Joint ventures worth close examination

Contract Language. By Steven M. Harris, AMNews contributor. Jan. 2/9, 2006.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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Sometimes there are chances for a contract with another physician, practice group or entity that offers certain items or services complementary to your practice. Such a deal -- often referred to as a joint venture -- might include any common enterprise with a perceived mutual economic benefit. It could include an arrangement for physical therapy, clinical lab services, durable medical equipment, radiology and imaging services, or pharmacy services.

But physician joint ventures have increasingly come under scrutiny by the government because physicians are in the position to refer patients to entities providing items or services paid for by Medicare and Medicaid. State and federal fraud and abuse laws can thrust many complications onto joint ventures due to self-referral and anti-kickback considerations.

A few years ago the Office of Inspector General issued a special advisory bulletin regarding contractual joint ventures. This OIG bulletin continues to serve as a warning to anyone in the health care system who treats Medicare and Medicaid patients against entering into joint venture arrangements that reward the physician for improper patient referrals in violation of federal anti-kickback laws.

The OIG identified several characteristics of potentially problematic arrangements including:

• New line of business: The physician owner is expanding into a related business that is wholly dependent on patient referrals from the existing business.
• Captive referral base: The owner's primary contribution to the venture is referrals, and payments to the owner are based on the owner's referrals to the new business.