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Medical Practice Sales, Appraisal and Financing

Medical Practice Sales, Appraisal and Financing

In return, the physicians would provide office space, administrative staff, medical supplies, liability insurance and physician supervision. The physicians would bill Medicare and other payors for the lab services and compensate the Requestor 60% of gross collections. It should be noted that the Requestor is owned and managed by a non-physician with no experience operating an allergy laboratory.

The Requestor was inquiring whether the Proposed Arrangement would violate section 1128(b)(7) or 1128A(a)(7) of the Social Security Act, as those sections relate to section 1128B(b) of the Act, the Federal anti-kickback statute. The anti-kickback statute prohibits healthcare providers from "offering or receiving any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program." This provision is meant to prevent unscrupulous providers from forming referral arrangements without concern for clinical appropriateness.

The Department of Health and Human Services set forth safe harbor regulations which allowed for exceptions to the anti-kickback statute because "such practices would be unlikely to result in fraud or abuse." An arrangement must meet all qualifying criteria to claim safe harbor protection. The safe harbors for equipment leases and personal services and management contracts [42 C.F.R. ยง 1001.952(c) and (d), respectively] were identified as potentially applicable to the Proposed Arrangement. However, further analysis revealed that the provisions were not fully met and these protections were rejected.

Two factors are of particular concern in the analysis for anti-kickback violation. First, the Requestor's compensation is connected to the volume of business generated, rather than services provided. It may not be a true reflection of fair market value. Secondly, while the OIG does not comment on the legality of the Requestor reviewing patient files, it deems such marketing activity to be potentially harmful. Because the Proposed Arrangement is likely to promote overutilization, the OIG concluded that it could potentially generate prohibited remuneration under the anti-kickback statute.

This is an overview of an OIG Advisory Opinion and should not be construed as guidance on any issues including legal, regulatory, and compliance matters.

 

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