Category Archives: Fraud and Abuse

November 11, 2013

Gifts to Referral Sources and Patients

by Kim Stanger, Holland & Hart LLP

At this time of year, many healthcare professionals want to give gifts to patients, physicians, or other referral sources to show their appreciation, but doing so may violate federal and state fraud and abuse laws. 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). Moreover, the AKS applies to both the giver and recipient. 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. 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 →

April 18, 2013

OIG Issues Revised Self-Disclosure Protocol

by Patricia (Pia) Dean, Holland & Hart LLP

On April 17, 2013, the Department of Health and Human Services Office of Inspector General released a revised provider self-disclosure protocol (SDP) that supersedes and replaces the 1998 Federal Register Notice and the Open Letters to Health Care Providers issued in 2006, 2008, and 2009. The SDP reaffirms the obligation on all members of the health care industry to take measures to detect and prevent fraudulent and abusive activities, and establishes new reporting requirements and guidance on calculating penalty multipliers.

Importance of Voluntary Self-Disclosure

The new SDP reaffirms the importance of self-disclosure, including OIG’s position that individual and entities that use the SDP and cooperate with OIG during the SDP process deserve to pay a lower multiplier on single damages than would normally be required. For the first time, the SDP states OIG’s general practice of requiring a minimum multiplier of 1.5 times the single damages, although the specific multiplier accepted may vary depending on the facts of each case.

CMS 60-Day Report and Repay Rule

The new protocol addresses CMS’s proposed 60-day “report and repay” rule. The Affordable Care Act generally requires that providers report and return Medicare or Medicaid overpayments within 60 days of the date the overpayment is first identified. Failure to report and repay within 60 days may create liability under the Civil Monetary Penalties Law (CMPL) and False Claims Act. CMS issued its proposed rule implementing the 60-day repayment obligation in February 2012. (77 FR 9179). The proposed rule would suspend the obligation to report overpayments when OIG acknowledges receipt of a submission on the SDP, provided the submission is timely made. In return for suspending the 60-day requirement, the new SDP states that OIG expects disclosing parties to disclose with a good-faith willingness to resolve all liability within the CMPL’s six-year statute of limitations. OIG has indicated it will provide additional guidance regarding the 60-day obligation and SDP process after CMS releases a final rule.

Eligibility Criteria and Guidance

The SDP provides greater guidance on how to investigate potentially fraudulent conduct, quantify damages, and report the conduct to OIG. According to the SDP, over the past 15 years, it has resolved over 800 disclosures, resulting in recoveries of more than $280 million to Federal health care programs. The SDP states that all health care providers, suppliers, or other individuals or entities that are subject to OIG’s civil monetary penalty authority are eligible to use the SDP. Accordingly, the SDP is not limited to any particular industry, medical specialty, or type of service. By way of example, the SDP states that a pharmaceutical or medical device manufacturer may use the SDP to disclose potential violations of the Federal anti-kickback statute (AKS) because such violations trigger CMP liability.

In addition, the new protocol delineates conduct that is not eligible for the SDP, including (1) matters that do not involve potential violations of Federal criminal, civil, or administrative law for which civil monetary penalties are authorized, such as one exclusively involving overpayments or errors, (2) requests for opinions from OIG regarding whether an actual or potential violation has occurred, and (3) disclosure of an arrangement that involves only liability under the physician self-referral law (Stark) without accompanying potential liability under the AKS for the same arrangement. Conduct that only involves Stark violations should be disclosed to CMS through CMS’s Self-Referral Disclosure Protocol.

Among other requirements, the SDP requires that the disclosing parties explicitly identify the laws that were potentially violated, and not just refer broadly to federal laws, rules and regulations. The SDP provides details for the content of all submissions as well as the specific requirements for conduct involving false billing, excluded persons, and the anti-kickback statute and physician self referral law.

The revised SDP is available here.

