall income. Are they not out of compliance with the federal guidelines as an owner of an ASC?

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Scott Becker, JD, CPA: Currently, CMS has not further refined what they mean by a person’s medical practice income. Hence, there is not a definite answer to this question. With regard to items or services closely related to practice, one would tend to include such income. In contrast, the less closely related to the practice that the income is (for example, lease income), the less one would believe that it must be included.

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