Anti-Referral and Anti-Kickback Laws

54 Pages·2010·0.44 MB·English

Anti-Referral and Anti-Kickback Laws:
A Guide for Home Health Agencies
and Hospices Operating in Texas
Preparedforthe
TexasAssociationforHomeCare&Hospice,Inc.
July15,2010*
PatrickKinder SuzanneDixon
DallasOffice DallasOffice
[phone] [phone]
[email protected] [email protected]
AustinOffice DallasOffice HoustonOffice
Suite3000 3000ThanksgivingTower Suite3400
600CongressAvenue 1601ElmStreet 1000Louisiana
Austin,Texas78701-2978 Dallas,Texas75201-4761 Houston,Texas77002-5011
[phone] [phone] [phone]
MexicoCityOffice
Gardere,ArenayAsociados,S.C.
TorreEsmeraldaII
Blvd.ManuelA.CamachoNo.36-1802
LomasdeChapultepec
11000Mexico,D.F.MEXICO
011(52)555-284-8540
www.gardere.com
* ThisguideincorporatesthePatientProtectionandAffordableCareActof2010(whichwaspassedasPublicLaw111-148,
datedMarch23,2010).
TableofContents
I. Introduction................................................................................................................................4
II. FederalLaws..............................................................................................................................6
A. StarkLaw.......................................................................................................................6
1. StarkLawDiscussion..........................................................................................6
2. StarkLawComments.........................................................................................7
3. StarkLawLegalMaterials..................................................................................9
B. Anti-KickbackLaw........................................................................................................22
1. Anti-KickbackLawDiscussion..........................................................................22
2. Anti-KickbackLawComments..........................................................................23
3. Anti-KickbackLawLegalMaterials...................................................................25
C. GiftstoBeneficiariesLaw.............................................................................................38
1. GiftstoBeneficiariesLawDiscussion...............................................................38
2. GiftstoBeneficiariesLawComments..............................................................38
3. GiftstoBeneficiariesLawLegalMaterials.......................................................40
III. TexasLaw...............................................................................................................................47
A. TexasLawDiscussion...................................................................................................47
B. TexasLawComments...................................................................................................47
C. TexasLawLegalMaterials...........................................................................................49
IV. ExamplesofProhibitedConduct............................................................................................52
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Introduction
3
I. Introduction
Home health agencies and hospices are subject to many federal and state laws. Chief among
these laws are those containing anti-referral and anti-kickback restrictions. These laws were
adopted, generally speaking, to ensure patient protection (and the patient’s freedom of choice) and
to eliminate overpayment and the overutilization of resources. This guide focuses on what are
generally considered the principal anti-referral and anti-kickback laws applicable to home health
agenciesandhospicesoperating in the state ofTexas.
The practical effect of these principal laws is that each and every financial relationship
between a home health agency or a hospice (on one hand) and any referral source or provider of
health care services (on the other hand) should be scrutinized for compliance. For these purposes, a
financial relationship is generally considered any compensation arrangement or ownership interest,
in each case, whether direct or indirect, including through multiple levels of intermediaries, through
multiple levels of contracts, and through family members. Examples of compensation arrangements
include leases (whether for personal property or for real property) and personal services contracts
(including those for medical director services or for management services). Examples of ownership
interestsinclude equity investmentsandmany typesofloans.
If a financial relationship does not comply with all of these principal laws, then a home
health agency or hospice involved in the financial relationship may have significant criminal and civil
exposure. Suchexposure may range from: fines; revocation ofone ormore licenses, registrations, or
certifications; civil penalties; and possibly even jail time. Additionally, it is not enough to confirm
that a financial relationship complies with one of these principal laws. Instead, each of these
principal lawsisunique andmustbe evaluatedonitsownterms.
This guide is intended only as an overview of certain applicable federal and Texas laws. It is
not intended to be a comprehensive analysis of each and every aspect of the law. Because of the
generality of this guide and because interpretive guidance is still developing regarding the laws
discussed in this guide, the information contained in this guide may not be applicable in all situations
and may not, after the date of its presentation, even reflect the most current authority. Nothing
containedin thisguide should be reliedoracteduponwithoutthe benefitof legal advice basedupon
the particular circumstances presented, and nothing in this guide is intended to be legal guidance or
otherwise construedasdeveloping anyattorney-clientrelationship withthe author.
4
Federal Laws
5
II. FederalLaws
There are at least three principal federal statutes containing anti-referral and anti-kickback
restrictions. These statutes, as known by their common names, are: (1) the Stark Law (sometimes
also referred to as Stark II); (2) the Anti-Kickback Law (sometimes also referred to as the Fraud and
Abuse Statute); and (3) the Gifts to Beneficiaries Law. Each of these three statutes is discussed in
the immediately followingparagraphs.
