Strategic Partnerships for 2007

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Drastic reimbursement reductions for MR and CT in the freestanding setting have made joint ventures with referring physicians more attractive than ever, writes Jerry J. Sokol, JD, and Joshua M. Kaye, JD, health care attorneys with McDermott Will & Emery, in an article in the January issue of Imaging Economics.

“Although some imaging centers think they have little choice other than to sell their business, there are, unfortunately, very few buyers….As a result, many imaging centers are considering ways to obtain a competitive edge by collaborating with referring physicians.”
—Jerry J. Sokol, JD, and Joshua M. Kaye, JD

The DRA has resulted in the biggest change in the imaging reimbursement landscape since the Stark laws, wrote Sokol and Kaye. The fear and uncertainty is compounded by the IDTF rule changes and the specter of future possible changes to the Medicare reassignment rule. Sokol and Kaye described four joint venture models, three of which are premised on the In-Office Exception and the emerging under-arrangement model, which meets other applicable Stark law exceptions.

The authors cautioned that all imaging arrangements with referring physicians be carefully reviewed in light of the concerns of the Office of Inspector General.

1) Block Leasing. Under the block lease arrangement, the independent diagnostic testing facility (IDTF) or health system leases a block of time on the imaging modality to a medical practice that desires to provide imaging services to its own patients. In exchange, the practice would pay fair market value rent and service fee to the IDTF, in addition to assuming financial and operational risks of the diagnostic business during the proscribed time period. From the Stark perspective, the “same location” test must be satisfied, that is, the referring physician must have an office within the same building in which the center is located.

2) Shared Ancillary. The shared ancillary model is a variation of the block lease model, but instead of leasing blocks of time, each physician practice assumes a proportionate share of the costs of the imaging business and use the equipment on a concurrent, first come, first-served basis.

3) Ancillary-Only Management. With roots in the physician practice management industry, this model provides physician practices with access to management and expertise of imaging suppliers. The imaging management company offers a practice a list of imaging management services, including the equipment, supplies, and assistance with billing. The practice pays a management fee.

4) Under Arrangement. This model leverages the hospital’s higher reimbursement rates and has many forms, usually exhibiting the following three characteristics: the participating physicians or IDTF provides to the hospital the imaging service; the hospital purchases the service on a per-use basis; and the hospital bills and collects for the services under the hospital APC codes.