This publication is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal or financial advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the author. This publication is not intended to create an attorney-client relationship between you and Holland & Hart LLP. Substantive changes in the law subsequent to the date of this publication might affect the analysis or commentary. Similarly, the analysis may differ depending on the jurisdiction or circumstances. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

March 15, 2013

May our group offer free screenings?

by Kim Stanger, Holland & Hart LLP

As with other free or discounted items or services, offering free screenings can violate (1) the federal Anti-Kickback Statute (“AKS”) if one purpose of the free screening is induce referrals for items or services payable by federal healthcare programs (42 USC § 1320a-7b), and/or (2) the federal Civil Monetary Penalties Law (“CMP”) if the physician knows or should know that the free screening is likely to induce a federal program beneficiary to purchase items or services covered by federal healthcare programs (42 USC § 1320a-7a). There are several potentially relevant CMP exceptions, most of which focus on whether the screening is tied to the provision of other services payable by federal healthcare programs. In Advisory Opinion 09-11, the OIG approved a hospital’s free blood pressure screening program where (1) the free screening was not conditioned on the use of any other goods or services from the hospital; (2) the patient receiving the screening was not directed to any particular provider; (3) the hospital did not offer the patient any special discounts on follow-up services; and (4) if the screening was abnormal, the patient as advised to see their own health care professional. Under these circumstances, the OIG concluded that the test was not improperly tied to the provision of other services by the hospital.

For more information, see the OIG’s Special Advisory Bulletin: Offering Gifts and Other Inducements to Beneficiaries (August 2002), available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/SABGiftsandInducements.pdf.

For questions regarding this update, please contact:
Kim C. Stanger
Holland & Hart, 800 W Main Street, Suite 1750, Boise, ID 83702
email: kcstanger@hollandhart.com, phone: 208-383-3913

November 13, 2012

Paying for Call Coverage

by Kim Stanger, Holland & Hart LLP

Hospitals increasingly pay physicians and other practitioners to participate in call coverage for emergency services. Last week, the Office of Inspector General (“OIG”) issued Advisory Opinion No. 12-15, which reminds providers of fraud and abuse parameters applicable to call coverage agreements.

Permissible Arrangements. Federal law does not require compensation for call coverage, nor does it prohibit paying for call so long as the compensation is not offered to improperly induce referrals for federal healthcare program business. The OIG recognizes that paying for call may be necessary to obtain services that may otherwise be unavailable because of, e.g., the lack of specialty services in an area or local physicians’ reluctance to take call because of practice demands, time commitments, or the probability of rendering uncompensated care. The key is to ensure that any call compensation paid (1) represents fair market value for actual and necessary services, (2) does not take into account the volume or value of referrals or other business generated between the parties, and (3) was not intended to maintain or generate future referrals from the physician for non-emergency patients. Common payment structures include hourly or “per diem” payments to be available for call, payment for time or services actually provided in response to call in exchange for assignment of the physician’s professional fees, etc.

Problematic Arrangements. Call compensation that exceeds fair market value or pays physicians for unnecessary or illusory services may amount to illegal kickbacks and/or Stark law violations. According to the OIG, suspect arrangements include:

“lost opportunity” or similarly designed payments that do not reflect bona fide lost income;
payment structures that compensate physicians even though no identifiable services are provided;
aggregate on-call payments that are disproportionately high compared to the physician’s regular medical practice income;
payment structures that compensate physicians for professional services for which the physician receives separate payments from patients or third party payors, thereby resulting in duplicate payment for the same services; or
payments made in response to threats that the physician will refuse to continue to use the hospital or refer non-emergency patients to the hospital unless call payments are provided.

Regulatory Compliance. Whatever its terms, the arrangement must be structured to satisfy Stark and Anti-Kickback Statute (“AKS”) technical requirements. For example, if the compensation is to be paid to a physician who is not employed by the hospital, the arrangement must satisfy the following:

The agreement must be documented in a written contract fully executed by the parties before any payments are made.
The compensation must represent fair market value for legitimate, needed services actually provided, and not offered to maintain, induce or reward the physician’s referrals to the hospital.
The compensation must not vary with the volume or value of referrals or other business generated by the physician except for services personally performed by the physician.
The compensation formula must be set in advance and be objectively verifiable.
Compensation-related terms may not change during the first year of the arrangement. If the agreement is terminated within a year, the parties may not enter a new agreement with different compensation terms within that year.
To avoid unintentional lapses, it is usually wise to include an auto-renewal or “evergreen” clause so that the agreement automatically renews unless terminated by the parties.

