Stark Rules: Joint purchases that pass muster

December 15, 2006

Stark allows unrelated practices in the same building to share ancillaries. But you need to tread very carefully.

Ever wish that you could afford to buy a CT scanner or lab equipment capable of running multiple blood tests? Perhaps you've toyed with the idea of investing in the equipment with other practices, but were afraid of getting snared by the Stark rules on self-referral. There is a way to accomplish your goal without violating the law.

The Stark regulations do permit certain exceptions, and one of these allows unrelated practices in the same building to co-own ancillary facilities in that location and to bill for services performed there. But the practices must meet specific requirements, and the rules are complex.

You're taking a big risk if you plunge into these joint ventures without getting sound legal advice. But it helps to know a few of the basics when you're considering such a venture. Here are the most important points we picked up from healthcare attorneys and consultants who have had experience with these kinds of arrangements.

There are also strict supervision requirements for in-office ancillary services. Medicare spells out the following three levels of supervision, and it has published a list of CPT codes that shows which level is required for each diagnostic test (see http://www.cms.hhs.gov/Transmittals/downloads/B0128.pdf).

These supervision requirements aren't completely straightforward, especially at the direct supervision level. Stark's definition of an office suite is wide enough to encompass a whole building, but carriers often define it more narrowly. So in terms of "immediate access," it's unclear whether a physician must practice on the same floor as the ancillary facility or whether there must be a connecting door between his suite and the facility.

Alice G. Gosfield, a healthcare attorney in Philadelphia, tells of a specially designed office building in which an MRI machine sits at the nexus of three offices. "Two of the practices have side doors that go into the MRI suite, and one of the practices is on the floor above, with a circular staircase that goes down into the suite," she says. The three practices are leasing the MRI machine and the suite jointly.