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  1. 1. ANTI-KICKBACK STATUTEAND STARK LAW UPDATEHealth Law Section Spring ConferenceMay 7, 2013Scott S.
  2. 2. 2Don‘t pay for referrals!Anti-Kickback Statute
  3. 3. 3 Prohibits knowingly offering or receiving anyremuneration to induce or as reward for referrals ofitems or services covered by federal health careprograms. 42 U.S.C. § 1320a-7b(b)(1)(A) &(b)(2)(A). Prohibits knowingly offering or receiving anyremuneration to induce or as reward for arrangingfor or recommending purchasing any item for whichpayment may be made by a federal health careprogram.‖ 42 U.S.C. § 1320a-7b(b)(1)(B) &(b)(2)(B).Anti-Kickback Statute
  4. 4. 4 Criminal law—violation is a felony Violation can be basis of civil monetarypenalty, False Claims Act, exclusion fromMedicare, Medicaid Worded and interpreted broadly Intent: knowingly and willfully Safe harbors provide protection Administered by OIGAnti-Kickback Statute
  5. 5. 5Don‘t refer to yourself!Stark Law
  6. 6. 6 Prohibits physicians from referringdesignated health services covered byMedicare or Medicaid to entities withwhich the physicians have a financialrelationship. 42 U.S.C. § 1395nn(a)(1).Stark Law
  7. 7. 7 Not criminal Violation can be basis of civil monetarypenalty, False Claims Act, exclusion fromMedicare, Medicaid No wiggle room if actions fall withinprohibition Exceptions provide protection Administered by CMSStark Law
  8. 8. 8 OIG Issued Special Fraud Alert 3/26/13– 14th Special Fraud Alert– 2nd since 2003– Addresses Physician-Owned Distributorships(PODs)• POD: Physician-owned entities that deriverevenue from selling, or arranging for the saleof, implantable medical devices ordered by theirphysician-owners for use in procedures thephysician-owners perform on their own patients.Special Fraud Alert:Physician-Owned Entities
  9. 9. 9 AKS Implications for PODs– Physician diagnoses need for medical device– Physician uses device supplied by POD– Medicare pays for device– POD makes distribution to physician ownersSpecial Fraud Alert
  10. 10. 10 AKS Implications for PODs– Does investment safe harbor apply? (42C.F.R. § 1001.952(a))• Eight elements• No more than 40 percent of investment interestsmay be held by investors who are in a position tomake or influence referrals.• No more than 40 percent of gross revenue relatedto the furnishing of health care may come frombusiness generated from investors.Special Fraud Alert
  11. 11. 11 OIG History With PODs:– 2006 OIG letter noted ―strong potential forimproper inducements between … physicianinvestors, the entities, device vendors, anddevice purchasers.‖Special Fraud Alert
  12. 12. 12 Stark Implications for PODs– Feels like self-referral issue– Stark Law definitions may not fitSpecial Fraud Alert
  13. 13. 13 Stark Law Implications for PODs– Stark prohibits referrals from a physician to an―entity‖ with which physician has financialrelationship– Are PODs ―entities‖?• ―Entity‖ is a person or entity that performs servicesbilled as DHS or presents a claim to Medicare forthe DHS• PODs don‘t perform services or bill MedicareSpecial Fraud Alert
  14. 14. 14 CMS History With PODs– ―[W]e are not adopting the position that [PODs]necessarily ‗perform the DHS‘ and are therefore an‗entity.‘‖ 73 Fed. Reg. 48727 (Aug. 19, 2008)– ―We are concerned that some [PODs] may servelittle purpose other than providing physicians theopportunity to earn economic benefits in exchangefor nothing more than ordering medical devices …that the physician-investors use on their ownpatients.‖ 73 Fed. Reg. 23695 (April 30, 2008)Special Fraud Alert