(See 42 C.F.R. §§ 411.357(d) and (l), and 1001.952(d)). Most call coverage arrangements will not satisfy an applicable AKS safe harbor because, e.g., the aggregate compensation is not set in advance. It is important that the parties consider and document the legitimate reasons for the call coverage arrangement, e.g., the hospital’s need for the contracted services, the financial or professional burden on physicians absent call compensation, and the physician’s reluctance to provide needed coverage absent call compensation that reflects fair market value for services actually provided.

For questions regarding this update, please contact:
Kim C. Stanger
Holland & Hart, 800 W Main Street, Suite 1750, Boise, ID 83702
email: kcstanger@hollandhart.com, phone: 208-383-3913

September 24, 2012

Carving Out Federal Programs Does Not Preclude Anti-Kickback Liability

by Kim C. Stanger, Holland & Hart LLP

The federal Anti-Kickback Statute (“AKS”) prohibits offering, paying, soliciting or receiving remuneration to induce referrals for items or services payable by federal health care programs unless the transaction fits within a regulatory safe harbor. 42 U.S.C. § 1320a-7b. AKS violations are felonies, resulting in penalties of $25,000 per violation and up to 5 years in prison in addition to civil penalties. AKS violations are now also False Claims Act violations, resulting in additional civil penalties.

To avoid AKS concerns, some transactions have been structured to carve out federal health care programs, e.g., remuneration is paid for non-Medicare or Medicaid business, but the remunerative arrangement does not apply to items or services payable by Medicare or Medicaid. The theory is that because the remuneration does not apply to federal healthcare programs, the AKS does not apply.

The Office of Inspector General (“OIG”) recently reaffirmed that such “carve out” arrangements do not necessarily protect the participants from AKS liability:

The OIG has a long-standing concern about arrangements under which parties “carve out” Federal health care program beneficiaries or business generated by Federal health care programs from otherwise questionable financial arrangements. Such arrangements implicate, and may violate, the anti-kickback statute by disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business.

OIG Advisory Opinion No. 12-06 at p.6-7. Accordingly, the OIG declined to render a favorable opinion as to an arrangement that would have allowed certain payments for only those patients referred for non-federal program business.

Unless the transaction can fit within one of the AKS regulatory safe harbors in 42 C.F.R. § 1001.952, the test for an AKS violation remains whether “one purpose” of a transaction is to induce referrals for items or services payable by Medicare, Medicaid or other federal health care programs. United States v. Greber, 760 F.2d 68 (3d Cir. 1985), cert. denied, 474 U.S. 988 (1985). While carving out federal programs may help, it does not insulate participants from AKS violations. Healthcare providers and other potential referral sources or recipients may want to review any “carve out” arrangements to ensure that they truly satisfy the AKS.

For questions regarding this update, please contact
Kim C. Stanger
Holland & Hart, U.S. Bank Plaza, 101 S. Capitol Boulevard, Suite 1400, Boise, ID 83702-7714
email: kcstanger@hollandhart.com, phone: 208-383-3913

September 10, 2012

Health Care Transactions: Beware Stark, Kickbacks, and More

by Kim C. Stanger, Holland & Hart LLP

Anytime you structure a transaction involving healthcare providers, you must beware federal and state statutes unique to the healthcare industry, including laws prohibiting illegal kickbacks or referrals. Those laws may affect any transactions between health care providers, including employment or service contracts, group compensation structures, joint ventures, leases for space or equipment, professional courtesies, free or discounted items or services, and virtually any other exchange of remuneration. Violations may result in significant administrative, civil and criminal penalties. The Affordable Care Act (“ACA”) dramatically increased exposure for violations by expanding the statutory prohibitions, increasing penalties, and imposing an affirmative obligation to repay amounts received in violation of the laws.¹ The following are some of the more relevant traps for the unwary.

