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Special report on reimbursement. The safe harbor for small investment interests: where do joint ventures go from here?



Special report on reimbursement. The safe harbor for small investment interests: where do joint ventures go from here?



Health Care Law Newsletter 6(11): 15-20



There is no specific federal self-referral legislation presently proposed or in effect that statutorily prohibits providers from referring Medicare or other patients to entities in which the referrers have an investment interest, except for existing "Stark" legislation, which applies only to clinical laboratory services, effective January 1, 1992. (See Newsletter, Vol. 6, No. 1, January 1991, at 3.) Thus, health care joint ventures are not per se illegal. The publication of the Safe Harbor Regulations does nothing to change this fundamental fact, and it should not cause providers to abandon existing joint ventures, or planned ones, in a "knee-jerk" fashion, without careful analysis. Of course, there is no guarantee that expanded "Stark" legislation, or some other new self-referral legislation, will not be enacted in the future to prohibit providers from referring patients to entities in which they have an investment interest. Because of this uncertainty, all health care joint ventures should contain "unwinding" provisions to govern the rights and obligations of investors in the event that the venture is required to, or the participants voluntarily elect to, dissolve. Any new venture being contemplated should plan for dissolution, and existing ventures should undertake an internal review of their charter documents to assess whether the rights and duties of all participants upon dissolution are properly spelled out. If not, amendments should be made now, while all participants are on good terms. A failure to agree in advance upon such important issues is an invitation to discord, and possibly even litigation.

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Accession: 047408170

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PMID: 10115384


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