  15. 15. 15 March 26, 2013, Alert from OIG PODs ―produce substantial fraud andabuse risk and pose dangers to patientsafety‖ Questionable features:– Selecting investors in position to generate business– Requiring investors who leave area to divest ownership– Distributing extraordinary returns on investment comparedto risk involvedSpecial Fraud Alert
  16. 16. 16 PODs Are Inherently Suspect Under AKS Some Suspect Characteristics:– Size of investment varies with value ofdevices used– Physician-owners condition referrals tohospitals on purchase of POD devices– POD is a shell entity that doesn‘t maintainnecessary inventory, personnelSpecial Fraud Alert
  17. 17. 17 OIG Concerns Magnified:– Physician-Owners are few in number—volume of referrals closely correlates to returnon investment– Physician-Owners alter medical practicesafter or shortly before investing in PODSpecial Fraud Alert
  18. 18. 18 Bottom Line: Be Careful Never Comfortable Engaging in ActivityThat OIG is Closely MonitoringPODs
  19. 19. 19 OIG Issues Approximately 20 Per Year– Helpful to Understand OIG Perspective– Opinions based on Submitted Questions, NotNecessarily Hot Topics– CMS Rarely Issues—Last in 2011Advisory Opinions
  20. 20. 20 Issued on Dec. 31, 2012 Topic: Rural Hospital Pays CardiologyGroup Performance Bonuses Verdict: OIG Will Not Impose SanctionsAdvisory Opinion No. 12-22
  21. 21. 21 Facts:– Only cardiac catheterization lab around– Physician group manages lab, performsprocedures, provides training– Part of compensation is performance fee basedprimarily on cost savings (also servicequality, patient satisfaction, etc.)– Independent utilization review firm reviewsannually to confirm no adverse impact on patientsAdvisory Opinion 12-22
  22. 22. 22 OIG Reasoning:– AKS is implicated because physicians refer patientsto the lab, and hospital pays physicians performancebonus– Personal services safe harbor (42 CFR 1001.952(d))does not apply because aggregate payment not set inadvance– No sanctions because (i) compensation is FMV, (ii)payment doesn‘t vary with referrals, (iii) specificity ofperformance measures based on national standardsAdvisory Opinion 12-22
  23. 23. 23 Issued on Dec. 12, 2012 Topic: Hospital Provides Free Access toElectronic Interface for Physicians toTransmit Orders for Services to Hospital Verdict: OIG Will Not Impose Sanctions;Arrangement Doesn‘t Generate ProhibitedRemunerationAdvisory Opinion No. 12-20
  24. 24. 24 Facts:– Hospital would provide free access toelectronic interface to all physicians who ask– Physicians could transmit orders for lab anddiagnostic services from hospital– Hospital would maintain interface– Physicians responsible for own electronichealth record systemAdvisory Opinion No. 12-20
  25. 25. 25 OIG Reasoning:– Whether remuneration is exchanged isthreshold question– Provision of free services to referral sourcesis suspect– Free access would have no independentvalue to physicians apart from serviceshospital providesAdvisory Opinion No. 12-20
  26. 26. 26 Issued on Nov. 29, 2012 Topic: 3 Municipalities Would Waive Cost-Sharing Obligations of Each Other‘sResidents for Backup Emergency MedicalServices Transportation Verdict: OIG Will Not Impose SanctionsAdvisory Opinion No. 12-18
  27. 27. 27 Facts:– Municipalities will provide backup responseand transportation for emergency calls fromeach other‘s citizens– The municipalities will waive cost-sharingobligations for each other‘s residents and onlybill for amounts covered by insuranceAdvisory Opinion No. 12-18
  28. 28. 28 OIG Reasoning:– Routine waivers of cost-sharing obligationsare suspicious because they may inducereferrals– Concern alleviated here because (i)municipalities will only provide services onsporadic basis, (ii) emergency transportationunlikely to lead to overutilization, (iii) localgovernments in mutual aid arrangementunlikely to abuse systemAdvisory Opinion No. 12-18