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Percentage Payments Under New Stark II Regulations

April 01, 2001

By Dan Higgins and Ken Yood

Since its enactment, the Stark legislation has included several exceptions that specifically require compensation to be "set in advance." The meaning of the term "set in advance," and the ability to use percentage payment formulas  have been hotly debated ever since. Many have argued that so long as the compensation methodology is set in advance (e.g., a fixed percentage compensation arrangement), the exception's "set in advance" requirement is met.