Question

How would you translate the OIG’s 2005 Special Bulletin on Joint Ventures to help a hospital understand its latitude for entering into joint ventures with physicians? What is a potentially problematic contractual arrangement? Do you think the guidance is too restrictive or not restrictive enough? Why or why not?

Answer 1

Answer :-

The Special Advisory Bulletin issued on April 23, 2003, by the Office of Inspector General (OIG) is raising concerns throughout the health care industry about the legality of a variety of provider joint ventures. The presume courses of action include a social insurance supplier (Provider) venturing into a related administration line by contracting with a current supplier of that administration (Supplier) to serve the Provider's current patient populace. In the OIG's view, the Provider contracts out the whole activity of a related line of business to what might some way or another be a contender. The OIG asserts that the Provider's share of the profits from the new venture constitutes remuneration for the referral of the Provider's Medicare/Medicaid patients and thus may violate the federal Anti-kickback Statute.

The OIG refers to for instance of a speculate game plan an emergency clinic going into another endeavor with a current DME organization, where the joint endeavor with a current tough restorative hardware (DME) organization and fundamentally serves medical clinic patients.

Another example is a group of nephrologists forming a joint venture with an existing home dialysis supply company to operate a new company to sell supplies to the nephrologists' dialysis patients.

The OIG explains that "problematic arrangements" of this sort typically have certain common elements, including:

New Line of Business. The Provider looks to venture into a related line of business that can serve the Provider's current patient base.

Hostage Referral Base. The new pursuit prevalently or only serves the Provider's current patients.

Absence of Business Risk. The Provider's essential commitment to the new pursuit is referrals. It doesn't work the new business nor does it submit generous budgetary, capital or HR.

Instead, virtually all of the operations of the new business are provided by the Supplier, while the billing of insurers and patients is done in the name of the Provider.

Supplier is Competitor. The joint venture partner selected by the Provider is an established Supplier of the same services as those to be offered by the new venture. In other words, absent the joint venture, the Supplier would be a competitor for the new line of business.

Shared Benefit: Remuneration. The Provider and the Supplier share in the monetary advantage of the new business. The commonsense impact is that the Provider has the chance to charge for administrations that would somehow or another be given autonomously by the Supplier.

Volume or Value. The total installments to the Supplier will normally shift with the volume or estimation of business produced for the new pursuit. Similarly, the compensation to the Provider (benefits from the endeavor) additionally changes dependent on the Provider's referrals to the new business.

Exclusivity. The parties may agree to a noncompete, barring the Provider, the Supplier, or both from offering the products or services of the new venture to Provider's patients other than through the new venture.

Of these variables, the "absence of business hazard" is likely the most imperative. In depicting presume courses of action, the Bulletin stresses adventures in which the Provider isn't effectively included either as a speculator or as an administrator. In these circumstances, the OIG sees the budgetary advantages of the dare to the Provider not as an arrival on speculation or work but rather as a kickback for patient referrals.

The OIG portrays the above-recorded factors as "illustrative, not thorough," and repeats that the Bulletin does not depict the whole universe of suspect legally binding joint endeavors. The Bulletin is troublesome in light of the fact that it recognizes as risky endeavors that are moderately basic in the business.

What the Bulletin does not fully address is the level of risk associated with ventures that have some but not all of the suspect attributes. It also may be difficult to determine what level of involvement by the Provider in the operations or business risk of the new venture would be sufficient to avoid being characterized as suspect. These issues may be clarified over time by either policy statements or enforcement actions.

The Special Advisory Bulletin isn't the primary word from the OIG regarding the matter of joint endeavors. The 1989 Fraud Alert on joint endeavors just as the Anti-kickback safe harbor for little speculations delineates the progressing enthusiasm of the controllers in supplier joint endeavors. The Bulletin's most critical ramifications is the thing that it proposes about authorization approach. It may signal the OIG's intention to be more aggressive in pursuing suspect joint ventures under the Anti-kickback statute. Although the Special Advisory Bulletin is not the law, providers contemplating or participating in joint ventures involving related lines of business should review the Bulletin carefully to be fully informed of the regulatory risks.

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