Anti-Kickback Statute (“AKS”). The federal AKS prohibits anyone from knowingly and willfully soliciting, offering, receiving, or paying any form of remuneration to induce referrals for any items or services for which payment may be made by any federal health care program unless the transaction is structured to fit within a regulatory exception.² An AKS violation is a felony punishable by a $25,000 fine and up to five years in prison.³ Thanks to the ACA, violation of the AKS is an automatic violation of the federal False Claims Act⁴, which exposes defendants to additional civil penalties of $5,500 to $11,000 per claim, treble damages, and private qui tam lawsuits⁵. The AKS is very broad: it applies to any form of remuneration, including kickbacks, items or services for which fair market value is not paid, business opportunities, perks, or anything else of value offered in exchange for referrals. The statute applies if “one purpose” of the transaction is to generate improper referrals⁶. It applies to any persons who make or solicit referrals, including health care providers, managers, program beneficiaries, vendors, and even attorneys⁷. Despite its breadth, the AKS does have limitations. First, it only applies to referrals for items or services payable by government health care programs such as Medicare or Medicaid⁸. If the parties to the arrangement do not participate in government programs or are not in a position to make referrals relating to government programs, then the statute should not apply. Second, the statute does not apply if the transaction fits within regulatory exceptions⁹. For example, exceptions apply to employment or personal services contracts, space or equipment leases, investment interests, and certain other relationships so long as those transactions satisfy specified regulatory requirements¹⁰. Third, interested persons who are concerned about a transaction may obtain an Advisory Opinion from the Office of Inspector General (“OIG”) concerning the proposed transaction. Past Advisory Opinions are published on the OIG’s website, www.hhh.oig.hhs.gov/fraud. Although the Advisory Opinions are binding only on the parties to the specific opinion, they do provide guidance for others seeking to structure a similar transaction.

Ethics in Patient Referrals Act (“Stark”). The federal Stark law prohibits physicians from referring patients for certain designated health services to entities with which the physician (or a member of the physician’s family) has a financial relationship unless the transaction fits within a regulatory safe harbor¹¹. Stark also prohibits the entity that receives an improper referral from billing for the items or services rendered per the improper referral¹². Unlike the AKS, Stark is a civil statute: violations may result in civil fines ranging up to $15,000 per violation and up to $100,000 per scheme in addition to repayments received for services rendered per improper referrals¹³. Repayments can easily run into thousands or millions of dollars. Stark is a strict liability statute; it does not require intent, and there is no “good faith” compliance¹⁴. Stark applies only to financial relationships with physicians, i.e., M.D.s, D.O.s, podiatrists, dentists, chiropractors, and optometrists¹⁵, or with members of such physicians’ families; it does not apply to transactions with other health care providers. Finally, unlike the AKS, Stark applies only to referrals for certain designated health services, (“DHS”), payable by Medicare;¹⁶ it does not apply to referrals for other items or services. If triggered, Stark applies to any type of direct or indirect financial relationship between physicians or their family members and a potential provider of DHS, including any ownership, investment, or compensation relationship¹⁷. Thus, the statute applies to everything from ownership or investment interests to compensation among group members to contracts, leases, waivers, discounts, professional courtesies, medical staff benefits, or any other transaction in which anything of value is shared between the parties. If Stark applies to a financial relationship, then the parties must either structure the arrangement to fit squarely within one of the regulatory safe harbors¹⁸ or not refer patients to each other for DHS covered by the statute and regulations.

Civil Monetary Penalties Law (“CMP”). The federal CMP prohibits certain transactions that have the effect of increasing utilization or costs to federally funded health care programs or improperly minimizing services to beneficiaries¹⁹. For example, the CMP prohibits offering or providing inducements to a Medicare or Medicaid beneficiary that are likely to influence the beneficiary to order or receive items or services payable by federal health care programs, including free or discounted items or services, waivers of copays or deductibles, etc²⁰. This law may affect health care provider marketing programs as well as contracts or payment terms with program beneficiaries²¹. The CMP also prohibits hospitals from making payments to physicians to induce the physicians to reduce or limit services covered by Medicare²². Thus, the CMP usually prohibits so-called “gainsharing” programs in which hospitals split cost-savings with physicians.²³ Finally, the CMP prohibits submitting claims for federal health care programs based on items or services provided by persons excluded from health care programs.²⁴ As a practical matter, the statute prohibits health care providers from employing or contracting with persons or entities who have been excluded from participating in federal health care programs.²⁵ Violations of the CMP may result in administrative penalties ranging from $2,000 to $50,000 per violation.²⁶

