VHA: Stark issues more common than execs think

While there are plenty of exceptions to self-referral regulations known as "Stark II," the repercussions can be enormous for hospitals that wrongly assume that they're in the clear. So whenever hospitals do business with physicians, it's critical for them to lay plans carefully and get attorneys involved in transactions, says Rosland Fisher McLeod, J.D., vice president and general counsel with Novation. For example, if hospitals want to offer physicians a lease, and then decide to cancel the deal, they can't offer physicians another lease until the original term is up. "Planning at the front end is very necessary," says McLeod, who led a session at the VHA Inc's annual conference in Denver. "Involve your legal counsel early and often. This stuff is very tricky."

Unfortunately, she notes, hospital leaders aren't always aware of which areas are dangerous in Stark terms. For example, she notes, there is no Stark exception allowing hospitals to let doctors purchase supplies through their bulk purchasing contracts. Another area where hospitals aren't always careful enough is when they create joint ventures with physicians. In such deals, like ambulatory surgical center and imaging center JVs, hospital execs must make certain that physicians are taking meaningful financial risks, she says. "They must sign a loan guarantee, buy some equipment...they have to have some skin in the game," she notes. What's more, hospitals must be certain that physicians aren't given special financial status related to how often they refer or how much their referrals are worth.

To get more background on Stark II rules:
- read this law firm's summary (.pdf)

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