New York Healthcare Law Blog

The Office of Inspector General (OIG) established by the Department of Health and Human Serves has issued a fraud alert focusing on the rental of space in physicians' offices by persons or entities that provide health care items or services to patients that are referred either directly or indirectly by their physician-landlors. The OIG has identified some of the potential illegal practices in such rental relationships.

The OIG described as typically questionable, rental arrangements between physician-landlords and comprehensive outpatient rehabilitation facilities that provide physical and occupational therapy and speech-language pathology services, mobile diagnostic equipment suppliers that perform diagnostic tests in physicians' offices, and suppliers of durable medical equipment, prosthetics, orthotics and supplies that set up "consignment closets" for their supplies in physicians' offices.

The questionable features of suspect rental arrangements are generally examined by the OIG within several suspect areas including the appropriateness of the rental agreement, the rental amount, and time and space considerations. The OIG offers specific criteria all of which must be met to immunize a rental arrangement from prosecution under the anti-kickback statute and strongly recommends that parties to rental agreements between physicians and suppliers make every effort to comply with the specific criteria for the rental safe harbor to the statute.