The settlement is yet another reminder of the challenges associated with per click lithotripsy arrangements. When entering into lithotripsy transactions, providers and facilities need to recognize the following fundamental challenges associated with ensuring compliance with federal regulations:

• Physician-owned companies generally control much or all of the volume of the patients requiring lithotripsy services. In addition, physician owners of these companies often control referral volume for other urology procedures at the hospital where lithotripsy is provided. Therefore, hospitals will continue to face difficult decisions regarding selection of their lithotripsy provider and the rates paid for the services.
• Technical component reimbursement for lithotripsy procedures is usually very attractive to hospitals, and therefore, hospitals can "afford" to pay physician-owned lithotripsy providers at rates that may be in excess of FMV while still realizing attractive profitability from the procedures. Nevertheless, as they would with non physician-owned service providers, hospitals should endeavor to negotiate a payment structure that complies with healthcare regulations.
• Determining FMV using a market approach requires that market comparables be based on transactions involving arm's-length parties. However, the market for lithotripsy services is largely dominated by physician-owned entities. Therefore, though tempting and intuitive, hospitals must avoid defaulting to what the "hospital down the street" is paying for lithotripsy services as such rates may not be at arm's length (or consistent with FMV).

The challenges above reveal the extent to which the deck seems stacked against entering into a compliant per click lithotripsy transaction with a physician-owned provider. Participants in this market must continue to pay close attention to the motives and financial outcomes of these transactions when establishing FMV.