Noting a rise in joint ventures that involve physicians and other providers, the HHS Office of Inspector General issued an advisory bulletin today showing how these arrangements can violate the federal anti-kickback statute.
The OIG's special advisory bulletin describes itself as a supplement to the OIG's special fraud alert on joint venture arrangements, released in 1989, and says the new advisory is needed because "contractual joint venture arrangements are proliferating."
The document lists some characteristics of a joint venture between a provider and a manager or supplier that it says can "potentially indicate a prohibited arrangement":
- New line of business. The owner seeks to expand into a service that can be provided to his or her existing patients. Examples include hospitals expanding into durable medical equipment services, DME companies expanding into the nebulizer pharmacy business, or nephrologists expanding into the home dialysis supply business.
- Captive referral base. The new business predominantly serves the owner's existing patient base, and the owner does not intend to serve new customers.
- Little business risk. The owner's primary contribution to the venture is referrals, and he or she makes little or no financial or other investment in the business, delegating the entire operation to the manager while retaining profits.
- Manager is a potential competitor. The manager would normally compete for the captive referrals and has the capacity to provide virtually identical services in her or her own right.
- Manager provides many key services. These services include day-to-day management, billing, equipment, personnel, office space, training, or healthcare supplies and services. "In general, the greater the scope of services provided by the Manager/Supplier, the greater the likelihood that the arrangement is a contractual joint venture," the OIG says.
- Profits are based on owner generating business. The remuneration to the owner takes into account the value and volume of business her or she generates.
- Exclusive arrangements. The parties agree to a noncompete clause, barring the owner from providing services to other patients than his or her own patients or barring the manager from providing services in its own right to the owner's patients.