Carolyn Buppert, NP, JD

Disclosures

January 02, 2001

Question

Could you explain how leased employee agreements work? If a physician leases an advanced practice nurse (APN) from a hospital, could the physician then bill for services provided by that APN within the hospital setting? If the APN still has benefits paid by the hospital, would the APN still be considered an employee of the hospital?

Response from Carolyn Buppert, NP, JD

Leased employee agreements allow a business to contract for the services of an employee of another business. An employer has a legal definition and legal responsibilities -- withholding and depositing income tax, making contributions to Medicare and Social Security, and providing worker's compensation insurance, among other things. One who leases an employee from another business does not inherit all of the legal responsibilities of an employer but may have specified responsibilities and privileges under a contract between the businesses.

For example, University of Elsewhere School of Nursing employs NP Jones. The School of Nursing pays NP Jones' salary, benefits, employment taxes, unemployment insurance, malpractice insurance, and continuing medical education. Dr. X leases NP Jones to work at his practice 2 afternoons a week. Under a contract with the School of Nursing, Dr. X pays the School $54 an hour for the time NP Jones works for him. The contract states, among other things, that the hourly rate includes a contribution to NP Jones' benefits and insurance, but it is the School of Nursing's responsibility to fulfill the legal requirements of being NP Jones' employer, including paying taxes and benefits.

When one business wants to lease another business' employee, the parties will want to be sure the arrangement is mutually beneficial and does not violate any laws. Each party's attorneys should review leasing agreements.

Four legal considerations are as follows:

  1. Does the leasing agreement violate the Federal law prohibiting kickbacks?

  2. Where does the liability fall for (a) the NP's safety in the workplace and (b) any lawsuits brought against the NP?

  3. Which party is responsible for ensuring that the NP is properly trained, not only in medicine but also in the details of Medicare compliance?

  4. Can a business, which is leasing another business' NP employee, bill for the NP's services?

If a physician wants to lease an NP employed by a hospital, a major consideration will be whether or not the hospital has included the NP's salary as a cost, to Medicare, under Part A. If the answer is "yes," the leasing physician may not bill Medicare for the NP's services. If the answer is "no," then the physician may bill Medicare for the NP's services, assuming he or she follows the rules for doing so.

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