Fraud
Essay title: Fraud
If I understand the joint venture proposal correctly, Franklin County hospital will operate a “for-profit subsidiary” called Franklin MRI Limited. Franklin MRI limited will lease an MRI machine, the cost for the machine and service will be divided. Franklin County will contribute $25,000, the limited partner physicians will each contribute $10,000.

In return the physician partners will receive a percentage of profits based on the number of patients referred. Furthermore, the limited partnership will pay the annual lease payment of $500,000. However, the limited partners will sub-lease the MRI to Franklin County Hospital. Who, in return will pay 80 percent of the annual lease payment, plus an additional 50 percent of the gross usage charges.

Does this joint venture violate the Medicare Anti-Kickback Act? The Federal Anti-Kickback Statute, prohibit individuals or entities from knowingly and willingly offer, pay, solicited or receive payment to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program (Harris, 2006).

In addition many courts have interpreted the law to cover any arrangement in which one purpose of the payment is to compensate for program referrals. However, to prove a violation of the anti-kickback statute, the government must prove that a defendant had a specific intent to disobey the law.

The concern being with the limited partners, and the incentives associated with referrals to Franklin MRI Limited. This issue is specifically troubling, as it provides an opportunity or at least speculation, for unnecessary MRI studies. These unnecessary studies would be for the sole purpose of increasing compensation. Another concern was a comment made by the President of Franklin County Hospital. The comment raises concern as to the intent to disobey the law, he stated ” in an effort to save money, he not want to raise the issue with the organizations legal department.” (www.law.cornell.edu/cfr/)

With that said, my initial thought is the arrangement does violate the Medicare Anti-Kickback Act. However, prior to publicly sharing my thoughts. I would request a copy of the official agreement, and have our professionals in the legal department review the process.

“Investment interests. As used in section 1128B of the Act, “remuneration” does not include any payment that is a return on an investment interest, such as a dividend or interest income, made to an investor as long as all of the applicable standards are met within one of the following three categories of entities:” (www.law.cornell.edu/cfr/)

“If, within the previous fiscal year or previous 12 month period, the entity possesses more than $50,000,000 in undepreciated net tangible assets (based on the net acquisition cost of purchasing such assets from an unrelated entity) related to the furnishing of health care items and services, all of the following five standards must be met

If the entity possesses investment interests that are held by either active or passive investors, all of the following eight applicable standards must be met

If the entity possesses investment interests that are held by either active or passive investors and is located in an underserved area, all of the following eight standards must be met”

Does the arrangement fit within the safe harbor for any type of investment interest? Why or why not? It appears that the arrangement does not fit within the safe harbor provisions. Specifically failing to meet the requirements set forth in sub-section (1) paragraph (iii), which reads:

The entity or any investor must not market or furnish the entitys items or services (or those of another entity as part of a cross referral agreement) to passive investors differently than to non-investors. (www.law.cornell.edu/cfr/)

Again , the referral agreement is a little troubling. The agreement limits the physicians MRI options to the Franklin MRI Limited organization. The physicians do receive compensation if they are associated with the Limited partners. However, if a physician not associated with Limited partners request studies through Franklin Limited MRI. Compensation is not provided, with the referral compensation being confined to the limited partners, this violates the above mentioned portion of the regulation.

“Equipment rental. As used in section 1128B of the Act, “remuneration” does not include any payment made by a lessee of equipment to the lessor of the equipment for the use of the equipment, as long as all of the following six standards are met”. (www.law.cornell.edu/cfr/) There are six areas which must be met to qualify for the Safe Harbor equipment regulation.

First, has the lease agreement been formally written and signed by all parties? I

Get Your Essay

Cite this page

Previous Fiscal Year And Franklin Mri Limited. (June 8, 2021). Retrieved from https://www.freeessays.education/previous-fiscal-year-and-franklin-mri-limited-essay/