2005
FPMP Compliance
Training:
Physician/Hospital
Financial Arrangements
Presented by:
Brigid M. Maloney, Esq.
U.B. Associates
Financial Arrangements with
Hospitals
Important Considerations:
• Stark Law
• Antikickback Statute
• Internal Revenue Code
Stark Law
If a physician (or immediate family member) has a
financial relationship with an entity, then the
physician may not make referrals to the entity
for the furnishing of designated health services,
and the entity may not submit a bill for the
furnishing of any such services.
Designated Health Services
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Clinical lab services
Physical therapy, occupational therapy and speech-language pathology services
Radiology and other imaging services not including nuclear medicine
Radiation therapy not including nuclear medicine
Durable medical equipment and supplies
Prosthetics, orthotics and prosthetic devices and supplies
Home health services
Outpatient prescription drugs
Parental and enteral nutrients and PEN-associated equipment and supplies.
Inpatient hospital services
Outpatient hospital services
If a physician (or immediate family member) has a “financial relationship” with
an entity, then the physician may not make referrals to the entity for the furnishing
of “designated health services”, and the entity may not submit a bill for the
furnishing of any such services.
Referrals
A “referral” is a request by a physician for an item or service for
which Medicare Part B may pay, including a request for a
consultation (including any tests ordered by the consultant), as
well as a request or establishment of a plan of care, with certain
exceptions. A referral does not include a request for a DHS item
or service that is provided or performed by the referring
physician.
If a physician (or immediate family member) has a “financial relationship” with
an entity, then the physician may not make referrals to the entity for the furnishing
of “designated health services”, and the entity may not submit a bill for the
furnishing of any such services.
Financial Relationship
Compensation Arrangement
--or-Ownership or Investment Interest
If a physician (or immediate family member) has a “financial relationship” with
an entity, then the physician may not make referrals to the entity for the furnishing
of “designated health services”, and the entity may not submit a bill for the
furnishing of any such services.
Compensation Arrangement
Direct or indirect remuneration between a
physician and an entity, overtly or covertly,
in cash or in kind.
If a physician (or immediate family member) has a “financial relationship” with
an entity, then the physician may not make referrals to the entity for the furnishing
of “designated health services”, and the entity may not submit a bill for the
furnishing of any such services.
Compensation Arrangements -Examples
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Physician employment agreements
Physician professional service agreements
(e.g., independent contractor agreements)
Medical director agreements
Lease of office space or equipment
Lease of time or a “per service” lease with
an MRI imaging center.
Compensation Arrangements-Exceptions
Office space and equipment rentals
Bona fide employment relationships
Personal service arrangements
Office Space Rentals
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Written lease, signed by the parties, specifying the
covered premises or equipment
Leased space/equipment must not exceed that which is
reasonable and necessary for legitimate business
purposes
Space/equipment is used exclusively by lessee when
being used by lessee
Lease term of at least one year
Rental amount is set in advance, FMV, not determined
in a manner that takes into account value of referrals or
other business generated between the parties
Commercially reasonable
Bona fide employment relationships
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Employment is for identifiable services
Compensation is FMV
Compensation not determined in a manner that
takes into account the volume or value of
referrals by the referring physician
Compensation is commercially reasonable
Personal Service Arrangements
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Arrangement is set out in writing, signed by the parties,
and specifies the services covered by the arrangement
The aggregate services contracted for do not exceed
those that are reasonable and necessary for the
legitimate business purposes of the arrangement
The term of the arrangement is at least one year
Compensation is set in advance, does not exceed FMV,
does not take into account the volume or value of
referrals or other business generated between the
parties
Services performed do not involve any illegal activities
Stark Reporting Requirements
Required information
• The name and unique physician identification number (UPIN)
of each physician who has a reportable financial relationship
with the entity.
• The name and UPIN of each physician who has an immediate
family member who has a reportable financial relationship with
the entity.
• The covered services furnished by the entity.
• The nature of the financial relationship as evidenced in records
that the entity knows or should know about.
Consequences of failure to report
• Up to $10,000 for each day following the deadline until the
information is submitted.
Sanctions
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No payment may be made for a designated health
service (DHS) that is provided in violation of Stark.
If an entity collects any amounts that were provided in
violation of Stark, those amounts must be refunded on
a timely basis.
Unrefunded collections are subject to a $15,000 civil
monetary penalty for each service rendered in violation
of Stark.
Fines for cross-referral arrangements or other unlawful
referral schemes may be up to $100,000 per
arrangement.
Physician exclusion from federal payor programs.
Antikickback Statute
Whoever knowingly and willfully solicits or receives any
remuneration (including any kickback, bribe, or rebate) directly or
indirectly, overtly or covertly, in cash or in kind—
in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part under a
Federal health care program…
shall be guilty of a felony and upon conviction thereof, shall be
fined not more than $25,000 or imprisoned for not more than five
years, or both.
Antikickback Statute Safe Harbors
Space/Equipment Rentals
Personal Services & Management Contracts
Bona fide Employment Arrangements
Space/Equipment Rentals
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Written lease, signed by both parties.
Lease specifies the premises/equipment covered by the
lease.
If part-time rental, lease specifies exactly the schedule
of intervals, their precise length, and the exact rent for
such intervals.
The term of the lease is for not less than one year.
Rental amount is set in advance
Rental amount is fair market value
Rental amount is not determined in a manner that takes
into account the volume or value of any referrals
Space/Equipment Rentals
Fair market value = value of the rental property or
equipment for general commercial purposes
Caveat: FMV cannot be adjusted to reflect the
additional value that one party would attribute to
the property based on proximity to sources of
referrals or business otherwise generated.
Personal Services & Management
Contracts
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The agreement is set out in writing and signed by the parties.
The agreement specifies the services to be provided by the agent.
If the agreement is intended to provide for services on a
periodic, sporadic or part-time basis, the agreement specifies
exactly the schedule of such intervals, their precise length, and
the exact charge for such intervals.
The term of the agreement is for not less than one year.
The aggregate compensation is set in advance, consistent with
FMV and not determined in a manner that takes into account
the volume or value of any referrals or business otherwise
generated between the parties
The services performed under the agreement are not illegal.
Employment Arrangements
A bona fide employment relationship with the
employer, for employment in the furnishing of any
item or service for which payment may be made in
whole or in part under Medicare or a State health
care program.
The big picture
FMV – look at all remunerative sources:
contract dollars
+
billing and collections
+
equipment/supplies/personnel
+
other perks and freebies
=
Total compensation package
Internal Revenue Code
IRC Sec. 501(c)(3):
Corporations…organized and operated exclusively
for religious, charitable…or educational purposes…
no part of the net earnings of which inures to the benefit
of any private shareholder or individual…
If you only remember one
thing…
Fair Market Value
And one more thing….
CONTRACT, CONTRACT, CONTRACT
Provide no services without a contract…
Accept no payment (cash or in kind) without a
contract…
Use no hospital resources without a contract…
Post Test
Instructions