In the March 2, 2026, issue of PBN, legal experts weigh in on the pitfalls a medical practice must negotiate when they sublet space from other providers. One of those experts, J. Malcolm “Jay” DeVoy, a partner with the Holland & Hart law firm in Las Vegas, offers some added advice on alternative arrangements.
On the “timeshare” alternative to the traditional sublease arrangement:
One or more tenants can have separate timeshare arrangements with a lessor, so long as the lessor does not offer (or collect compensation for) more resources than can possibly be consumed by all tenants if fully utilized. The use of the term "timeshare" was popularized by 2016 amendments to regulatory exceptions to the Stark Law, found in
42 C.F.R. § 411.357(y) [“Timeshare arrangements. Remuneration provided under an arrangement for the use of premises, equipment, personnel, items, supplies, or services if the following conditions are met ... "].
This exception provided flexibility for specific time- and service-based arrangements that did not fit then-existing Stark Law exceptions or AKS [anti-kickback statute] safe harbors -- see, also from 42 C.F.R. § 411.357, (a) and (b) (exceptions to Stark Law's prohibitions for rentals of space or equipment), and
42 C.F.R. § 1001.952 (b), (c), and (d) (safe harbors for space rental, equipment rental, and personal service or management contracts). This timeshare arrangement allows for more flexibility in leasing space or equipment, or using services, on a less-than-full-time basis, within the traditional lessor-lessee model.
On “per-use” subleasing arrangements:
Time-based leasing of premises or equipment, especially when on a fixed schedule, can more easily comply with applicable AKS safe harbors and Stark Law exceptions that allow the parties -- whether lessor or lessee -- to make and receive referrals, provided all other requirements are satisfied.
The HHS OIG has taken a negative view of per-use (or “per-click”) arrangements for more than 25 years, as seen in their
2000 special fraud alert cautioning against third-party space rental agreements with physician offices where "rental amounts ... vary with the number of patients or referrals," or "set a fixed rental fee per hour, but do not fix the number of hours or the schedule of usage in advance."
However, more recent rulemaking has indicated that certain limited applications of per-action payments that could influence referrals pose a sufficiently low risk of abuse that the OIG would not act on them. (See
OIG Advisory Opinion 19-04.)