Providers of healthcare items or services are well-served to take note: a Federal Court of Appeals has recently held that “the Anti-Kickback Statute prohibits a doctor from receiving kickbacks that are made in return for a referral. It does not require that the referral be made in return for a kickback.” Thus, receiving any unauthorized payment from a health care provider to whom you send patients is a very bad idea.
The Federal Anti-Kickback Statute, 42 USCS § 1320a-7b(b) states, in pertinent part, that a person may not knowingly or willfully solicit or receive any remuneration directly or indirectly, overtly or covertly, in cash or in kind, in return for referring an individual for the furnishing of a healthcare item or service that is payable in whole or in part by a Federal healthcare program. In laymen’s terms, a person cannot pay or receive anything of value in return for furnishing a Medicare patient to receive a healthcare item or service. (Note, however, that the law does set forth examples of permissible payments, or “safe harbors,” but we won’t address those in this article.) Continue reading →
Across the healthcare industry, providers and healthcare businesses are consistently faced with the decision of whether to employ or contract with their workers. Whether it’s a physician working with a group practice, or a marketer on behalf of a healthcare service, correctly structuring relationships between healthcare businesses and their workers is important. For tax reasons, many workers strongly prefer to enter into independent contractor relationships. However, simply calling oneself an independent contractor is not enough to solidify the relationship. Many times, workers who call themselves independent contractors are actually employees in the minds of the government. And sometimes, so-called “employees” with several part-time positions are actually viewed as independent contractors.
On July 15, 2015 the Administrator of the Department of Labor’s Wage and Hour Division (WHD) provided additional guidance regarding the application of the standards for determining who is an employee under the Fair Labor Standards Act (FLSA). The goal of the guidance is to help the regulated community in classifying workers and decreasing misclassification. The Administrator’s Interpretation reviews the pertinent FLSA definitions and the breadth of employment relationships covered by the FLSA. The Administrator’s Interpretation then addresses each of the factors of the “economic realities test”.
According to the Administrator, when determining whether a worker is an employee or independent contractor, the application of the economic realities factors should be guided by the FLSA’s statutory directive that the scope of the employment is very broad. The FLSA’s definitions establish the scope of the employment relationship under the Act and provide the basis for distinguishing between employees and independent contractor.
The Supreme Court and Circuit Court of Appeals have developed a multi-factorial “economic realities” test to make the determination whether a worker is an employee or an independent contractor under the FLSA. The test focuses on whether the worker is economically dependent on the employer or in business for him or herself. The factors include: Continue reading →
The Tuomey decision, U.S. Court of Appeals case out of South Carolina, contains important lessons for physicians, especially as it relates to (1) compensation arrangements with hospitals, (2) proper compensation arising in connection with the provision of designated health services (“DHS”), and (3) the advice of counsel defense.
The concept of DHS arises largely in the context of the federal Stark Law, which in pertinent part (1) forbids physicians from owning and referring to providers of DHS (e.g. PT, rehab, diagnostic imaging, home health, DME, clinical laboratory, inpatient and outpatient hospital services), (2) describes how medical practices can provide DHS to their own patients, and (3) forbids even physicians within a practice from allocating DHS profits on the basis of who ordered or referred to them.
The Tuomey case involves a whistleblower action filed against a not for profit hospital system. The original jury in that case decided that the system didn’t violate the False Claims Act, but the appellate court set aside the verdict using facts and testimony that had be excluded from the jury trial, Tuomey Healthcare System was found to have knowingly submitted over 21,000 false claims to Medicare and the government was awarded over $237 Million (most of it in the form of punitive damages). The government (which often advances the plaintiff’s—“relator” case in whistleblower cases) filed a motion for a new trial, which the trial court granted and the appellate court affirmed.
A Jacksonville compounding pharmacy has agreed to pay $3.775 million to settle false claims allegations that it defrauded TRICARE. MediMix Specialty Pharmacy billed TRICARE for compounding pain prescriptions that came from an improper referral source. MediMix’s top-prescriber over a period of five years was also married to one of MediMix’s senior vice presidents. MediMix itself was one of TRICARE’s top billers for compounded pain medications.
Since the federal law limiting physician self-referrals, 42 U.S.C. 1395nn (more commonly called the “Stark law”) does not apply to TRICARE, the government proceeded under a law entitled Administrative Remedies for Fraud, Abuse, and Conflict of Interest, 32 C.F.R. 199.9, which is applicable for claims submitted to CHAMPUS and TRICARE. This law is much more broad than the Stark law. While the Stark law contains specific exceptions, this law does not. Continue reading →
The HHS Office of Inspector General in a fraud alert released 6-9-15 is telling physicians to be cautious about entering into payment agreements that could violate the Anti-Kickback statute. In the alert, OIG tells physicians entering into such payment arrangements that their compensation must reflect the services’ market values. Further, OIG notes that such an arrangement could violate the Anti-kickback Statute if it seeks to increase the number of referrals the organization receives from those physicians.
Federal fraud and abuse laws often require that arrangements between health care providers are “fair market value” and “commercially reasonable.” And while these terms look like legalese and are easy to overlook, in fact, they are important. For example, the Federal Stark law requires strict compliance with its terms. A physician may enter into a prohibited arrangement with the intention that it falls within an exception to the law. If, however, the arrangement is not fair market value, the physician’s arrangement would violate the law, subject the physician to fines and risk the physician’s ability to participate in Medicare. Continue reading →
Vascular access centers are a common ancillary service offered by a variety of physicians, mostly nephrologists. They provide a unique setting for patients requiring interventional vascular services in connection with things like oncology, dialysis, nutritional delivery, wound healing, pain management and more. Unlike many surgical services, however, they are typically not provided via a surgery center, but rather as part of (and inside) the physician’s practices. Continue reading →