Fraud and Abuse Primer Stark Law The Anti-Kickback Statute False Claims Act
Stark Act 42 U.S.C. 1395nn The Stark II Act prohibits a physician from making a Referral to an entity; for the furnishing of a Designated Health Service; for which payment may be made under Medicare; if the physician (or an immediate family member); has a Financial Relationship with the entity. Applicable to Medicaid (42 USC 1396b(s))
Stark Act 42 U.S.C. 1395nn If a physician has a financial relationship with an entity furnishing designated health services (DHS), the physician cannot refer Medicare DHS to the entity and the entity cannot bill for the Medicare DHS, unless an exception applies. PROOF OF INTENT IS NOT REQUIRED
Penalties 1. Denial of payment or refund; 2. Civil money penalties ($15,000/per claim); and 3. Exclusions from federal and state Programs.
What is a DHS? Clinical laboratory services; PT, OT, speech language pathology services; Radiology and other imaging services (including MRI, CAT scans); Radiation therapy services and supplies; Durable medical equipment Parental and enteral nutrients, equipment and supplies; Prosthetics, orthotics and prosthetic devices; Home health services; Outpatient prescription drugs; and Inpatient and outpatient hospital services (encompassing almost every type of medical procedure). Note: Ambulatory Surgery Center services are not DHS!
What Is A Financial Relationship? A Financial Relationship includes: Ownership and investment interests -Through equity, debt, or other means; and Compensation arrangements -Includes virtually any form of remuneration Direct and indirect relationships included
Nature Of Exceptions If a FINANCIAL RELATIONSHIP exists, and patients are being REFERRED FOR DESIGNATED HEALTH SERVICE, then activity must either comply with an exception or the activity is illegal.
Exceptions Some apply only to ownership/investment Some apply only to compensation Some apply to both ( service-based exceptions )
Most Common Service-Based Exceptions Physician Services In-office Ancillary Services Rental Agreements
Compensation Exceptions Rental of Office Space Rental of Equipment Employment Relationships Personal Service Arrangement Physician Recruitment Services Unrelated to DHS Hospital-affiliated Group Practice Arrangements Fair Market Value Payments Made by Physicians for Items and Services (i.e., clinical laboratory services)
Compensation Exceptions Charitable Donations by Physician Fair Market Value Compensation Medical Staff Incidental Benefits Risk-sharing Arrangements (i.e., withholds, bonuses, risk pools) Compliance Training
Compensation Exceptions Obstetrical Malpractice Insurance Subsidies Professional Courtesy Retention Payments in Underserved Areas Community-wide Health Information Systems Electronic Prescribing Items & Services
Physician Services Exception (Applies to Ownership & Compensation Arrangements) Physician can refer designated health services if such services are performed by a physician in the referring physician s group practice.
In-Office Ancillary Services Exception (Applies To Ownership and Compensation Arrangements Must answer 3 questions: Who? Where? How?
In-Office Ancillary Services Exception Who May Provide Services? Referring physician; Physician who is member of same group practice as referring physician; Individuals who are directly supervised by physician or another physician in same group practice; and Physicians in the group practice such as employees and independent contractors of group practice.
In-Office Ancillary Services Where are Services Provided? Same Building, which is defined as a structure with a single street address assigned by the U.S. Postal Service, not including interior loading docks, mobile vehicles, vans or trailers that meet one of the following three tests: 1) The physician or group practice has an office that is open to the group s patients for medical services at least 35 hours per week and a member of the group provides physician services (including non-dhs services) to patients at least 30 hours per week.
In-Office Ancillary Services Where Are Services Provided? Same Building (Continued) 2) The referring physician s group owns or rents an office that is normally open to patients for medical services at least 8 hours per week and the referring physician provides physician services (include non-dhs services) to patients at this office at least 6 hours per week. 3) The referring physician s group owns or rents an office that is normally open to patients for medical services at least 8 hours per week, either the referring physician orders the DHS services while seeing the patient on the premises or a member of the referring physician s group practice is on the premises when the DHS is performed and the referring physician or member of group practices at site at least 6 hours per week.
In-Office Ancillary Services Where Are Services Provided? A Centralized Building, which means all or part of a building that is owned or leased on a 24/7 basis by a group practice including a mobile vehicle, van or trailer where some or all of the groups practice s DHS is provided.
In-Office Ancillary Services Covered by Exception Furnished in a Physician s Office
In-Office Ancillary Services NOT Covered By Exception Given to Patient in Physician s Office But Intended To Be Used at HOME or OUTSIDE Physician s Office
In-Office Ancillary Services How Are Services Billed? By physician performing or supervising services; By group practice of which such physician is member, employee or independent contractor under billing number assigned to group practice; or By entity that is wholly owned by such physician or such group practice.
