By Kim Stanger

Healthcare attorneys and their clients are generally aware of and take appropriate steps to avoid the severe penalties that may follow fraud and abuse of government payor programs such as Medicare and Medicaid. They may be less attuned to their potential liability in private payor situations and, consequently, more cavalier when considering mistakes, misconduct, and potential repayments to private payors, including patients, residents, insurers, or other third parties. Red flag situations may include, e.g., waiving copays or deductibles; providing patient or resident discounts or other inducements to receive services, especially for out-of-network patients; kickbacks or similar arrangements to induce referrals; billing and coding errors; false claims; billing for medically unnecessary services; billing for services that were provided by unlicensed or uncredentialed providers or misrepresenting the provider of services; failing to comply with coordination of benefits or secondary payor rules; double payments; claims that lack sufficient documentation; or claims for substandard care. Whether due to business concerns or regulatory mandates, private payors seem to be increasingly active in monitoring and responding to potential provider fraud or abuse. This memo will summarize some of the statutory, contractual, and common law bases for private payor enforcement. Continue reading →

By Kim Stanger

A good contract with an employed or contracted physician or other practitioner may help you avoid regulatory violations and future disputes. Here is a brief summary of some terms or issues that you should consider in your provider agreements.

Regulatory Compliance. If the practitioner will be performing or referring items or services payable by government healthcare programs, you should generally structure the contract to satisfy applicable safe harbors under the federal Anti-Kickback Statute (“AKS”), 42 CFR 1001.952(d) or (i). If the contract involves a physician, the contract must be structured to satisfy the Ethics in Patient Referrals Act (“Stark”), 42 CFR 411.355 or 411.357(c), (d) or (l). For information concerning these regulatory requirements, see our Client Alert, Stark Requirement for Physician Contracts. In addition, the federal Civil Monetary Penalties Law generally prohibits hospitals from offering inducements to physicians to limit medically necessary services payable by government programs. (42 USC 1320a-7a(b)(1)). If the employer is a tax-exempt entity, you will also want to ensure the compensation reflects fair market value to avoid 501(c)(3) tax issues. If your state recognizes the corporate practice of medicine doctrine, you may need to structure your arrangement to fulfill any unique requirements applicable to your state.

By Kim Stanger

Healthcare providers often offer free screening tests or services as a way to generate business for their facility or practice; however, doing so may violate federal and state laws unless structured properly.  The federal Anti-Kickback Statute (“AKS”)¹ and Civil Monetary Penalties Law (“CMPL”)² generally prohibit offering free or discounted items or services to patients as a way to generate business payable by Medicare, Medicaid or other federal healthcare programs unless the arrangement fits within a regulatory exception.³ Violations of the AKS or CMPL may result in criminal, civil, and/or administrative penalties. Continue reading →

by Kim Stanger

Many providers mistakenly believe that the federal Stark law prohibits hospitals and other employers from requiring employed or contracted physicians to refer healthcare services to the employer. Stark actually allows a hospital or other employer to require contracted physicians to refer items or services to the hospital if the items or services relate to the physician’s services under the contract and certain additional conditions are satisfied.

Stark Regulations. Stark’s “special rules on compensation” state:

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By Kim Stanger, Holland & Hart LLP

At this time of year, healthcare providers may want to give gifts to referring providers, patients or other sources of business; however, such gifts may violate federal and state fraud and abuse laws and result in fines—or worse—to both the giver and recipient. Here are some guidelines to ensure your gift giving does not get you in trouble with the government.

