Stark Requirements for Physician Contracts

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by Kim C. Stanger, Holland & Hart LLP

Entities that employ or contract with physicians must ensure their agreements are structured to comply with the federal Ethics in Patient Referrals Act (“Stark”)1 if they intend to bill Medicare for services rendered or referred by the physicians. Under Stark, if a physician (or a member of the physician’s family) has a financial relationship with an entity, the physician may not refer patients to the entity for certain designated health services (“DHS”)2 payable by Medicare unless the financial relationship is structured to fit within a regulatory safe harbor.3 Entities may not bill Medicare for services improperly referred and, if they have done so, the entity must repay amounts improperly received. Failure to report and repay within 60 days may result in additional civil penalties of $15,000 per claim as well as False Claims Act liability.4 Repayments can easily run into the hundreds of thousands if not millions of dollars. Given the potential liability, it is critical that physician arrangements be structured to fit within the regulatory safe harbors.
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May our medical group offer free screenings?

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As with other free or discounted items or services, offering free screenings can violate (1) the federal Anti-Kickback Statute (“AKS”) if one purpose of the free screening is induce referrals for items or services payable by federal healthcare programs (42 USC § 1320a-7b), and/or (2) the federal Civil Monetary Penalties Law (“CMP”) if the physician knows or should know that the free screening is likely to induce a federal program beneficiary to purchase items or services covered by federal healthcare programs (42 USC § 1320a-7a).  There are several potentially relevant CMP exceptions, most of which focus on whether the screening is tied to the provision of other services payable by federal healthcare programs.  In Advisory Opinion 09-11, the OIG approved a hospital’s free blood pressure screening program where (1) the free screening was not conditioned on the use of any other goods or services from the hospital; (2) the patient receiving the screening was not directed to any particular provider; (3) the hospital did not offer the patient any special discounts on follow-up services; and (4) if the screening was abnormal, the patient as advised to see their own health care professional.  Under these circumstances, the OIG concluded that the test was not improperly tied to the provision of other services by the hospital.

For more information, see the OIG’s Special Advisory Bulletin:  Offering Gifts and Other Inducements to Beneficiaries (August 2002), available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/SABGiftsandInducements.pdf.

Kim Stanger is the Chairman of Holland & Hart LLP’s Health Law Group.  He can be reached at kcstanger@hollandhart.com or (208) 383-3913.  To subscribe to Holland & Hart’s free e-newsletter or blog concerning health law issues, please e-mail Mr. Stanger.

This publication is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal or financial advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the author. This publication is not intended to create an attorney-client relationship between you and Holland & Hart LLP. Substantive changes in the law subsequent to the date of this publication might affect the analysis or commentary. Similarly, the analysis may differ depending on the jurisdiction or circumstances. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

Beware Excluded Individuals and Entities

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by Kim C. Stanger, Holland & Hart LLP

Federal laws generally prohibit providers from billing for services ordered by, or contracting with, persons or entities that have been excluded from participating in Medicare, Medicaid, or other federal health care programs. Violations may result in significant penalties, including repayment of amounts improperly received. To avoid penalties, providers should check the OIG’s List of Excluded Individuals and Entities (“LEIE”) before hiring, contracting with, or granting privileges to employees, contractors, or practitioners, and should periodically re-check the LEIE thereafter.

Effect on Excluded Entities. Federal statutes such as the Civil Monetary Penalties (“CMP”) law allows HHS to exclude individuals and entities from participating in federal health care programs if they have been convicted of fraud or abuse or engaged in certain other misconduct. (See, e.g., 42 USC §§ 1320a-7 and 1320c-5). States are required to exclude from Medicaid any person or entity that has been excluded by HHS. (Id.). An excluded individual or entity generally may not do the following: Read more

Waiving Copays and Deductibles

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by Kim C. Stanger, Holland & Hart LLP

Providers sometimes waive patients’ cost-sharing amounts (e.g., copays or deductibles) as an accommodation to the patient, professional courtesy, employee benefit, and/or a marketing ploy; however, doing so may violate fraud and abuse laws and/or payor contracts. From a payor’s perspective, waiving cost-sharing amounts creates two problems. First, payors often contract with providers to pay based in part on the provider’s usual charges. The Office of Inspector General (“OIG”) has argued that a provider who routinely waives copays is misrepresenting its actual charges. Second, and more importantly, payors require copays to discourage overutilization and reduce costs. Waiving copays and deductibles removes the disincentive for utilization, thereby potentially increasing payor costs. Accordingly, federal and state laws as well as payor contracts generally prohibit waiving cost-sharing absent genuine financial hardship.

Federal Programs. Waiving copays and deductibles for government program beneficiaries implicates at least the following laws:

1. Monetary Penalties Law. The federal Civil Monetary Penalties Law (“CMPL”) prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs (e.g., Medicare) from a particular provider. (42 USC 1320a-7a(a)(5)). Violations may result in penalties of $10,000 per item or service provided, treble damages, repayment of amounts paid, and exclusion from federal programs. (Id.; 42 CFR 1003.102). The CMPL specifically defines “remuneration” to include waivers of copays and deductibles. (42 USC 1320a-7a(i)).

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Check Your Physician Contracts

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by Kim Stanger

Contracts and other financial arrangements with physicians and certain other healthcare providers must be structured to comply with the federal Stark,1 Anti-Kickback,2 and Civil Monetary Penalties Laws3 if the physician will refer patients for items or services payable by Medicare, Medicaid or other healthcare programs. Failure to comply may result in overpayments; failure to report and repay such overpayments within 60 days may violate the False Claims Act, subjecting the parties to additional penalties, including treble damages, fines of $5,500 to $11,000 per claim, and exclusion from Medicare and Medicaid.4 Given the severe penalties for noncompliance, hospitals and other healthcare providers should ensure that their physician contracts comply.

TOP COMPLIANCE CONCERNS FOR PHYSICIAN CONTRACTS. The following are top compliance issues for services contracts with referring physicians or their family members. Many of these same rules apply to contracts with other healthcare providers who may refer patients for services covered by Medicare or Medicaid.5 Read more