State Anti-Kickback, Self-Referral, or Fee Splitting Statutes. Many states have their own versions of anti-kickback²⁷ or self-referral laws²⁸ that must also be considered. State versions vary widely; they may or may not parallel federal versions. In addition, most states also prohibit fee splitting or giving rebates for referrals, which might also apply to some transactions between referral sources.²⁹ Providers should check their own state statutes to ensure compliance.

Medicare Reimbursement Rules. The Centers for Medicare & Medicaid Services (“CMS”) has promulgated volumes of rules and manuals governing reimbursement for services provided under federal health care programs. The rules govern such items as when a health care provider may bill for services provided by another entity, supervision required for such services, and the location in which such services may be performed to be reimbursable. In addition, the amount of government reimbursement may differ depending on how the transaction is structured, e.g., whether it is provided through an arrangement with a hospital or by a separate clinic or physician practice. The rules concerning reimbursement and reassignment should be considered in structuring health care transactions if the entities intend to bill government programs for services or maximize their reimbursement under such programs.

Corporate Practice of Medicine Doctrine (“CPOM”). Some states impose the so-called “corporate practice of medicine” doctrine by statute or case law, i.e., only certain licensed health care professionals (e.g., physicians) may practice medicine; corporations may not employ physicians to practice medicine due to the risk that such an arrangement would improperly influencing medical judgment.³⁰ There are often statutory exceptions, e.g., professional corporations or employment by hospitals or managed care organizations. In those states that apply or enforce the CPOM, transactions may need to be structured around the CPOM, including services contracts with physicians or other healthcare providers.

Certificates of Need (“CON”). Finally, to avoid over-saturation and resulting overcharges, some states require that providers obtain a certificate authorizing the construction or expansion of certain types of facilities, e.g., hospitals, ambulatory surgery centers, or skilled nursing facilities.³¹

Conclusion. The foregoing is only a brief summary of some of the more significant laws and regulations that may affect common health care transactions. As in all cases, the devil is in the details (as well as the Code of Federal Regulations and CMS Medicare Manuals). Providers and their advisors should review the relevant laws and regulations whenever structuring a health care transaction, especially if that transaction involves potential referral sources or implicates federal health care programs.

