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3/26/2013
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Anatomy of a Guilty Referral Relationship: Dissecting the Risk Areas and Ensuring Compliance
Anna M. Grizzle, Esq. LeToia Crozier, Esq., CHC
Bass, Berry & Sims PLC Cogent HMG
It has become the health care compliance professional’schore to ensurebusiness arrangements recognize the practicalities of the business world while steering clear of those prosecutors out to prohibit agreements based on the volume or value of referrals.
This presentation will give you the tools to meet this challenge.
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Hypothetical
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Physician Self-Referral“Stark Law”
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Stark - 42 U.S.C. 1395nnThe law prohibits:
1. physicians from referring Medicare/Medicaid patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician's immediate family has a financial relationship—
2. It also prohibits an entity from presenting or causing to be presented a bill or claim to anyone for a DHS furnished as a result of a prohibited referral.
Unless an exception applies.
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Stark
• Physicians (as defined in Medicare rules) (includes immediate family members)
• With a financial relationship with any entity providing designated health services
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DHS Entity
Physician
FinancialRelationship
Medicarepatient referral
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Stark
• Shall not refer government payer patients to that entity providing DHS, and
• The entity cannot bill for the provision of the DHS…
• Unless falling within an exception
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DHS Entity
Physician
FinancialRelationship
Medicarepatient referral
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What are “Designated Health Services”?
• Clinical laboratory services
• Physical therapy, occupational therapy, and outpatient speech-language pathology services
• Radiology and other imaging services
• Radiation therapy services and supplies
• Durable medical equipment and supplies
• Parenteral and enteral nutrients, equipment and supplies
• Prosthetics, orthotics and prosthetic devices and supplies
• Home health services
• Outpatient prescription drugs
• Inpatient and outpatient hospital services
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“Referral” Defined
Very broad – includes:• A request for, or the ordering of, DHS by a physician
• Establishment of a plan of care
• A request for a consultation and any test or procedure ordered by a physician-consultant
• Indirect referrals by a physician who has reason to know the identity of the actual provider of the service
• Does not include DHS personally performed or provided by the referring physician
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Physician
• M.D.
• D.O.
• Dentist
• Podiatrist
• Optometrist
• Chiropractor
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Immediate Family Member
• Husband or wife
• Birth or adoptive parent, child, or sibling
• Stepparent, stepchild, stepbrother or stepsister
• Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
• Grandparent or grandchild
• Spouse of a grandparent or grandchild
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Strict Liability Law
• Intent is Not Relevant– Does not matter if the
prohibited financial relationship results from innocent error or inadvertence
• Technical Violations = Violations
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What is a Financial Relationship?• Direct or Indirect Ownership:
– Equity/stock
– LLC membership interests
– Partnership interests
– Secured debt, loans
• Direct or Indirect Compensation:
– Leases between health care facilities and physicians or physician groups
– Medical director agreements and other service agreements
– Independent contractor relationships with physicians
– Employment arrangements
– Incidental medical staff benefits
• Look for any remuneration!
• Bottom Line: Does the arrangement create any sort of benefit for a physician or his or her immediate family member?
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Financial Relationships
• The relationships themselves need not involve the provision of DHS!
• The key inquiry is whether there is a financial relationship between a DHS entity and a physician (or immediate family member) who refers DHS in any context, whether pursuant to the financial relationship or outside of it.
• Although there is an exception for remuneration paid by a hospital to a physician that is “wholly unrelated” to the provision of DHS, this provision is narrowly construed.
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Stark ExceptionsGeneral Introduction
• Ownership only exceptions – There are very few!