A. StarkLaw
1. StarkLawDiscussion
The Stark Law prohibits a physician from referring a patient to an entity with which the
physician (or an immediate family member of the physician) has a financial relationship for the
furnishing of a designated health service. The Stark Law defines a “referral” as a request by a
physician for any item or service paid for or by Medicare or Medicaid, including: a consultation with
another physician; a test or procedure to be performed by another physician; and the establishment
of a plan of care. Designated health services under the Stark Law include home health services; but,
importantly, do not currently include hospice services. The relevant text of the Stark Law’s general
prohibition can be found on Pages 9-10. Additionally, the relevant text of selected Stark Law
definitionscanbe foundon Pages 11-12.
Anyone receiving a payment in violation of the Stark Law must refund any amount so-
received. Anyone presenting a claimfora service thathe orshe knowsorshould know isa violation
of the Stark Law is subject to a penalty of up to $15,000 per presentation. Also, anyone entering an
arrangement in which he or she knows or should know is a violation of the Stark Law is subject to a
penalty up to $100,000 per arrangement. Finally, anyone violating the Stark Law is subject to having
his or her Medicare/Medicaid certification revoked. The relevant text of the Stark Law sanctions
canbe foundon Page 13.
The Stark Law contains several exceptions that permit financial relationships which are
otherwise prohibited by its plain language. In other words, a physician (or an immediate family
member) is permitted to have a financial relationship with a home health agency and refer patients
to the home health agency so long as the financial relationship complies with the applicable
exceptions to the Stark Law. For example, the Stark Law contains an exception for ownership
interests in a rural provider of designated health services so long as substantially all of the designated
health services furnished by the rural provider are furnished to individuals residing in the rural area.
There are certain qualifications as to what constitutes a “rural provider” and “substantially all” for
this exception. The Stark Law also contains exceptions for certain contractual relationships,
including: (1) the rental of office space; (2) the rental of equipment; (3) bona fide employment
relationships; (4) personal service arrangements; and (5) non-monetary compensation up to $300 (as
such amount is adjusted annually by CMS). The relevant text of these exceptions, together with
certain clarifying commentsby the author, canbe foundon Pages 14-21.
Importantly, in order to qualify for protection under an exception to the Stark Law, a
financial relationship must strictly comply with each any every test and condition required by the
applicable exception. The Stark Law does not care about, and is not dependent upon, whether the
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parties to the financial relationship have any “bad” intent or otherwise intend to enter into a
transaction in violation of the Stark Law. Instead, the Stark Law is what is considered a strict
liability statute—in other words, if a financial relationship violates the Stark Law’s prohibitions in
any way, then the parties to the financial relationship may have significant liability even if they
believe they areacting in goodfaithandare, in fact,acting withoutany “bad”intentions.
2. StarkLawComments
Immediately following are certain comments to the Stark Law provided by the author.
Please note that these comments are also included within the content found at the links provided
above. Most (if not all) of these comments are more helpful and provide more specific guidance
when viewed in their applicable context, such as the statutes and regulations from which the
comments derive. Therefore, it is recommended that the reader not rely solely on these comments
butalsocarefully review the contentprovidedin eachofthe linksprovidedabove:
● Comment: TheStarkLawonlyappliestoMedicareandMedicaid. Other
federalhealthprogramscoveredbytheAnti-KickbackLawarenotincluded
withintheStarkLaw.
● Comment: TherearetendesignatedhealthservicesundertheStarkLaw,
includinghomehealthservicesandoccupationaltherapyservices. Hospice
servicesarenotcurrentlyincludedasadesignatedhealthservice.
● Comment: Theruralproviderexceptionappliestonon-MetropolitanService
Areas(assuchareasaredefinedbytheFederalgovernment).
● Comment: Percentage-based lease arrangements and per-click lease
arrangementsarenolongerpermissibleundertheStarkLawexceptions.
● Comment: Thebonafideemploymentexceptionmaynotapplytomany
situations,asTexasisacorporatepracticeofmedicinestate,meaningthat
non-physiciansmaynotemployphysicians.
● Comment: Thepersonalservicearrangementsexceptionprovidesapossible
avenuebywhichhomehealthagenciescanutilizeaphysician’sservices(such
asmedicaldirectorservices,policyreviewservices,andqualityassurance
services)inexchangeforaservicesfee,andthephysiciancanlegallyreferto
thehomehealthagency.