1. Gifts To Referral Sources. The federal Anti-Kickback Statute (“AKS”) prohibits soliciting, offering, giving, or receiving remuneration in exchange for referrals for items or services covered by federal healthcare programs (e.g., Medicare and Medicaid) unless the arrangement fits within a regulatory exception. (42 USC 1320a-7b(b)). AKS violations are felonies, and may result in criminal and civil penalties, False Claims Act liability, and exclusion from Medicare and Medicaid programs. The AKS is violated if “one purpose” of the remuneration is to induce federal program referrals, including gifts to referring practitioners or program beneficiaries to encourage or reward their business. (OIG Adv. Op. 12-14). Significantly, the AKS applies to both the giver and recipient; thus, soliciting or receiving gifts from vendors or other providers may expose the recipient to liability. The OIG has suggested that “nominal” gifts would not create much AKS risk, but offers no guidance as to what is “nominal”. (65 FR 59441). The AKS does not expressly apply to referrals for private pay business, but the OIG has warned that offering remuneration to obtain private pay referrals may also induce federal program business and thereby violate the AKS. (OIG Adv. Op. 12-06). In addition, offering gifts to induce or reward private pay business may violate state laws, including state laws prohibiting kickbacks, rebates, or fee splitting. (See, e.g., Idaho Code 41-348 and 54-1814). In short, you should not give or accept gifts to or from referral sources (especially those referring federal program business) unless the gift is truly nominal, is clearly and completely unrelated to past or future referrals, or is very unlikely to influence referrals. Continue reading →

by Kim C. Stanger, Holland & Hart LLP

Healthcare providers sometimes offer “prompt pay” discounts to encourage patients to pay their bills within a certain period, including outstanding copayments or deductible amounts. Such programs should be structured appropriately to ensure compliance with applicable laws and payer contracts.

1. Federal Fraud and Abuse Laws. If the discount is offered to induce the patient to receive other services payable by Medicare, Medicaid, or other government programs, the discount may violate federal fraud and abuse laws. The federal Anti-Kickback Statute (“AKS”) prohibits knowingly offering any remuneration to persons to induce or reward referrals for items or services covered by federal health programs, including Medicare or Medicaid. See 42 U.S.C. § 1370a-7b. The AKS applies to discounts offered to federal program beneficiaries if the purpose of the discount is to induce referrals. See, e.g., OIG, Special Advisory Bulletin: Offering Gifts and Other Inducements to Beneficiaries (8/30/02); OIG, Special Fraud Alert regarding Routine Waiver of Part B Co-Pays and Deductibles (12/19/94). Similarly, the federal Civil Monetary Penalties Law (“CMPL”) prohibits knowingly offering anything of value to Medicare or Medicaid beneficiaries that is likely to influence the beneficiary’s selection of a particular provider of services payable by Medicare or Medicaid, including waivers or discounts of coinsurance or deductible amounts. See 42 U.S.C. § 1320a-7a(a)(5); 42 C.F.R. § 1003.102 and .103(b)(13). Continue reading →

by Kim C. Stanger, Holland & Hart LLP

Recent Stark law amendments will make it easier for physicians to share space, and for hospitals to provide space, equipment, and services to visiting specialists and other physicians on a non-exclusive, “as-needed” basis. Hospitals and physicians may want to review their current lease arrangements to determine whether the new exception is a better fit for their current or future relationships and, if so, structure their arrangements accordingly.

Prior Law. The federal Ethics in Patient Referrals Act (“Stark”) generally prohibits physicians from referring patients for certain designated health services (“DHS”) payable by Medicare to entities with which the physician has a financial relationship unless the relationship is structured to fit within a regulatory safe harbor. (42 USC 1395nn; 42 CFR 411.353). Providing space or equipment to a referring physician generally creates a financial relationship that triggers Stark¹; consequently, such arrangements generally needed to be structured to satisfy Stark safe harbors for leases of space or equipment. Unfortunately, those safe harbors required, among other things, that the physician enter a formal lease that provided for exclusive use of the leased premises or equipment during defined lease terms (42 CFR 411.357(a)-(b)); the physician and lessor were generally not permitted to share space or equipment during the lease term, nor could the lease be on an “as needed” basis. Traditional timeshare arrangements in which physicians share space or equipment on a non-exclusive basis did not satisfy Stark, thereby forcing physicians and their landlords to enter formal, inefficient, and sometimes impractical lease arrangements. Continue reading →