In terms of joint ventures, unbundling hospice services and contracting with another licensed entity is something that we see a lot. And we have developed a sample palliative care services agreement that you have in your packet. It does comply with the personal services and management safe harbor of the anti-kickback statute, which is important.
The system-based hospices don't really have the same anti-kickback issues. But this contract - if you're a free-standing hospice and hospital is what you want to have a relationship with, you could take a look at this contract and it would be good starting point for you in developing a relationship with a relationship where they are running the palliative care program and you're providing unbundled services to the hospital. So, it is one model to consider.
Now, in terms of the safe harbor – this keeps you much safer under anti-kickback prohibitions. And you want to get as close to meeting that safe harbor as possible even though it's not of legal requirement. So, an arrangement fits within that personal services and management contract’s safe harbor if all of the requirements are met.
The arrangement first of all has to be in writing. And it has to be specific about the covered services. So for example, if you're contracting with a hospital, you want to be very specific about what you're doing for the hospital as a hospice. Are you doing direct care? Are you doing administrative services? Are you consulting on the protocols that they will need in their palliative care program? You want to be specific. And then that agreement has to be for at least one year.
The second element of the safe harbor is that there has to be a specific schedule, length and charge for the intervals of service, if you’re not full time. So again, in the case of hospice contracting with a hospital let's say, you want to be very specific, that you're going to be charging them X dollars an hour for your nursing practitioner to make consults or to develop protocols. You want to charge X dollars an hour for your medical director or whom ever else you may decide to bring into the next.
The next element of the safe harbor is a compensation is set in advance at fair market value, not in arms-length transaction and not taking into account the volume or value of referrals. This may be the most essential element of all. You’ve got to make a determination of what is fair market value. And you do that looking in your service area at what might be comparable.
You want to really look at either other service providers in your area, what do you think - and it's not a legal determination but it is really an accounting determination, what would be what the market would bear for these kinds of services in your area and charge as close to that amount as you can. What you don't want to do is be giving away these services because once again, we get into that inducement problem.
The next element that our speaker highlighted in the hospice conference is that the contract cannot counsel or promote any violation of state or federal law. And then finally, the services under the arrangement do not exceed those necessary to accomplish a commercially reasonable business purpose.
There might be some agreements where it could be argued that this was pretty much of a sham. You know, if you go out and hire every oncologist in your service area and you really don't need them to provide services to your patients, that could be beyond what is commercially reasonable and would be a suspect on those grounds. So, that’s what constitutes the safe harbor.
Now, in terms of the joint venture situation, there are certain things you want to look at in your agreement. You want to be very precise about the obligations of the hospice in terms of what you're going to do. Are you going to be providing direct care? Are you going to be providing consultation to the staff? And so, sometimes it's good to spell that out and really separate patient care services from administrative services.
What are the other things that you might be doing that you should be compensated for like program guidance, policy and procedure development, training, meeting participation, participating in their QUAPI, their quality assessment and performance improvement functions and anything else you might be thinking of doing.
Now, one of the questions that we sometimes get from hospices is that they’ve been invited to sit on a committee of a hospital isn't that okay. We think that’s fine. This is about good relationships within the community. But when we start getting into many hours of work developing policies and procedures and doing training and so on, then you’ve crossed over the line, in my opinion, and it's important to obtain compensation for those services.
And again, this is very complex territory. If you're thinking about doing this, it really is a very wise idea that both parties have their legal counsel takes a look at the arrangement because any small fact can change the equation in terms of whether it's permissible or maybe impermissible. And there’s a gray line here too. So, a lot of it depends on how clear you are that there is no possible intent to induce referrals and that you’ve overcome as much as the possibility of an allegation of that by staying within the safe harbor as per the healthcare guidelines.
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