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Structuring an arrangement with medical office building staff

Compliance Monitor, May 26, 2006

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Q: Our hospital is considering building a medical office building (MOB) adjacent to our hospital. We would like to give preferential treatment to physicians in the community who admit the most patients to our hospital. How should we structure the arrangement?

A: Many hospitals have constructed MOBs to ensure physicians in the community have suitable office space in close proximity to the hospital. I am not sure of your reference to "preferential treatment." The rental of office space safe harbor to the federal anti-kickback statute includes six conditions that must be satisfied. One of the conditions is that the aggregate rental charge is

·  set in advance

·  consistent with fair market value in an "arms-length transaction"

·  not determined by the volume or value of any referrals generated between parties

In addition, an exception to the Stark statute related to compensation arrangements states that the rental charge over the term of the lease agreement is not determined by the volume or value of any referrals generated between parties.

As the hospital begins to lease the MOB, it is acceptable to make available special invitations for select physicians to view the MOB space (provided that no lavish food, entertainment, etc. is included at the viewing). The rental charge for the MOB space should make no distinction between the type of physician or non-provider commercial vendor and the number of referrals that the physician or group makes to the hospital.

Thanks to Bruce D. Armon, Esq., a partner with the Philadelphia-based law firm Saul Ewing LLP, for answering this week's question.

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