Fee-splitting and kickback issues pose challenge for medical clinics and wellness centers that include non-physician providers such as nurses, psychologists, chiropractors, acupuncturists and massage therapists.
There is a lot of guidance online, some helpful and some confusing. Here is one relatively clear post with specific examples:
What are some examples of possible kickbacks?
A hospital may demand that radiologists pay excessive transcription costs, for which the hospital is reimbursed under Medicare Part A. The radiologists either have to pay an amount that exceeds what Medicare pays for the service (e.g., fair market value) or risk losing the contract to provide radiologic services for the hospital. Although the radiologists would not be subject to anti-kickback liability if they declined to pay, the hospital would be liable because it solicited the excessive payment in return for continuing to refer to the radiologists federal program business.
Members of a hospital-based radiology department may be coerced by the hospital to become employees of a multispecialty clinic from which physicians refer patients to the hospital. Professional revenues generated at the hospital then flow to clinic physicians and serve as an inducement for them to refer patients to the hospital.
Purchased interpretations by nonradiologists obtained from radiologists for amounts significantly below the Medicare fee schedule could yield sub-fair market value payment to radiologists. The difference between the radiologists' professional component billed by a family practice and payment made to the radiology group might represent an illegal kickback.
Medical oncologists may propose to enter into a joint venture with a radiation oncology group whereby each party would have a 50 percent ownership stake in a cancer treatment center. That 50/50 ownership split would fail to meet the safe harbor's maximum limit of 40 percent ownership by physicians who refer to entities they own.
Free radiology services may be provided to other hospital-based physicians who send patients for CT scans or to hospital administration employees as part of the radiologists' exclusive contracts.
While proving a violation in such situations requires proof of intent to disobey the law, the OIG indicated in a 1991 Management Advisory Report that "if a hospital demands payment from a hospital-based physician ostensibly for services that the hospital has already received reimbursement for through the prospective payment system, the anti-kickback statute may be implicated A court may draw an inference that a direct payment from a hospital-based physician to a hospital is made for an illegal purpose if the amount of the payment cannot be justified based on the amount of services the hospital renders under the contract with the physician."
Should I try to obtain an advisory opinion from the OIG on whether an arrangement might violate the kickback law?
Perhaps. The OIG does provide advisory opinions that can assist a party in deciding whether to move forward with an arrangement. However, there are drawbacks. The OIG's opinions apply only to the requesting party's specific arrangement and cannot be used to assess the legality of any other arrangements. A requester must identify all parties to the arrangement and agree to submit all relevant documents relating to the arrangement, including contracts and leases. The requester may ask that the OIG protect proprietary information, but the OIG will not guarantee that such information will not be disclosed under a Freedom of Information Act inquiry. If an arrangement does not qualify for a safe harbor or a favorable advisory opinion, it might be scrutinized by the OIG for potential investigation and referred to the Justice Department for prosecution. We strongly recommend that any ACR member who considers seeking an advisory opinion first consult with qualified local counsel.
Could forgiving a patient's copayment represent a potential kickback problem?
Yes. The OIG has stated that routine waivers of Part B service copayments for federal program beneficiaries may violate the anti-kickback law. While the OIG has recognized an exception based on an individual's financial hardship or where a "good-faith effort" to collect copayments or deductibles has been made, it assesses those situations case-by-case. Thus, radiologists and radiation oncologists should attempt to collect a copayment or deductible unless they have proof of the patient's inability to pay.
What about extending professional courtesy to a colleague?
Many physicians provide "professional courtesy" discounts to other physicians as well as to those with whom they work or have a personal relationship (e.g., office staff, hospital employees and family members).
These discounts, which may involve the provision of services at no charge or the waiver of a patient's copayment or deductible, may raise concerns under the federal anti-kickback statute. However, there have been no reported cases in which a physician has been prosecuted for professional courtesy discounts, and it is unlikely that the government would target such discounts except in extreme cases of abuse. In many professional courtesy situations, physicians who grant courtesy already have strong relationships with the recipient.
For the government to bring an anti-kickback action against a physician based on professional courtesy, it would have to prove that one purpose of the free or discounted service was to induce the referral of federal program beneficiaries and, at least in one jurisdiction, that the parties had a specific intent to violate the anti-kickback statute. It is unlikely that the government could make such a case based solely on granting professional courtesy to fellow physicians, family members or employees of the radiologist or radiation oncologist who happen to be federal program patients. However, the government might be able to prove an anti-kickback violation if professional courtesy is offered for a highly valued service or procedure to a physician who is in a position to refer federal program patients to the radiologist or radiation oncologist, or if a radiology or radiation oncology group is required to extend professional courtesy to employees of a hospital with which the group has an exclusive contract.
Could one transaction violate both the anti-kickback law and the Stark self-referral law?
Yes. Stark II and the federal anti-kickback statute are independent laws. A physician who wishes to
refer to or receive a referral from an entity with which that physician has a financial relationship must satisfy the requirements of both laws. Compliance with one does not necessarily ensure compliance with the other. However, many anti-kickback safe harbors share common elements with certain exceptions under the Stark self-referral law. For example, to meet the safe-harbor requirements for personal services and management contracts, physicians must enter into a written contract for at least one year. The contract's aggregate compensation must reflect fair market value and not take into account the volume or value of referrals. The Stark compensation exception for personal service agreements has similar requirements, except that it does not mandate that the compensation be aggregated in advance. Because most ACR members do not refer patients to other physicians or other health care providers, they should be more concerned about receiving prohibited referrals than making them.
Could an arrangement violate a state law also?
Yes. Many states have anti-kickback statutes, including California, Florida, Georgia, Massachusetts, New Jersey, North Carolina and Texas. As some state laws are more comprehensive than others, ACR members should consult their local counsel.
Would fee splitting be considered a kickback?
Sharing a fee with another physician or health care provider for obtaining a patient referral is one type of remuneration for referrals. States such as Illinois, New York and North Carolina make fee-splitting a separate offense from kickback acts. Violations of fee-splitting laws may subject a physician to disciplinary action by a state's licensing board, in addition to other sanctions.
For advice on properly structuring a practice, clinic, center or medical spa so as to be legally compliant, consult an attorney experienced in Stark, anti-kickback analysis, and state fee-splitting laws.
Our law office has attorneys with legal experience in FDA matters, including guiding clients involved in health care delivery, group medical and private medical practice, who are concerned about issues at the interface of federal and state law, concerned about medical board discipline or medical malpractice liability issues. We also review and draft informed consent forms and guide clients concerning a variety of health care law issues.
If you have legal questions concerning self-referral, kickbacks and fee-splitting or patient brokering in New York, California, Massachusetts, Washington DC, and other states, contact a lawyer who knows the rules.
Consult an experienced health care law attorney who knows complementary medicine and integrative medicine for legal advice pertaining to any project involving allied health or CAM professionals.
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