Personal Service Exception Arrangement in writing, signed by parties, specifies the services covered Covers all services to be furnished Term of at least 1 year Services are reasonable and necessary; Compensation to be paid over term of arrangement is set in advance, does not exceed FMV and is not determined in manner which takes into account volume or value of referrals between parties.
Space and Equipment Rental Exception Lease must be in writing, signed, and specifies premises and equipment to be leased; Term of at least one year; Space and equipment rented does not exceed that which is reasonable and necessary for legitimate business purposes of lease and is used exclusively by lessee when being leased by lessee; Rental charges over term of lease are set in advance consistent with fair market value, and not determined in a manner that takes into account volume or value of referrals or other business generated between parties, and Lease would be commercially reasonable even if no referrals were made between parties.
Space and Equipment Rentals Cannot charge percentage-based fee or per-click fee if lessor is source of referral.
One Year Requirement Agreement can be terminated within the first year with or without cause as long as the parties do not enter into a new agreement during the first year of the original term.
Employment Exception Employment is for identifiable services; Amount of remuneration under employment is: Consistent with fair market value and not determined in manner which takes into account volume or value of referrals by referring physician; and Remuneration is provided pursuant to agreement that would be commercially reasonable even if no referrals were made to employer.
Physician Recruitment Exception Remuneration can be paid by a hospital directly to a physician to induce relocation of practice to the geographic area served by the hospital it: Arrangement is set out in writing and signed by the parties Arrangement is not conditioned upon the physician s referral of patients to the recruiting hospital The remuneration is not based on the volume or value of any actual or anticipated referrals by the physician to the hospital Physician is allowed to establish staff privileges at any other hospital and may refer business to other DHS entities.
Professional Courtesy Exception Professional courtesy offered to a physician or a physician s immediate family member or office staff is permissible if all of the following conditions are met: Professional courtesy is offered by entity with formal medical staff. Professional courtesy is offered without regard to the volume or value of referrals. The health care services are routinely provided by the DHS entity. A professional courtesy policy is set out in writing and approved in advance by the governing body. Professional courtesy is not offered to a Medicare/Medicaid beneficiary (except in the case of financial need).
Electronic Health Records Exception DHS entity can donate software or information technology and training services used predominantly to receive and transmit HER if- The remuneration is provided to a physician Software is interoperable Physician pays 15% of donor s cost and donor does not finance Not a condition of doing business Eligibility for an amount/nature of items/services is not determined in a manner that directly takes into account referrals (indirect is okay) Other conditions
Medicare and Medicaid Fraud and Abuse Law ( Anti-Kickback Statute ) 42 U.S.C. 1320a-7b
Under the Anti-kickback Statute, it is illegal to knowingly or willfully: offer, pay, solicit, or receive remuneration; directly or indirectly; in cash or in kind; in exchange for; referring an individual; or furnishing or arranging for a good or service; and for which payment may be made under Medicare, Medicaid, or other federal health care programs
PENALTY Fined -Up to $50,000 per claim or Imprisoned for up to Five (5) years or both
Three Necessary Elements Intentional Act Direct or Indirect Payment of Remuneration To Induce the Referral of Patients or Business
What is Remuneration? Extremely Broad Scope, whether in cash or in kind, and whether made directly or indirectly, including: Kickbacks; Bribes; Rebates; Gifts; Above or below market rent or lease payments; Discounts Furnishing of supplies, services or equipment either free, above or below market; Above or below market credit arrangements; and Waivers of payments due.
CAUTION Almost Any Benefit by and Between Medical Providers Can Be Considered Remuneration
What constitutes Knowing and Willful Violation of the Law? Hanlester Network v. Shalala- the OIG tests the new remedy of program exclusion; providers won because they did not specifically intend to violate the Anti-Kickback Statute. 6402(f) ACA-Amends Anti-Kickback Statute to provide that specific intent to violate the statute is not necessary.
Common Safe Harbor Provisions 42 C.F.R. 1001.952 If entity/person satisfies requirements of one or more of the following safe harbor provisions, otherwise suspect payment practices are NOT subject to criminal prosecution- Investment interests for publicly traded companies and smaller entities; Space and equipment rental agreements; Personal services and management contracts; Sale of a medical practice; Employees; Group purchasing organizations and Discounts; Waiver of beneficiary co-insurance and deductible amounts; Warranties
Safe Harbor Provisions 42 C.F.R. 1001.952 Investments in Ambulatory Surgical Centers (ASCs) Joint Ventures in Underserved Areas Practitioner Recruitment in Underserved Areas Sales of Physician Practices to Hospitals in Underserved Areas Subsidies for Obstetrical Malpractice insurance in Underserved Areas Cooperative Hospital Services Organizations Investments in Group Practices