Advisory Opinion No. 08-10: Review Of Block Lease Arrangement
In late August, the Office of the Inspector General of the
United States Department of Health and Human Services
("OIG") issued Advisory Opinion No. 08-10, which reviewed
a block lease arrangement involving urologists using Intensity
Modulated Radiation Therapy ("IMRT"). This Opinion
reflects continued government antipathy toward shared ancillary
services among referring physicians. Similar concerns have driven
recent Stark III and related changes, such as the anti-mark-up
rule.
At issue in Advisory Opinion No 08-10 was a fairly common
structure pursuant to which urology groups would lease from a
radiation oncology physician group practice, on a part-time basis,
space, equipment, personnel and radiation and other supplies and
administrative and billing services needed to perform IMRT.
Compensation would be a fixed amount set in advance, that would not
vary based on utilization. The agreements are certified to be at
fair market value, a one year term, and are in effect assumed in
the opinion to have met all other Anti-Kickback Law Safe Harbor
requirements.
Noting that even if the agreements making up the proposed
arrangement could each satisfy the applicable Anti-Kickback Law
Safe Harbor conditions, the OIG wrote that it would only protect
the amount paid by the urology groups to the radiation oncology
group practice for services rendered or space or equipment leased.
The OIG noted, however, that "in this Opinion, we are
concerned about potential compensation to the Urologist Groups, who
are sources of referral to the [radiation oncology group] for the
very services to be provided under the Proposed Arrangement."
In the Special Advisory on contractual joint ventures issued in
2003 and the 1989 Special Fraud Alert on joint venture
arrangements, the OIG found that a sham relationship is not
protected by technical compliance with Safe Harbors. Applying those
principles here the OIG reasoned that the retained profit of the
urologist group after paying all amounts due to the radiation
oncology practice was effectively remuneration. In other words, by
agreeing to provide services that they could otherwise provide for
less than the available reimbursement, the radiation oncology
group's leases of space, equipment and personnel to the
referring groups provided the referring groups with an opportunity
to generate a fee and a profit. Finding that profit could be a
kickback if made with the requisite intent, the OIG stated that
"there is a significant...
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