Medicare Compliance & Reimbursement

Four key elements win over the feds Despite the HHS Office of Inspector General's longstanding suspicion of health care joint ventures, you can craft a business arrangement that passes anti-kickback muster - if you know the ropes. Case in point: In its latest advisory opinion (No. 03-13), the OIG OK'd joint venture ownership of a freestanding magnetic resonance imaging center located on the campus of a rural community hospital. This marks the second time the agency has done so in the past several weeks -advisory opinion 03-12 also approves an MRI deal. The watchdog agency pointed out that the JV didn't fall into the relevant safe harbor, but concluded that it wouldn't pursue sanctions due to numerous compliance safeguards. Other health care providers contemplating JV arrangements can take a lesson from the OIG's findings. The deal won over the OIG with the following features:

1) It had all the "indicia of a legitimate, bona fide business." The OIG noted in particular that all investors were invited to join in on the deal under the same conditions - without regard to potential referrals (ultimately, about 60 percent of the MRI center is owned by parties in a position to make referrals, although that percentage is decreasing). Moreover, less than 40 percent of the center's revenue came from business generated by investors. 2) The structure of the arrangement -which dates back to 1990 - accords with then-existing guidelines from the OIG on how to safely structure JVs, including the agency's 1989 fraud alert on the subject (which was updated and expanded upon this April). 3) The center was developed "as a community-oriented effort to provide access to MRI services in the rural three-county area and has provided substantial community benefit."

4) The related management agreement and space lease agreement comply with the relevant anti-kickback safe harbors for those sorts of arrangements. To see the opinion, go to http://oig.hhs.gov/fraud/docs/advisoryopinions/2003/ao0313.pdf. Lesson Learned: Joint venture arrangements need intensive compliance scrutiny to avoid longstanding OIG wariness.