Compliance Issues with
Referral Arrangements
Health Care Compliance Association
Compliance Institute
September 27, 2000
New Orleans, Louisiana
John E. Steiner, Jr., Esq.
Chief Compliance Officer
The Cleveland Clinic Health System
Incorporating Stark Analysis in
Compliance Audits
Specific “Stark II” Proposed
Regulations Issues
These January 9,1998 regulations, and
the Preamble, provide needed clarification
and guidance for structuring a compliance
audit
The following main points are
particularly important to check when
conducting a system-wide or entity
specific “Stark” analysis:
Prohibition
Reinforce understanding that,if Stark
applies,the physician may not make
the referral and the entity may not submit
a claim or bill for services provided
pursuant to a prohibited referral.
Prohibition
(Continued)
A “service for which payment may be made
under Part B” means that it is ordinarily
covered even if Medicare ultimately doesn’t
pay
So, could face a sanction for submitting a
claim even if Medicare suffers no fiscal harm
(similar to civil False Claims Act)
Referral
Referral must be for a designated health
service(d.h.s.).
Physician makes referral when physician:
•
Requests, orders, certifies or
re-certifies the need for, or
establishes a plan of care that
includes,d.h.s. covered by Medicare
Part A or Part B
BUT,
Not a prohibited referral if physician merely
establishes a plan of care that leads to
furnishing a d.h.s. in an entity with which
the physician has a financial relationship,
if the physician does not control or
influence the referral decision
NOTE:
HCFA will presume that the physician with
the financial relationship made the referral if
it is unclear who made the referral, the
physician can rebut the presumption
Financial Relationship
• Ownership and Investment
Interests
“equity, debt, or other means”
Any indirect interest, no matter how many
levels removed from a direct interest, creates
a financial relationship
So,
explore “immediate family members”
includes:
– in-laws and spouses of grandchildren
Financial Relationship
(Continued)
Ownership Interest includes stock options
and non-vested interests
NOTE:
Could also be a compensation arrangement
if provided as compensation to the physician
Financial Relationship
(Continued)
• Debt as ownership interest
–
Physician loans to entity and debt
is secured by entity’s assets
–
Creditor-debtor relationship with
signs of ownership,e.g., bonds
convertible to common stock of entity
Financial Relationship
(Continued)
NOTE:
Loans to physicians (or family member)
from entity are not ownership interest,
but are compensation arrangement
Compensation Arrangements
Same definition as Stark I, i.e.,
Any remuneration, direct or indirect, no
matter how many levels the remuneration
passes through or whether it changes form
Compensation Arrangements
(Continued)
e.g., A physician who directs a research
facility and owns a clinical lab might make
research grants to other physicians who
agree to refer to his lab
Compensation Arrangements
NOTE:
New Exception for Compensation
Arrangement:
“Fair Market Value Compensation”
(‘good guy’ exception)
“Fair Market Value”
Compensation Arrangements
–
Written, signed, cover identifiable
items or services specified in document
–
Cover all items and services to be
provided by physician or immediate
family member or cross refer to
agreements with those parties
“Fair Market Value”
Compensation Arrangements
(Continued)
–
Specify time frame and limit of one
arrangement for same items or services
in one year (can be for any period of time
and include termination clause)
–
Specify compensation in advance or
method for determining compensation
“Fair Market Value”
Compensation Arrangements
(Continued)
–
Compensation consistent with fair
market value not take into account
volume or value of any referrals,
payments for referrals for medical
services not covered under Medicare
or Medicare,or other business generated
between parties
“Fair Market Value”
Compensation Arrangements
(Continued)
–
Arrangement is commercially
reasonable and furthers legitimate
business purpose
–
Arrangement either meets a “safe
harbor” or otherwise complies with
Medicare/Medicaid anti-kickback law
CHECK:
“Volume or Value” of referrals standard
applies even if physician’s payments do
not vary but payment is conditioned,
expressly or otherwise, on physician
referrals to a particular provider
e.g.,condition of employment to refer
only within hospital network of ancillary
providers
Designated Health Services
HCFA generally looks to Medicare
Program definitions
Designated Health Services
(Continued)
Stark II regulations introduce points to
bear in mind for compliance audits:
•
d.h.s. remains a d.h.s. even if
billed as something else or
bundled with other services for
billing purposes e.g., SNF services
and physical therapy
Designated Health Services
(Continued)
•
“Merely peripheral” parts of a d.h.s.
e.g., echocardiography in a CABG
•
Exclude “invasive” radiology(or
intentional radiology) because
incidental to another procedure ordered.
Unsettled area: is imaging used to guide
a needle, probe or catheter
Designated Health Services
(Continued)
•
Inpatient and Outpatient Hospital
Services
–
Inpatient: Part A definition of
hospital services
NOTE: • dialysis
• lithotripsy
Designated Health Services
(Continued)
– Outpatient:
Include services “incident to”
physician services, diagnostic
outpatient hospital services, and
partial hospitalization services
Exceptions
Group Practice:
Member does not include independent
contractor
–
“Substantially all” means 75% of
total patient care services of group
practice members measured by
time
Exceptions
(Continued)
–
Billing number “assigned to the
group” can allow group or whollyowned subsidiary of group to have
more than one billing number
–
“Group” test annual attestation
requirement
Medicare Anti-Kickback Statute
CASE UPDATE
Medicare Anti-Kickback Statute
(Continued)
United States vs. Anderson, Lahue
& Lahue
In the United States Court of Appeals for
the Tenth Circuit, on appeal from the
United States District Court for the District
of Kansas
Medicare Anti-Kickback Statute
(Continued)
–
Jury instruction that a finding of
illegal intent to induce referrals “must,
at least in part, have been the reason
[for] the remuneration …”
Jury instruction 32