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Give leasing agreements for imaging services a close scan

A column examining the ins and outs of contract issues

By Steven M. Harrisis a partner at McDonald Hopkins in Chicago concentrating on health care law and co-author of Medical Practice Divorce. He writes the "Contract Language" column. Posted Nov. 7, 2005.

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CT and MRI scanning have become one of the fastest-growing health care services in the United States. Projections for the total spent in this country on imaging services and new equipment is estimated to reach $100 billion this year.

With that kind of spending, leasing agreements for scanners have come under scrutiny due to the high volume of utilization in recent years, increased Medicare reimbursement and concerns regarding compliance with state and federal laws.

Leasing agreements for the provision of CT and MRI scanning services must be carefully structured to comply with state and federal regulations. If you are considering entering into a leasing agreement for CT or MRI services, you should determine how the arrangement will be structured to comply with the anti-kickback and Stark laws, if you are providing services to Medicare or Medicaid patients. In addition, state laws often regulate prohibited kickbacks and self-referrals.

In August, the Centers for Medicare & Medicaid Services published proposed revisions to the 2006 physician fee schedule. CMS has proposed including positron emission tomography and other nuclear medicine within the definition of "designated health services," and such services would be covered under the Stark II law. Nuclear medicine procedures currently are excluded from Stark II unless such services are performed as hospital inpatient or outpatient services.

Certain imaging leases in Florida and Louisiana have come under scrutiny due to suspect terms including financial relationships, the referral of patients outside the context of the imaging lease, and payments to physicians in exchange for patient referrals.

In light of these suspect arrangements, the Louisiana State Board of Medical Examiners issued a statement of position in June that says per-click agreements violate that state's anti-kickback law. Leasing agreements that are based on a specified number of tests per month often are referred to as "per-use" or "per-click" arrangements.

The expectation is that other states will follow Louisiana's lead.

Access payments

Other leasing agreements have been structured as time-share agreements for CT or MRI services, in which a practice group or physician rents the imaging center's equipment, facilities and employees for certain time slots each month. These arrangements must comply with all state and federal regulations regarding anti-kickback and self-referral provisions.

If you are leasing your CT or MRI to another practice group, you may consider implementing a contractual relationship between the parties which includes an access payment.

Such payments would be paid monthly by the lessee practice to the lessor, either a physician or group practice that owns the equipment. Under this type of arrangement, the access payment is not based upon the number of scans being conducted, the actual use of the equipment, or volume or value of referred patients.

The lessee physician or practice would pay the lessor physician or imaging center a set rate for blocks of time that would include the use of the equipment, facilities and technicians. The following is a sample contract provision for access payments for the provision of imaging services:

"Access payments. In payment for access to the equipment, facility and facility personnel, the lessee physician group shall pay the lessor physician group $________ per hour with blocks of two (2) hours for ____ days per week. Regardless of the number of patients who are scanned during each two (2) hour leased time block, the lessee physician group shall pay the lessor physician group $_______ per hour for ____ days per week ("access payments"). Such fees shall be payable in consideration of the time the access is being made available to the lessee physician group, regardless of whether any scans are conducted during the available time or the facility and equipment are actually used."

If you are the lessee, you should make sure there is a provision in your leasing agreement stating that you are not responsible for paying the access payments if the equipment is broken or not operational on certain days due to staffing or scheduled holidays.

Equipment and billing

You also should consider including a provision in your leasing agreement that clearly states which equipment and facility personnel are provided under the contract. The following language is an example of such a provision:

"Use and billing by lessee physician group. The lessee physician group shall use the following equipment and facility only to provide CT services to its patients pursuant to the terms of this agreement and such equipment and facility shall include: ______________ (identify specific equipment and facility). The lessee physician group shall be solely responsible for: (i) providing such services; (ii) billing for all technical and professional components of such services; and (iii) collecting payment for all such services. The lessee physician group shall comply with all applicable laws, rules and regulations in connection with its use of the equipment and facility, and shall comply with all rules and regulations as established from time to time by the lessor physician group."

In this climate of increased scrutiny of imaging centers and leasing agreements between physicians, it is important to review carefully your current agreements and any proposed leasing arrangements to ensure compliance with all applicable state and federal regulations. You should pay close attention to how compensation, use and billing are addressed in these agreements.

Steven M. Harris is a partner at McDonald Hopkins in Chicago concentrating on health care law and co-author of Medical Practice Divorce. He writes the "Contract Language" column.

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