Leasing puts physicians just a click away from profits

November 2, 2005

Guaranteed profits with no financial risk: That is the lure of "per-click" leasing. The in-office imaging strategy promises to make self-referral financially safe and operationally easy to execute, according to attorney Thomas Greeson.

Guaranteed profits with no financial risk: That is the lure of "per-click" leasing. The in-office imaging strategy promises to make self-referral financially safe and operationally easy to execute, according to attorney Thomas Greeson.

Hundreds of such MR and CT deals, which meet federal anti-self-referral requirements, have been made between imaging services providers and group practices, Greeson said.

With per-click leasing, equipment is installed in a physician's office so the technical component of fees qualifies for the in-office ancillary services exemption to the Stark II self-referral law. A physician services exemption allows the physician to bill Medicare for interpretation. Leasing fees are set in advance and reflect their market value, as the law requires.

The referring physician pays a "leasing fee" only when a patient is referred for imaging. Profits are assured because the leasing fee is set below the insurer's technical reimbursement rate for the procedure.

The imaging provider handles all the details of equipment financing, installation, staffing, operation, and maintenance, making it easier for group practices to participate. Patients may be scheduled into any available slot, and minimum volume requirements are not applicable.

"These lease arrangements have zero business risk. Physicians profit with every referral," Greeson said.

As a result, they are an invitation for overutilization, because profits rise in direct proportion to the number of patients referred for imaging.

Block time leasing is also popular, but it entails some risk. The group practice could lose money if patient slots are not filled.

Because the imaging provider accepts only a portion of the Medicare technical payment, per-click leasing may, depending on how the arrangement is structured, violate the CMS billing rules prohibiting markup of purchased diagnostic tests as well as the Medicare anti-kickback statute, Greeson said. The Department of Health and Human Services' Office of the Inspector General has criticized the practice, and the Louisiana Board of Medicine ruled in June that pure per-click lease arrangements violate the state's anti-kickback law. Implementation of MedPAC recommendations such as utilization monitoring and interpreting-physician standards could discourage inappropriate referrals.

Until regulations are adopted, the profits will continue to rise, one click at a time. -JMB