• Compensation only exceptions, e.g.,
– Space and equipment leases
– Personal services
– Recruitment
– Medical staff incidental benefits and non-monetary compensation
• Exceptions for both ownership and compensation
– The “group practice” exceptions
– Academic medical centers
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Stark ExceptionsCommon Elements to Many Compensation Exceptions
• Written Agreement Signed by Both Parties• One year minimum term• Compensation Set in Advance• Fair Market Value• Commercially Reasonable (includes the concept of “needed and
necessary”)• Compensation can’t take into account volume or value of referrals or
other business• NO percentage or “per-click” compensation for space or equipment
leases
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Sanctions under the Stark Law
• Payment denial• Monetary penalties (up to $15,000 for each
prohibited referral and up to $100,000 for a circumvention scheme)
• Exclusion from participation in Federal health care programs
• Refund of amounts collected
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The Anti-Kickback Statute
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Overview
“The anti-kickback statute prohibits in the health care industry some practices that are common in other business sectors, such as
offering gifts to reward past or potential new referrals.” See OIG Supplemental Compliance
Guidance for Hospitals, 70 FR at 4861 (Jan. 31, 2005)
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Federal Anti-Kickback Statute 42 U.S.C. § 1320a-7b(b)
• Prohibits anyone from
– Knowingly and willingly
– Offering or paying (soliciting or receiving)
– Any remuneration (kickback, bribe or rebate)
– Directly or indirectly, overtly or covertly
– In cash or in kind
– To any person to induce such person to
– purchase, lease, order or arrange for or recommend purchasing, leasing, or ordering any good, facility, service or item for which payment may be made, in whole or in part
– Under a Federal Healthcare Program
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Caution!
Almost
Any
Benefit
by and between
Medical Providers
can be considered
“Remuneration”
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Intent Standard: “One Purpose” Test
• As interpreted by OIG and some federal courts, the “one purpose” test means that if just one of your many purposes in paying the remuneration is to influence referrals, you have violated the law.
• Due to the “one purpose” test, enforcers have unlimited discretion to prosecute an arrangement that implicates the AKS but does not fully meet an exception/safe harbor.
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Anti-Kickback Statute Penalties
• Criminal and civil penalties
• $25,000 per offense
• Imprisonment up to 5 years
• Civil monetary penalties (exclusion and $50,000)
• Possible False Claims Act liability
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Safe Harbors
• The OIG has established “safe harbors” that will protect an arrangement from enforcement if all of the requirements of the safe harbor are met.
• Failure to comply with a safe harbor is not a per se violation of the Anti-kickback Statute, but may increase the risk that the arrangement may be scrutinized by the OIG.
• Safe harbors overlap in many respects with the Stark exceptions, but safe harbors are voluntary.
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Examples of Safe Harbors
• Investment Interests
• Bona fide employment arrangements
• Personal Services and management arrangements
• Space and Equipment Leases
• Certain discounts
• Payments to group purchasing agents
• Risk-sharing arrangements with managed care plans
• Waivers of coinsurance for federally qualified healthcenters
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Safe Harbors - Caveat
• Even if an arrangement complies with all of the applicable safe harbor requirements, the OIG maintains that safe harbor still may not protect any profit from the arrangement if the intent or purpose of the arrangement is to provide a referral source with the opportunity to generate or retain a profit from its, his, or her referrals.
• Nonetheless, a key compliance tip is to fit an arrangement within a safe harbor wherever possible.
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Proceeding Outside a Safe Harbor
• Failure to bring an arrangement within a safe harbor arrangement will not violate the Anti-Kickback Statute per se.
• The situation will be analyzed on a facts/circumstances basis.
• Government may infer bad intent from certain facts/circumstances.
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Examples of “Remuneration”
• Free or below-market goods or services provided to the referral source
• Absorbing a cost that the referral source otherwise must absorb
• “Cross-referral” promises – e.g., you send me your patients and I’ll send you mine
• Contractual Joint Ventures
• Swapping
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Key AKS Compliance Inquiries for Transactions Between Referral
Sources• Is the remuneration
– fair-market value? – in an arm’s-length transaction?– for reasonable and necessary services that are
actually rendered?• What is the legitimate business purpose? Is there
any service provided other than referrals?• Is the remuneration conditioned in whole or in part on
referrals or other business generated between the parties?
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Assessing Fair Market Value
• Is a third-party valuation necessary?