Endnotes
¹ 42 U.S.C. § 1320a-7k.
² 42 U.S.C. § 1320a-7b(b).
³ 42 U.S.C. § 1320a-7b(b)(2)(B).
⁴ Patient Protection and Affordable Care Act Pub L. No. 111-148 § 6402(f)(1), 124 Stat. 119 (2010); see 31 U.S.C. § 3729 et seq.
⁵ See, e.g., 42 U.S.C. § 1320a-7a(5); 42 U.S.C. § 1320a-7(b)(7); 31 U.S.C.§ 3729-3733; United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 20 F. Supp. 2d 1017 (S.D. Tex. 1998).
⁶ United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir.), cert. denied 474 U.S. 988 (1985).
⁷ United States v. Anderson, Case No. 98-20030- 01/07 (D. Kan. 1998).
⁸ See 42 U.S.C. § 1320a-7b(b)(2)(B).
⁹ 42 U.S.C. § 1320a-7b(3); 42 C.F.R. § 1001.952.
¹⁰ 42 U.S.C. § 1320a-7b(3); 42 C.F.R. § 1001.952.
¹¹ 42 U.S.C. § 1395nn; 42 C.F.R. § 411.351 et seq.
¹² 42 C.F.R. § 411.353(b).
¹³ 42 U.S.C. § 1395nn.
¹⁴ See 42 C.F.R. § 411.353(a)-(b).
¹⁵ Id. at § 411.351.
¹⁶ The “designated health services” covered by Stark include clinical laboratory services; physical therapy, occupational therapy and speech-language pathology services; radiology and other imaging services; radiation therapy; durable medical equipment and supplies; prosthetics, orthotics, prosthetic devices and supplies; home health services; outpatient prescription drugs; inpatient and outpatient hospital services; and parenteral and enteral nutrients. Id. at § 411.351.
¹⁷ Id. at § 411.351.
¹⁸ Id. at § 411.355 to 411.357.
¹⁹ 42 U.S.C. § 1320a-7a.
²⁰ 42 U.S.C. § 1320a-7a(a)(5).
²¹ See OIG Special Advisory Bulletin, “Offering Gifts and Other Inducements to Beneficiaries” (August 2002); OIG Special Fraud Alert, “Routine Waiver of Part B Co-Payments/Deductibles” (May 1991).
²² 42 U.S.C. § 1320a-7a(b).
²³ See, e.g., OIG Special Fraud Alert, “Gainsharing Arrangements and CMPs for Hospital Payments to Physicians to Reduce or Limit Services to Beneficiaries” (July 1999).
²⁴ 42 U.S.C. § 1320a-7a(a)(1)(C) and (2).
²⁵ OIG Special Advisory Bulletin, “The Effect of Exclusion from Participation in Federal Health Care Programs (Sept. 1999). ²⁶ See id. at § 1320a-7a(a) and (b).
²⁷ See, e.g., Colorado Revised Statutes (“CRS”) § 25.5-4-305; Idaho Code (“IC”) § 41-348(1); Nevada Revised Statutes (“NRS”) 439B.420; New Mexico Statutes Annotated (“NSMA”) §§ 30-41-1 to -3, and 30-44-7(A)(1); Utah Code § 26-20-4.
²⁸ See, e.g., CRS § 25.5-4-414; NRS. 439B.425; New Mexico Administrative Code (“NMAC”) 439B.5205-.5408; NMSA §§ 24-1-5.8(C)(6); NMAC 7.7.2.8(B)(3) and 7.7.2.8(N); Utah Code §§ 58-67-801, 58-68-801, 58-69-805.
²⁹ See, e.g., CRS §§ 12-36-125 and 12-36-126; IC § 54-1814(8)-(9); NMSA §§ 61-6-15(D).
³⁰ See, e.g., CRS §§ 12-36-117(m) and 6-18-301 et seq.; Worlton v. Davis, 73 Idaho 217, 221, 249 P.2d 810 (1952).
³¹ See, e.g., NRS 439A and NAC 439A.

For questions regarding this update, please contact:
Kim C. Stanger
Holland & Hart, 800 W Main Street, Suite 1750, Boise, ID 83702
email: kcstanger@hollandhart.com, phone: 208-383-3913

August 22, 2012

Obama Administration Announces Fraud Prevention Partnership

By Bill Mercer

Last month, Secretary Sebelius and Attorney General Holder announced a new collaboration with health insurance companies to provide both government and private payer claims data to a third-party to detect overpayments and fraud.

http://www.hhs.gov/news/press/2012pres/07/20120726a.html

http://www.justice.gov/opa/pr/2012/July/12-ag-926.html

By pooling claims data and having the third-party analyst look for suspicious billing patterns, the federal government and participating insurers believe outliers would be readily identifiable. Claims data which appear to suggest the existence of fraud or overpayments would be referred to federal law enforcement for further investigation.

By commingling claims information from private insurers, Medicaid, and Medicare, the Administration believes it could detect, for example, a provider who bills all payers for more than 24 hours in a day or bills the same claims to multiple insurers. Attorney General Holder’s statement [http://www.justice.gov/iso/opa/ag/speeches/2012/ag-speech-120726.html] refers to the prospect of detecting claims made to multiple public and/or private insurance plans for the same patient on the same day in more than one city.

A number of private sector participants have volunteered to participate in the partnership, including:

America’s Health Insurance Plans

Amerigroup Corp.

Blue Cross and Blue Shield Association

Blue Cross and Blue Shield of Louisiana

Humana Inc.

Independence Blue Cross

Travelers

Tufts Health Plan

UnitedHealth Group

WellPoint Inc.

