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What Happened to Providers Who Violated
Requirements Applicable to Payment Arrangements with Referring
Physicians?
Elizabeth E. Hogue, Esq.
Office: 877-871-4062
Fax: 877-871-9739
E-mail:
ElizabethHogue@ElizabethHogue.net
Many post-acute
providers have established relationships with physicians who
also make referrals to them. Such relationships may include
payments for services provided as Medical Directors or
consulting physicians. They may also include leases to rent
space from referring physicians.
Generally, providers
that establish such relationships must meet the requirements of:
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the federal anti-kickback statute, and applicable
exceptions or “safe harbors;”
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the federal so-called Stark laws and applicable
exceptions; and
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requirements of state statutes and regulations in all
states in which they do business.
The Stark laws do not
apply to hospices.
Failure to meet these
requirements has resulted in enforcement actions against a
number of providers. Below are some examples of such actions.
San Jacinto Methodist
Hospital (SJMH), Texas,
agreed to pay $21,025.62 for allegedly violating the Civil
Monetary Penalties Law provisions applicable to kickbacks and
physician self-referrals. The OIG alleged that SJMH entered into
an arrangement with a physician for a Medical Director position,
which included the physician occupying hospital space for
private use and utilizing hospital personnel for clerical
assistance related to the physician's private practice patient
visits without any contractual entitlement to do so.
MedCare Home Health
and its owner Wilfred Braceras,
Florida, agreed to pay $178,000 for
allegedly violating the Civil Monetary Penalties Law provisions
applicable to kickbacks. The OIG alleged that MedCare and
Braceras paid kickbacks to a "coordinator" to induce the
referral of home health care patients. The recipient of the
kickbacks was not an employee, had no contract, and was paid
based on the volume and value of the referrals. Braceras’ home
health care chain; B&B Holdings Enterprises, Inc. d/b/a South
Eastern Health Management Association, Inc.; also entered into
an addendum to the existing corporate integrity agreement.
The King's Daughters'
Hospital and Health Services, Indiana, agreed to pay $391,500
for allegedly violating the Civil Monetary Penalties Law
provisions applicable to kickbacks. The OIG alleged that the
Hospital’s compensation arrangements with employed physicians
failed to comply fully with the Stark law's restrictions on
productivity bonuses. Specifically, the physicians were
compensated for services that they did not personally perform.
Valerie Tolley d/b/a
Health Care Medical (HCM),
Mississippi, agreed to pay $100,000 for
allegedly violating the Civil Monetary Penalties Law provisions
applicable to kickbacks. The OIG alleged that HCM made payments
and attempted to make payments of kickbacks in exchange for
direct and indirect patient referrals.
Ivinson Hospital,
Wyoming, agreed to pay $635,000 for
allegedly violating the Civil Monetary Penalties Law provisions
applicable to kickbacks. The OIG alleged that Ivinson paid
prohibited remuneration to physicians in the form of free rent,
equipment and furnishings, leases at less-than-fair-market
value, reimbursement for medical-director services in excess of
fair-market value, and reimbursement in excess of the
requirements of an income-guarantee agreement.
Bioscrip, Inc. and
Bioscrip Pharmacy, Inc. (Bioscrip); agreed to pay $795,000 for
allegedly violating the Civil Monetary Penalties Law provisions
applicable to kickbacks and prohibited physician
self-referrals. The OIG alleged that Bioscrip stationed a
pharmacist from its
West Hollywood, California
pharmacy at two physician practices and that, while on-site at
the physician practices, the pharmacist provided services for
the pharmacy with the practices as well as services that
benefitted the physician practices without a lease. These
services included those that otherwise would have been provided
to patients by the physician practices. Patients of the
physician practices, including those counseled by the on-site
Bioscrip pharmacist, were referred to and filled prescriptions
paid for by the Medicare Part D program at a Bioscrip pharmacy.
Spartanburg Regional
Healthcare System,
South Carolina, agreed to pay $780,000 for
allegedly violating the Civil Monetary Penalties Law provisions
applicable to kickbacks. The OIG alleged that
Spartanburg
provided information technology (IT) resources to non-employee
physician groups without written contracts in place.
Specifically,
Spartanburg
reported that it failed to document IT agreements with ten
different physician practices/groups and also failed to bill and
collect for those IT resources.
Providers must be
scrupulous about compliance with all applicable requirements
when they establish relationships with referring physicians that
involve payments to them. The costs of non-compliance may be
high, as demonstrated above.
©2009. Elizabeth E.
Hogue, Esq. All rights reserved.
No portion of this
material may be reproduced by any means without the advance
written permission of the author.
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