DEPARTMENT: Legal / POLICY DESCRIPTION: General Statement on Agreements With Referral Sources; Approval Process
PAGE:1 of 3 / REPLACES POLICY DATED: Feb. 11, 1998,
July 8, 1998; Jan. 1, 2001
APPROVED: April 9, 2002 / RETIRED:
EFFECTIVE DATE: June 1, 2002 / REFERENCE NUMBER: LL.001
SCOPE: All Company-affiliated facilities including, but not limited to, hospitals, ambulatory surgery centers, home health centers, home health agencies, physician practices, service centers and all Corporate departments, Groups and Divisions.
PURPOSE: To provide direction as to the Company’s process on the entering into financial arrangements with physicians and other potential referral sources.
POLICY: The Company will from time to time promulgate various policies as to financial relationships between Company entities and physicians and other referral sources (the “Policies”). Compliance with the Policies is required in all of the contracts with physicians and other referral sources, although exceptions may be made in certain circumstances where the facts demonstrate that an exception is appropriate. Any proposed exceptions must be discussed with assigned Operations Counsel and immediate supervisors prior to committing to such non-conforming proposals.
The Policies apply to any agreement or financial relationship involving a physician or, as set forth above, a non-physician referral source and a physician’s immediate family members (herein and in the Policies, all may be referred to as "Referral Sources") (“Immediate family members” is defined as spouse; natural or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother or stepsister; father-in law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and the spouse of a grandparent or grandchild). Subject agreements and financial relationships include, but are not limited to, physician recruiting agreements, loans, guarantees of physician loans, guarantees of physician loans, management services agreements, professional service agreements, employment agreements, physician expense reimbursement agreements, other agreements for the provision of services (whether medically related or not), asset purchase and disposition agreements, and medical office building leases.
In general, in compliance with 42 U.S.C. § 1395nn (commonly known as “Stark II”) and the fraud and abuse safe harbors, an agreement with a referral Source must:
  1. be in writing, signed by the parties and must specify the services covered;
  2. specify the timeframe for the arrangement; and
  3. specify the consideration (i.e., rent, purchase price, compensation) and set the consideration in advance, consistent with fair market value, for services or items actually provided without taking into account the value or volume of referrals or other business generated by the Referral Source.
Informal documents, such as "letters of intent," "letter agreements," or "memorandums of understanding" are subject to the Policies, as are arrangements with physician-owned entities. Facilities must not enter into side agreements or arrangements (written or oral) with physicians. The Policies apply to all amendments and extensions/renewals of agreements with physicians as well.
Other than one-time payments of $250 or less or aggregate payments of $500 or less in a 12 month period that are paid in accordance with an executed Physician Expense Reimbursement Agreement, all physician agreements must receive the approval of the Division President and be reviewed by the Legal Department prior to becoming effective. The review and approvals must be obtained even if the agreement complies in all respects with the Policies. It is not acceptable to obtain the appropriate approvals after execution of, and/or making payments per, the agreement. Further, do not make commitments to physicians until approvals have been obtained from both the Division President and the Legal Department. The Division President, in his or her discretion, may delegate authority to the appropriate Market Manager to fulfill the Division President’s responsibilities pursuant to the Policies.
Referral Source arrangements meet the Policies where the intent is to bring a new or needed service to the community (in the case of recruitment), to obtain services or rent property at fair market value rates or to acquire or divest medical practice assets at fair market value as confirmed by independent, third-party appraisers. If at any time it appears that there have been discussions or memoranda indicating an intent to obtain or reward referrals by way of an agreement, such agreement will not be approved.
In all arrangements with Referral Sources, performance of all of the terms of the agreements is required. For example, monies owed by a physician under a lease agreement or loan documents must be paid in accordance with the terms of the documents. Accurate and complete records of all physician receivable collection activity should be maintained by the facility. The Legal Department should be contacted in the event of a default (in the case of physician receivables, APG #2 should be followed) so that remedies may be pursued in a prompt and business-like fashion.
The Legal Department has prepared pre-printed form contracts and certifications which will cover most situations. To the extent possible, the form contracts should be adhered to. Each provision of the contract has its own purpose, so there should not be many deletions (other than "optional" provisions). Substantially all Referral Source agreements should utilize the pre-printed forms. The turn-around time with other agreement forms will be substantially longer. The pre-printed form contracts are available on the Company’s intranet. PLEASE DO NOT RETYPE THE FORM CONTRACTS ONTO A WORD PROCESSING SYSTEM; SUBSTANTIAL DELAYS IN LEGAL DEPARTMENT REVIEW AND APPROVAL WILL RESULT.
REFERENCES:
42 U.S.C. § 1320a-7b; 42 C.F.R. § 1001.952(a)-(l); 42 U.S.C. § 1395nn;
60 Fed. Reg. 41914 (Aug. 14, 1995); 63 Fed. Reg. 1659 (Jan. 9, 1998);
66 Fed. Reg. 856 (Jan. 4 2001)

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