● Comment: Ahomehealthagencymaypayaphysicianamedicaldirectorfee
so long as all of the specific items of the personal service arrangements
exceptionaresatisfied. Thisexceptiondoesnotsetalimitonthenumberof
medicaldirectors,butahomehealthagencyisprohibitedfromhavingmore
medicaldirectorsthannecessarytoaccomplishthecommerciallyreasonable
businesspurposeforhavingamedicaldirector. Infact,theconditionsfor
participationapplicabletoahomehealthagencydonotrequireamedical
director for certification purposes. Therefore, having multiple medical
directorsmaybeproblematic,maybearedflagtoagovernmentalregulator,
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andmayleadtoadditionalscrutiny. Alegitimatebusinesspurposenever
includesaninducementtomakereferrals.
● Comment: Whilethemethodfordeterminingthefairmarketvaluehourly
rate under the personal service arrangements exception is not explicitly
specifiedintheregulations,itisrecommendedthatthehomehealthagency
takeallreasonablestepstoconfirmthatthehourlyrateisfairandreasonable
in the home health agency’s market and does not take into account the
volumeorvalueofreferrals. Itisfurtherrecommendedthatthehomehealth
agencydocumentinwritingthemethoditusedtodeterminesuchhourlyrate.
● Comment: Please note that the personal service arrangements exception
requires“cross-referencing”ofmultiplepersonalserviceagreementsorthe
maintenanceofa“masterlist”listingallpersonalserviceagreements.
● Comment: Theexceptionfornon-monetarycompensationupto$300does
notpermitthepaymentofanycashoranycashequivalent,suchasapre-paid
giftcardorcreditcard. Inaddition,non-monetarycompensationcannever
begivenasaninducementorarewardforreferrals.
● Comment: There is anexceptionunderthe StarkLaw formedical staff
incidentalbenefits(notincludingcashorcashequivalents)thatdonotexceed
$25andthatmeetcertainotherrequirements. Thisexceptionislocatedat42
C.F.R.411.357(m). However,thisexceptionisonlyavailabletohospitalsand
otherfacilitiesandhealthcareclinicsthathavebonafidemedicalstaffs. Itis
recommended that home health agencies proceed cautiously when
attemptingtooperateunder,orfitwith,thisexception.
● Comment: Under both non-monetary compensation exceptions (i.e., the
$300/$25exceptions),thecompensationlimitsareadjustedeachcalendar
yearbyCMStothenearestwholedollarbytheincreaseintheConsumer
Price Index-Urban All Item (CPI-U) for the 12-month period ending the
preceding September 30th. The CPI-U for the 12-month period ending
September30,2009,decreased1.3percent. AstheCPI-Udecreasedinthe12-
monthperiodendingSeptember30,2009,thedollarvaluelimitsassignedby
CMStothenon-monetarycompensationandmedicalstaffincidentalbenefits
exceptionsremainedthesameastheywereincalendaryear2009. Thus,for
thecalendaryearbeginningJanuary1,2010,thecompensationlimitforthe
exceptionat§411.357(k)remains$355peryear,andthevalueofanymedical
staffincidentalbenefitstobefurnishedincompliancewiththeexceptionat
§411.357(m)remainslessthan$30peroccurrenceofthebenefit.
8
3. StarkLawLegalMaterials
StarkLaw: Prohibition
[Locatedat42U.S.C.§1395nn(a)]
The relevanttextofthe Stark Law is:
(a) “Prohibition ofcertain referrals
(1) Ingeneral
Except as provided in subsection (b) of this section, if
a physician (or an immediate family member of such
physician) has a financial relationship with an entity
specifiedin paragraph(2),then--
(A) the physician may not make a referral to the
entity for the furnishing of designated health
services for which payment otherwise may be
made under this subchapter [Medicare and
Medicaid][Comment: TheStarkLawonly
appliestoMedicareandMedicaid. Other
federal health programs covered by the
Anti-Kickback Law are not included
withintheStarkLaw.], and
(B) the entity may not present or cause to be
presented a claim under this subchapter or bill
to any individual, third party payor, or other
entity for designated health services furnished
pursuant to a referral prohibited under
subparagraph(A).
(2) Financial relationship specified
For purposes of this section, a financial relationship
of a physician (or an immediate family member of
such physician) with an entity specified in this
paragraphis--
(A) except as provided in subsections (c) and (d)
of this section, an ownership or investment
interestin the entity, or
(B) except as provided in subsection (e) of this
section, a compensation arrangement (as
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ReturntoStarkLaw Discussion
defined in subsection (h)(1) of this section)
betweenthe physician(oranimmediate family
memberofsuchphysician)andthe entity . . .”
10
ReturntoStarkLaw Discussion