Special Advisory Bulletin on Contractual Joint Ventures
The DHHS OIG issued a Special Advisory Bulletin in April addressing a concern regarding the proliferation of contractual joint venture arrangements. The Bulletin focused on contractual arrangement in which one health care provider ("Owner") in one line of business expands into a related health care business by contracting with an existing provider of the related business ("Manager/Supplier") to provide the new service to Owner's existing patient population. For example: A group of nephrologists form New Company to provide home dialysis supplies to the group's dialysis patients. New Company contracts with an existing supplier of dialysis supplies to operate New Company and to provide all goods and services to New Company.
| The Bulletin identifies common elements of problematic arrangements: |
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New line of business |
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Captive referral base (i.e. patient base of existing business) |
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Lack of business risk (owner's primary contribution is referrals) |
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Status of Manager/Supplier as competitor |
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Scope of services provided by Manager/Supplier (management, billing services, equipment, personnel and related services, office space, training, and/or health care items, supplies and services) |
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Payments to Manager/Supplier typically vary with the value or volume of business |
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Exclusivity |
The Bulletin explains that illegal remuneration in contractual joint ventures is often the difference between the money paid by the Owner to the Manager/Supplier and the reimbursement received from the federal health care programs. "The opportunity to generate a fee is itself remuneration that may implicate the anti-kickback statute," according to the OIG.
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