Monday, January 31, 2005

OIG rules on joint ventures
with Clay Stribling
C. Stribling

Q. What should HME suppliers consider before entering into joint ventures with referral sources?

A. On December 10, 2004, the Office of Inspector General for the Department of Health and Human Services issued an advisory opinion concerning a joint venture arrangement for the provision of pathology services. The proposed arrangement was similar to many arrangements that are common in the DME industry. The advisory opinion discussed the OIG’s April 23, 2003, Special Advisory Bulletin regarding contractual joint ventures. Since the opinion concerns issues closely related to several types of “turnkey” DME joint ventures, it should interest suppliers to know that the OIG relies on the Special Advisory Bulletin in its analysis. The proposed arrangement had most of the characteristics of a “suspect joint venture” described in the Special Advisory Bulletin. The key issue raised by the OIG was that one party had no financial or business risk, and was providing mostly patients to the venture. An acceptable model has both parties assuming risk in the operation and financing of the venture.

Clay Stribling, Esq., is an attorney with the Health Care Group of Brown & Fortunato, P.C., an Amarillo, Texas based law firm. He can be reached at (806) 345-6346 or