Therefore, it is critical to understand whether the practice has been billing timely and appropriately and whether the appropriate payments have been made to the practice.
Another issue to understand related to payers is that rates set by payers in their contracts are often specific to a particular practice. When a change of control in ownership occurs, the payer may terminate the existing contract and create a new contract with the practice, which may have different reimbursement rates. Therefore, a potential buyer must realize that rates may change and anticipate this change of rates when determining whether to invest in the practice.
Knowing these issues exist, evaluating whether they are going to be hurdles to your transaction & discussing them with your attorney at the onset of the transaction may help determine what actions are necessary.
Anti-Kickback & Stark Law Concerns
Another issue associated with a healthcare transaction is whether the sale violates any federal or state law, including the Anti-Kickback Statute and the Stark Law (also known as the Physician Self-Referral Law).
The Anti-Kickback Statute (under 42 U.S.C. §1320a-7b[b]) prohibits anyone from offering, soliciting, paying or receiving anything of value to induce referrals of items or services covered by federally funded healthcare programs, including Medicare and Medicaid. The purpose of the statute is to ensure that physicians’ medical decisions are based on the needs of individual patients instead of improper incentives or drivers.
The Stark Law (under 42 U.S.C. §1395[nn]) is a set of regulations that prohibits physician referrals of Designated Health Services under Medicare and Medicaid to an entity when a physician (or his or her immediate family members) has a direct or indirect financial relationship with that entity, unless the referral fits into a specific exception outlined in the regulations. There are multiple exceptions to the Stark Law, including referrals made to other physicians in the referring physician’s group and in-office ancillary services.
These laws can be implicated in a number of ways, including if you have another practice that may be a referral source of the acquired medical practice.
It’s important to note that each state may also have its own anti-kickback rules. Therefore, before deciding to purchase a practice, you should consider consulting with a healthcare attorney to ensure that you are in compliance with laws at both the federal and state levels.
Of course, these issues can be addressed throughout the transaction. However, knowing that these issues exist, evaluating whether they are going to be hurdles to your transaction and discussing them with your attorney at the onset of the transaction may help determine what actions are necessary. This can be extremely beneficial for all parties involved in the transaction and can make the process more efficient and that much smoother.
