Contracts and Business Arrangements; Fraud and Abuse and the Stark Law.
Employment Contracts. Call us before you enter into an employment contract with an entity providing health care services. Unless the obligations of both parties are completely clear, and the non-competition provisions are acceptable to you, you will save money by having your contract reviewed BEFORE, not AFTER, you sign it.
Medical Director Contracts. Medical Director Contracts can be a source of problems because they either do not adequately compensate the medical director for spending the time to provide necessary services, or they overcompensate a medical director who is a source of referrals to the entity.
Contracts to Provide Testing Services. Arrangements between providers of medical services and testing services, whether urine testing, allergy testing, drug testing, genetic testing, hearing tests, etc. need special review to make sure that they comply with all legal restrictions. Historically, there have been federal indictments against physicians who had profitable business arrangements with various kinds of testing services.
Management Contracts. Management contracts are regulated at the state and federal level. Management companies must be paid the fair market value of their services, without regard to whether they are a source of patient referrals. Percentage arrangements are generally prohibited.
Space and Equipment Leases. A person who leases space from a medical provider must pay rent at the fair market value of the property, without regard to whether they are connected to the provider’s business. For example, the empty space in a doctor’s office an only be rented at the fair market value of the space, regardless of whether it is rented to a beautician or a provider of a test used by the provider. There are special legal rules that apply to both space and equipment leases.
Providing health services is a highly regulated industry. There are many ordinary commercial practices which, if used by a medical provider, can result in career-ending penalties, including fines, prison terms, loss of Medicare/Medicaid provider status and loss of medical licensure.
In order to do business with a medical provider, or in a medical business of any kind, you need an attorney who has experience in the formation and operation of medical business entities such as physician recruitment agreements, exclusive service contracts, joint ventures and employment agreements. If you are considering a business arrangement with a medical provider of any kind, or entering into a medical director agreement or other contract with a provider, you need an expert to structure the transaction. This is not an overstatement. There are many ordinary commercial practices which, if used by a medical provider, can result in career-ending penalties, including fines, prison terms, loss of Medicare provider status and loss of medical licensure
The anti-fraud and abuse laws and the Stark Law are complex and not readily summarized. However, in very general terms, they affect your business like this:
- The federal anti-fraud and abuse laws prohibit soliciting or receiving an incentive to refer patients for services reimbursed by Medicare or Medicaid
- The Florida law prohibits referrals for designated health services to an entity in which the provider is an investor, regardless of payor
- The Stark law prohibits a physician from making referrals for designated services to an entity with which he has an ownership or compensation arrangement, and prohibits the entity from presenting a claim for payment under of the federally funded healthcare programs
There are many other restrictions. Understanding how these principles apply to your contract, joint venture, merger or acquisition, medical director agreement or other business arrangement requires an expert.
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This firm has been advising health care entities and structuring their transactions for 28 years.
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Christine C. Whitney, P.A. provides guidance to businesses that work with healthcare professionals throughout Florida and nationwide. To find out what the firm can do for you, call 904.356.4387 or contact the firm online.