OIG Advisory Opinion Indicates Block Lease Raises Significant Risk
Advisory Opinion 08-10, posted by the OIG on August 26, addresses a proposal for a physician group practice to provide space, equipment and personnel to another physician group practice through a block lease, and concludes that there is a "significant risk" that the arrangement would be an improper contractual joint venture that would reward the leasing group for referrals.
The opinion addresses a block lease of space, personnel and equipment from oncologists to urologists for IMRT, combined with use of contracted radiologists to supervise the procedures. The urologists bill all payers for the services, including Medicare. The OIG's rationale is that of its 2003 contractual joint venture advisory bulletin, but it is notable that in the arrangement discussed in this Advisory Opinion, the blocks of time are fixed, as is the compensation, and there is a one-year term. Thus, although the OIG refuses to address the question, it appears that all of the components may have been designed to satisfy a safe harbor. The OIG doesn't address the safe harbor issue because the remuneration it is concerned about is the opportunity for the urologists to make a profit. The OIG emphasizes that the oncology group is agreeing to provide services it could provide in its own right for less than the available reimbursement.
A key point that may distinguish this from many physician block leases is that the urologists do not participate in performing the IMRT, but contract out substantially all the services, including the professional services. The opinion states that the urologists contract with individual radiologists (who also provide services to the oncologists) to supervise the IMRT procedures. Thus, the OIG goes on to note that the urologists commit little financial, capital or human resources.
Like the recent changes to the Stark Law regulations, this opinion provides indication of continually increasing government scrutiny of physician ventures.