Significant details necessary to the creation of a functional partnership have yet to be resolved. According to the HHS press release, the Executive Board and two committees will meet for the first time next month. The initial work plan is also a work-in-progress.

The partnership received support from Senator Coburn and Senator Hatch, who wrote to the Acting Administrator of CMS that “this is an effort which is long overdue.” [http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=b3d5048d-a395-49af-b4ac-2c2b65b9a4a0] The lack of detail in the Administration’s rollout of the initiative generated a series of follow-up questions from Senators Coburn and Hatch. They have asked for responses on the following issues by the end of August:

“Specifics regarding exactly how this collaboration will work including what entities will be involved, whether HHS/CMS or another entity will be overseeing the effort and a timeline for expected key milestones of the effort.

A step-by-step explanation of how the information will be shared (e.g., what systems will be used to transmit the data), what authorities allow the exchange of information, what impediments exist to sharing information (e.g., statutory language) and where the information will be stored/analyzed.

A description of the third party who will be analyzing the data, as well as an explanation of how that entity will be selected and what their capabilities are to integrate and analyze such a large amount of information.

Specifics regarding what will happen when leads are identified, how that information will be disseminated, and what the process will be for following up on those leads.”

April 6, 2012

Beware Professional Courtesies

Many health care practices or facilities waive or discount co-pays or deductibles for other physicians, the physician’s family members, or the physician’s staff as a “professional courtesy.” Although often well-intentioned, such practices can violate state and federal laws and managed care contracts.

Courtesies to Referring Physicians. Giving professional courtesies to a physician or their family members will violate the federal Stark law if the physician refers certain designated health services payable by Medicare or Medicaid unless specific regulatory standards are satisfied, including the following:

The courtesy is offered by entities with a medical staff, which includes group practices, hospitals, and similar entities. Solo practitioners do not qualify.
The entity has a written professional courtesy policy approved in advance by its governing body.
The courtesy is offered to all physicians on the entity’s medical staff or in the entity’s local community regardless of the volume or value of referrals between the parties.
The courtesy is not offered to anyone who is a federal health care program beneficiary unless there is a showing of financial need.

Stark law violations require repayment of amounts received from Medicare and Medicaid for services rendered or items provided per improper referrals. Additional administrative penalties may apply.

Courtesies to Induce Referrals. Even if an arrangement satisfies Stark, it may still violate state and federal anti-kickback statutes if offered to induce referrals. The federal Anti-Kickback Statute prohibits soliciting, offering, or giving remuneration to induce referrals for items or services covered by federal health care programs, including Medicare or Medicaid. Similarly, the federal Civil Monetary Penalties Law prohibits offering inducements to federal program beneficiaries, including waiving co-pays and deductibles absent a showing of financial need. Violations of the federal statutes may result in significant criminal and administrative penalties. State anti-kickback laws may also apply.

Courtesies to Patients with Private Insurance. Even if no government health care programs are involved and there is no intent to induce referrals, state laws and managed care contracts may still prohibit waiving co-pays and deductibles. For example, Idaho Code § 41-348 prohibits engaging in a regular practice of waiving or rebating deductibles. Violations may result in a $5000 fine. In addition, most managed care contracts require providers to collect co-pays and deductibles; failure to do so may breach the contract. Blue Cross of Idaho recently sent a letter to providers warning of such actions.

The Bottom Line. Given the foregoing statutes, providers should ensure that their professional courtesy policies comply with the following:

If the courtesy is offered to a physician who refers designated health services, make sure you have a written professional courtesy policy that satisfies the Stark law regulations.
If private insurance is involved, do not waive or discount co-pays or deductibles unless there is a documented showing of financial need or you obtain permission from the health insurer.
Never offer professional courtesies as a way to induce referrals.
If you offer a professional courtesy, it is generally safer to waive the entire fee than to waive co-pays and deductibles. The government and private payors are not as concerned if they are not required to pay for the service; however, you still need comply with Stark.

For questions regarding this update, please contact:
Kim C. Stanger
Holland & Hart, 800 W Main Street, Suite 1750, Boise, ID 83702
email: kcstanger@hollandhart.com, phone: 208-383-3913