Last month the Office of Inspector General issued OIG Advisory Opinion No. 04-17 concerning a proposed pathology joint venture whereby a company affiliated with an operating pathology laboratory would undertake to set up "turn key" pathology laboratories for physician groups specializing in urology, gastro-interology and dermatology. The venture anticipated that up to five separate and fully functioning laboratories would be set up in a single office building with pathologists and technical personnel floating from one to another.
Each laboratory would service a single practice and would take advantage of the in-office ancillary services exception to the Stark law prohibitions.
The OIG in its advisory opinion emphasized that regardless of whether the proposed venture met the Stark criteria it appeared shaky at best under the federal anti-kickback statute review. The two statutes do cover a lot of the same ground but they have their significant differences and compliance with one does not equate with compliance with the other. Since Stark is a strict liability statute a venture must position itself within the clear exceptions of the statute to avoid liability. Skating around the hole without falling provides no protection whatsoever. The anti-kickback statute, however, is more complicated as there are issues of intent and the failure to comply with a "safe harbor" does not necessarily implicate liability.
In reviewing the proposed pathology joint venture, the OIG hearkened back to an earlier Special Advisory Bulletin. See 68 Fed. Reg. at 23148. The bulletin raised concerns over an arrangement where the owner of a line of business moves into a related line of business dependent on referrals from the first line and contracts substantially the entire operation out to a company in the second line of business and the profits are shared between the two. (I.e. hospitals going into the outpatient Oxygen business for example, where the entire operation is performed by an established O2 company and the profits are shared.) While it is true that the first line medical group was obligated to pay a monthly fee to the pathology company, the first line had no real risk because it controlled the level of referrals. Second, there were per-specimen fees to be paid which rewarded the parties based on volume of referrals. Even if each of the individual space, equipment, personal services contracts met individual safe harbor protections, the amount of money flowing to the first line company from the referrals to the laboratories for the technical components were not protected under the statute.
Comments