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Imaging centers under pressure to enter leasing agreements may be treading on thin ice

Radiology Administrator's Compliance and Reimbursement Insider, July 1, 2005

Many physicians are squeezing imaging centers to enter into questionable leasing agreements that may violate federal or state anti-kickback laws, say healthcare attorneys. As these agreements become more common, regulators, including the Office of Inspector General (OIG)-are taking notice.

Enforcement in this area is likely on the upswing, says attorney William Sarraille. "We're starting to see qui tam actions related to some of these [leases]," he says, adding that increased attention on this issue from Congress and the media has put state attorneys general on the alert.

A May 2 Wall Street Journal article described a number of imaging center/physician lease agreements, some of which appear to be little more than means of allowing physicians to make money by referring imaging services. For example, one type of leasing agreement described in the article called for an imaging center to charge physicians a low, flat fee per scan. Under this deal, the referring physician turns around and seeks a higher reimbursement rate from a private payer or the federal government. The referring physician doesn't provide any real contribution to the delivery of the technical component serv ice, other than his or her referral. In addition, the facility may be "leased" to the physician when his or her patients are in the office-not for a set block of time or weekly or monthly. Physicians stand to make hundreds of thousands of dollars per year in profits from such arrangements, according to the Journal . In return, the imaging center receives the increased patient volume it needs.

This kind of agreement represents the most drastic risk for organizations, but there are other types of agreements that are perceived as safer, such as "block" lease agreements. Under block lease deals, physicians lease a set number of hours per week at fair market value (FMV) from a center and are responsible for that time and the direction of the center during the leased peri od. However, healthcare attorneys caution that it is difficult to completely eliminate risk from these agreements.

"There are ways to have part-time relationships that are compliant, and there are ways to have part-time relationships that are fundamentally illegal and [that] create risks under anti-kickback [statutes] and the False Claims Act," says Sar raille. And federal regulations aren't the only ones about which sites should be worried. Imaging centers can also run afoul of private commercial insurers.

The motivation behind the agreements

Regardless of the potential for legal problems, there is a lot of pressure on imaging centers to enter into them, says attorney Tom Greeson. Physicians have been looking for new sources of income in the face of dwindling margins and unfavorable fee schedules, says Sarraille.

Imaging centers also feel pressure because they often have a lot of com petition, which gives them the incentive to court referring physicians by offering lucrative deals, says attorney Anne M. Haule. Those facilities that opt against offering leasing agreements often lose significant business to the sites that do agree to them, says Haule. So although attorneys recommend proceeding cautiously, many sites may not follow this advice. But the fol lowing tips can help reduce your risk: 1. Consult your lawyer. These agreements are so tricky that trying to navi gate them on your own can lead to trouble, says Greeson. "You need someone who can assist you in structuring arrangements in a manner that complies with [federal and state laws]," he says.

2. Choose the lowest-risk leases. If you feel that you must offer lease agree ments to stay viable, choose a less risky type of agreement, says Haule. Some healthcare attorneys say block-lease agreements, in which physicians lease a set block of time from an imaging center monthly, carry less risk. Although attorneys have different opinions on the legality of these arrange ments, Haule says she doesn't believe they are immune from scrutiny and counsels her clients to avoid them all together. However, some attorneys believe that anyone charged with violating the law by entering into a block-lease agreement could successfully fight the charges. However, Haule points out that even if you win a legal fight on this issue, you may still have to spend thousands of dollars in the process.

3. Pay FMV for the lease. If you enter into a lease agreement, ensure that it is at FMV. Have an outside expert conduct the valuation, says Haule.

4. Comply with the Stark law limitations. Be careful to meet the Stark Law limitations that may apply, says Sarraille. To meet the in-office ancil lary services exception and some of the other exceptions that are likely to apply, consider the following criteria:

  • The center is located in the same building where the cardiologist is located and provides the full range of his or her services if the arrange ment is part-time
  • The leasing entity is the only entity that occupies and uses the leased space during lease hours
  • The payment under the lease reflects FMV For some attorneys, a significant issue to consider in leasing arrange ments is whether the referring physician is the actual provider of the service. If a physician who doesn't know how to interpret data or images and knows nothing about supervising the technical staff enters into a lease agreement, it will raise red flags if that physician holds him self or herself out as being the provider of the service, says Sarraille.

    5. Don't refer government payer patients. If you send your government patients to the same center where you have the lease agreement, you could be violating the law even if the patients aren't part of the actual lease agreement, says Haule. Send these patients to a separate facility. Although this won't protect you from other violations, it can protect you from feder al anti-kickback and False Claims Act violations.

    6. Request an advisory opinion. If your arrangement raises questions, ask the OIG to review it for legality, says Greeson.

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