• Is the determination of fair-market value based upon a reasonable methodology that is uniformly applied and properly documented?
• Is there any potential for “double-dipping,” i.e., paying a facility for services for which it is already receiving a composite rate?
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Assessing Commercial Reasonableness
• Would a reasonable commercial entity undertake the arrangement absent a potential for referrals?
• Is there any potential for “swapping” or “cross-referrals” between the parties?
• Is patient choice respected? What safeguards are in place?
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Key Question
• Any time a health care business offers something to a physician or other referral source for free or at below fair market value, the question should be:
“Why?”
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False Claims Act and Overpayments
False Claims Act31 U.S.C. § 3729 et seq.
• FCA used to recover for:– Presenting, or causing the presentation of, false
claims for payment
– Making, using, or causing to be made or used, a false record or statement material to a false claim
• Conduct must be “knowing”– Actual knowledge of the information
– Deliberate ignorance of truth or falsity of the information
– Reckless disregard of truth or falsity of information
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2009 Expansion of the FCA
• Fraud Enforcement and Recovery Act of 2009 (“FERA”) expands federal FCA liability to create FCA liability for knowingly retaining any overpayment
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PPACA Requirement• A provider or supplier must “report and
return” an overpayment, and “notify” the recipient “in writing of the reason for the overpayment” within “60 days after the date on which the overpayment was identified”
PPACA § 6402(d); 42 U.S.C. § 1320a-7k(d)(1).
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What is an Overpayment?
• “Any funds that a person receives or retains under title XVIII [Medicare] or XIX [Medicaid] to which the person, after applicable reconciliation, is not entitled under such title.”
PPACA § 6402(d); 42 U.S.C. § 1320a 7k(d)(4).
Penalties
• Treble Damages
• Civil Monetary Penalty between $5,500 to $11,000 per claim
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Takeaways
Tip #1: Remember the basic purposes of the Stark law.
• Prevent corruption of medical decision-making
• Prevent over-utilization
• Prevent increased program costs
• Prevent unfair competition
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Tip #2: Hug a safe harbor or advisory opinion as closely as possible.
• Document reasons why full compliance with an applicable safe harbor is not possible.
• Adopt principles from relevant OIG guidance to the extent possible.
• For Stark, you must meet an exception.
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Tip #3: Don’t rely on safety in numbers.
• Avoid being the next “national project.”
• Be sensitive to areas of heightened scrutiny.
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Tip #4: Be careful with gifts.
• NFL tickets
• Fancy dinners / lobster
• A “holiday basket” may be too much
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Tip #5: Greed is NOT Good.
The #1 red flags to investigators are:
• Return on investments that appears excessive
• Compensation that appears excessive
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Tip #6: Fair Market Value is Your Best Friend.
• For necessary, justifiableservices/investments
• By an independent, reliable source
• Using recognized methodology
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Tip #7: DOCUMENT! DOCUMENT! DOCUMENT!
• All Legitimate business purposes
• All Fair Market Values
• All Services to be provided and time spent providing them
But…documentation can be a two-edged sword if it is inaccurate when created or not fulfilled going forward.
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Tip #8: Check compliance on an ongoing basis.
Continually reassess to be certain that:
• Deal is properly implemented
• Parties fulfilling substantiveresponsibilities
• Ongoing documentation is properly maintained
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Tip #9: Think before you speak.
• Use caution when drafting emails or leaving voicemails.
• Consult a regulatory attorney about all potential regulatory issues.
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Tip #10: Step back and view the entire tapestry.
• Understand every angle of the layered, interconnected network of facts.
• Do not review an issue in isolation, especially when the stakes are high.
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Simple Guidelines
• Four Objective questions:1. Does the arrangement or practice have a
potential to interfere with, or skew, clinical decision-making?
2. Does the arrangement or practice have a potential to increase costs to Federal health care programs?
3. Does the arrangement or practice have a potential to increase the risk of over utilization or inappropriate utilization?
4. Does the arrangement or practice raise patient safety or quality of care concerns?
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