John Falcetano (email@example.com) is Director Corporate Compliance at Brooks Health System in Jacksonville, FL.
A critical element of any effective compliance program is monitoring. As a service to our members, each month this column focuses on potential monitors for specific business lines.
Several kinds of legal agreements with providers should be monitored by compliance professionals. When dealing with physician lease agreements, we need to monitor Stark Law and Anti-Kickback Statute (AKS) compliance. Stark Law prohibits physicians from referring Medicare patients for designated health services to any entity with which the physician, or their immediate family member, has a financial relationship. The AKS on the other hand, prohibits receiving anything of value for patient referrals when the services are payable by federal healthcare programs. Illegal remuneration can include anything from paying for a physician’s lodging and meals to giving them cash.
In order to decide what to monitor when it comes to physician lease agreements, we have to understand the compliance risk. There are many things in physician lease agreements to monitor; I will focus on just two, the written agreement and fair market value (FMV).
The agreement must be a written lease agreement that is signed by both parties. The agreement must identify the specific premises rented. Most lease agreements usually use information on the amount of square footage being leased. The agreement needs to be for at least one year in duration and, if it is terminated before the first year is up, the parties are restricted from entering into a new agreement for the same space during the remainder of the first year of the agreement.
Besides having a written agreement, another import risk that should be monitored is related to how much the organization is charging or paying for leased property. Organizations must ensure appropriate rent charges over the term of the arrangement. The amount needs to be set in advance and be consistent with FMV. Be sure to pay attention to automatic lease renewals that are written into the agreement. The FMV may have changed during the duration of the lease agreement. A new FMV evaluation should be conducted at the time of renewal.
Compliance professionals need to ensure physician lease agreements are not the only type of provider agreements monitored. There are other types of physician agreements that can be monitored, such as medical directorships, management services, or equipment rentals. In conclusion, there are always opportunities to identify potential compliance monitoring activities.