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Government targets physician self-referral
Are you certain you are compliant?
In the past 10 years, there have been about 100 settlements of self-referral and kickback between the Office of Inspector General (OIG) of the Department of Health and Human Services and health care facilities. Twenty of these cases occurred in the past two years.
In one recent case, a hospital faces nearly $45 million in damages for Stark Law violations.1 The hospital, Tuomey Regional Medical Center in Sumter, SC, was found to have provided part-time employment arrangements which violated the provisions of the Stark law to induce referrals. The OIG had sought $277.5 million for fraudulent Medicare claims (False Claims Act) against Tuomey Regional. The hospital was found not to have violated the False Claims Act.
Such cases are cropping up more frequently as health care facilities seek closer alignment with physicians, and those alignments are coming under increasing scrutiny by the federal government, legal experts say. And it's not just the federal government getting involved. In New Jersey, the Codey Law places restrictions on physician ownership of surgery centers and limits construction of new physician-owned centers.
"In reality, a lot more of these violations come up, state and federal government are being more vigilant and aggressive in looking for them and going after them," says David M. Johnston, JD, associate with Bricker & Eckler in Columbus, OH. Through pilot projects, OIG is "being very aggressive regionally," Johnson says. Additionally, the recently passed health care reform law has several provisions that strengthen enforcements for the False Claims Act and for violations of the Stark Law, he says.
Hospitals and ambulatory surgery centers don't always strictly follow the Stark Law exceptions, To avoid violations, obtain solid legal advice, say experts interviewed by Same-Day Surgery. The Stark law is a strict liability statute, Johnston says. "That means you don't have to have intent to do wrong, just technicalities put you in violation," he says.
The law is quite detailed and has several parts that require compliance, Johnston points out. Health care facilities need knowledgeable legal advice about relationships their facility is planning with physicians, he says. "They particularly need to get good valuations advice, to make sure the contract is for fair market value for whatever services are being provided," Johnston says.
Compensation arrangements must meet fair market value standards and must be commercially reasonable, without regard to volume of referrals, to meet the requirements of the Stark Law, says Sandra Miller, Esq. a partner in the Greenville, SC, firm of Womble Carlyle Sandridge and Rice. Miller represented the physician relator who originally brought the federal lawsuit. The government intervened and took over the lawsuit after investigating the original complaint.
The lesson to be learned? You can't shop for legal opinions or appraisals, Miller says. In other words, if you have an arrangement that you feel is very outside the norm, and you have a reputable firm or reputable group that tells you `there is a problem with this,' you can't keep going to people until you get someone who tells you it's OK, she says.
Ensure you're using reputable consultants and legal counsel who are familiar with the Stark law and regulations, Miller advises. Make sure you are compliant on the front end, she says. "It's much easier to correct contractual relationships before anyone has billed anything, than to find a problem on back end and have to engage in repayment," Miller says.
Look at individual/group relationships
As collaborations grow between physicians and health care facilities, one significant concern is the need to avoid examining each individual physician relationship in isolation, Miller says.
For example, consider the example of a joint venture that involves a physician group with a medical director. Those physicians might have "problematic relationships" in which they manage other programs, product lines, or research for the hospital, Miller says. "Each by itself may be OK, but you have to look at the whole too and make sure it all fits together," she says. The Medicare program requires that when a business venture impacts multiple contracts with one physician group, they should cross reference each other. The same requirement goes for lease arrangements.
"If you have a large medical practice group, you could have 12-15 arrangements between one group and one hospital," Miller says. The solution? "Look at them individually and in their totality," Miller says.