October 27, 2016

Many of us have heard of or used the concept of a License Agreement - whereby we take a "privilege to act on another's property and does not confer a possessory interest in the property", as opposed to a lease, which conveys dominion and control of the property leased.  

To address the circumstance and need of a Timeshare arrangement for practitioners receiving reimbursement by a federally funded program, a new exception to the Stark law became effective January 1, 2016.  What does this mean?  it means if you are in a license or Timeshare arrangement and you receive Medicare or Medicaid funding - whether through HMO or direct pay - that meets the following parameters, you qualify for the Stark Law exception - translating to - you may go about your business!  Here are the Timeshare arrangement exception requirements -   
  1. The arrangement is set out in writing, signed by the parties, and specifies the premises, equipment, personnel, items, supplies and services covered by the arrangement; 
  2. the arrangement is between a hospital or physician organization (licensor) and a physician (licensee) for the use o the licensor's premises, equipment, personnel, items, supplies, or services;
  3. the licensed premises, equipment, personnel, items, supplies, and services are used predominantly to furnish evaluation and management services to patients of the licensee;
  4. the equipment covered by the arrangement, if any: (i) is located in the office suite where the physician performs evaluation and management services, (ii) is used only to furnish DHS that is incidental to the physician's evaluation and management services and furnished at the time of such evaluation and management services, and (iii) is not advanced imaging equipment, radiation therapy equipment, or clinical or pathology laboratory equipment (other than equipment used to perform CLIA-waived laboratory tests); 
  5. the arrangement is not conditioned on the licensee's referral of patients to the licensor; 
  6. the compensation over the term of the arrangement is set in advance, consistent with fair market value, and not determined in a  manner that takes into account (directly or indirectly) the volume or value of referrals or other business generated between the parties;
  7. the arrangement would be commercially reasonable even if no referrals were made between the parties; and 
  8. the arrangement does not violate the anti-kickback statute (section 1128(b) of the Act) or any federal or state law or regulation governing billing or claims submissions. 
See  42 C.F.R. § 411.357(y)

A distinction of note - the Timeshare arrangement as indicated is for a non-exclusive possessory interest - not a lease or sublease, which offers an exclusive right to use space.  

The Federal Register documents OIG's concern over timeshare arrangements between non hospital and physician parties, specifically, arrangements where the licensor is another type of DHS entity - for instance, an independent diagnostic testing facility or clinical laboratory - which, clarification is added - "pose a heightened risk of program or patient abuse as they may serve to lock in referral streams from the physician licensee as a result of the physician's proximity to the DHS furnished by such entities."  81 FR 12030, Mar. 8, 2016. 

The exception added to the Stark Law reminds us that regulators are watching how and why money is passing between parties.  It serves as a reminder that how we pay or receive money matters.  It also serves to remind us that practice structuring is not a Do It Yourself project - the requirements set forth for the Timeshare Exception are complex and require an experiences healthcare attorney to help you structure.  

If you are sharing space or passing referrals, do not blindly continue without having a proper review and structure advise.  For assistance with any such arrangement, contact Jennifer to discuss at 516 747 6700 x. 302 or Jennifer@Kirschenbaumesq.com.