group practice

Fraud and Abuse Primer
Stark Law
The Anti-Kickback Statute
False Claims Act
Stark Act
42 U.S.C. 1395nn
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The Stark II Act prohibits a physician from
making a Referral
• to an entity;
• for the furnishing of a Designated Health
Service;
• for which payment may be made under
Medicare;
• if the physician (or an immediate family
member);
• has a Financial Relationship with the entity.

Applicable to Medicaid (42 USC 1396b(s))
Stark Act
42 U.S.C. 1395nn
If a physician has a financial
relationship with an entity furnishing
designated health services (DHS),
the physician cannot refer Medicare
DHS to the entity and the entity
cannot bill for the Medicare DHS,
unless an exception applies.
 PROOF OF INTENT IS NOT
REQUIRED
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Penalties
1. Denial of payment or refund;
2. Civil money penalties
($15,000/per claim); and
3. Exclusions from federal and state
Programs.
What is a DHS?
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Clinical laboratory services;
PT, OT, speech language pathology services;
Radiology and other imaging services (including MRI, CAT
scans);
Radiation therapy services and supplies;
Durable medical equipment
Parental and enteral nutrients, equipment and supplies;
Prosthetics, orthotics and prosthetic devices;
Home health services;
Outpatient prescription drugs; and
Inpatient and outpatient hospital services (encompassing
almost every type of medical procedure).
Note: Ambulatory Surgery Center services are not DHS!
What Is A Financial Relationship?
A Financial Relationship includes:
Ownership and investment interests
-Through equity, debt, or other means; and
Compensation arrangements
-Includes virtually any form of remuneration
Direct and indirect relationships included
Nature Of Exceptions
If a FINANCIAL RELATIONSHIP
exists, and patients are being
REFERRED FOR DESIGNATED
HEALTH SERVICE, then activity must
either comply with an exception or the
activity is illegal.
Exceptions
Some apply only to
ownership/investment
 Some apply only to compensation
 Some apply to both (“service-based
exceptions”)
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Most Common
Service-Based Exceptions
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Physician Services
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In-office Ancillary Services
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Rental Agreements
Compensation Exceptions
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Rental of Office Space
Rental of Equipment
Employment Relationships
Personal Service Arrangement
Physician Recruitment
Services Unrelated to DHS
Hospital-affiliated Group Practice
Arrangements
Fair Market Value Payments Made by
Physicians for Items and Services (i.e.,
clinical laboratory services)
Compensation Exceptions
Charitable Donations by Physician
 Fair Market Value Compensation
 Medical Staff Incidental Benefits
 Risk-sharing Arrangements (i.e.,
withholds, bonuses, risk pools)
 Compliance Training
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Compensation Exceptions
Obstetrical Malpractice Insurance
Subsidies
 Professional Courtesy
 Retention Payments in Underserved
Areas
 Community-wide Health Information
Systems
 Electronic Prescribing Items &
Services
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Physician Services Exception
(Applies to Ownership & Compensation Arrangements)
Physician can refer designated health
services if such services are performed
by a physician in the referring
physician‟s group practice.
In-Office Ancillary Services Exception
(Applies To Ownership and Compensation Arrangements
Must answer 3 questions:
Who?
Where?
How?
In-Office Ancillary Services Exception
Who May Provide Services?
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Referring physician;
Physician who is member of same group
practice as referring physician;
Individuals who are directly supervised by
physician or another physician in same
group practice; and
Physicians in the group practice such as
employees and independent contractors of
group practice.
In-Office Ancillary Services
Where are Services Provided?
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Same Building, which is defined as a
structure with a single street address
assigned by the U.S. Postal Service, not
including interior loading docks, mobile
vehicles, vans or trailers that meet one of
the following three tests:
1) The physician or group practice has an office that is open to
the group‟s patients for medical services at least 35 hours per
week and a member of the group provides physician services
(including non-DHS services) to patients at least 30 hours per
week.
In-Office Ancillary Services
Where Are Services Provided?
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Same Building (Continued)
2) The referring physician‟s group owns or rents an office that is
normally open to patients for medical services at least 8 hours per
week and the referring physician provides physician services
(include non-DHS services) to patients at this office at least 6
hours per week.
3) The referring physician‟s group owns or rents an office that is
normally open to patients for medical services at least 8 hours per
week, either the referring physician orders the DHS services while
seeing the patient on the premises or a member of the referring
physician‟s group practice is on the premises when the DHS is
performed and the referring physician or member of group
practices at site at least 6 hours per week.
In-Office Ancillary Services
Where Are Services Provided?
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A Centralized Building, which
means all or part of a building that is
owned or leased on a 24/7 basis by a
group practice including a mobile
vehicle, van or trailer where some or
all of the groups practice‟s DHS is
provided.
In-Office Ancillary Services
Covered by Exception
Furnished in a
Physician‟s Office
In-Office Ancillary Services
NOT Covered By Exception
Given to Patient in
Physician‟s Office But
Intended To Be Used
at HOME or OUTSIDE
Physician‟s Office
In-Office Ancillary Services
How Are Services Billed?
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By physician performing or supervising
services;
By group practice of which such
physician is member, employee or
independent contractor under billing
number assigned to group practice; or
By entity that is wholly owned by such
physician or such group practice.
Personal Service Exception
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Arrangement in writing, signed by parties,
specifies the services covered
Covers all services to be furnished
Term of at least 1 year
Services are reasonable and necessary;
Compensation to be paid over term of
arrangement is set in advance, does not
exceed FMV and is not determined in
manner which takes into account volume
or value of referrals between parties.
Space and Equipment Rental
Exception
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Lease must be in writing, signed, and specifies premises
and equipment to be leased;
Term of at least one year;
Space and equipment rented does not exceed that which is
reasonable and necessary for legitimate business
purposes of lease and is used exclusively by lessee when
being leased by lessee;
Rental charges over term of lease are set in advance
consistent with fair market value, and not determined in
a manner that takes into account volume or value of
referrals or other business generated between parties, and
Lease would be commercially reasonable even if no
referrals were made between parties.
Space and Equipment Rentals
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Cannot charge
percentage-based
fee or per-click fee
if lessor is source
of referral.
One Year Requirement
Agreement can be terminated within
the first year with or without cause
as long as the parties do not enter
into a new agreement during the first
year of the original term.
Employment Exception
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Employment is for identifiable services;
Amount of remuneration under
employment is:
• Consistent with fair market value and not
determined in manner which takes into
account volume or value of referrals by
referring physician; and
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Remuneration is provided pursuant to
agreement that would be commercially
reasonable even if no referrals were made
to employer.
Physician Recruitment Exception
Remuneration can be paid by a hospital directly to a physician
to induce relocation of practice to the geographic area
served by the hospital it:
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Arrangement is set out in writing and signed by the parties
Arrangement is not conditioned upon the physician‟s
referral of patients to the recruiting hospital
The remuneration is not based on the volume or value of
any actual or anticipated referrals by the physician to the
hospital
Physician is allowed to establish staff privileges at any other
hospital and may refer business to other DHS entities.
Professional Courtesy Exception
Professional courtesy offered to a physician or a physician‟s
immediate family member or office staff is permissible if all
of the following conditions are met:
Professional courtesy is offered by entity with formal medical staff.
Professional courtesy is offered without regard to the volume or
value of referrals.
The health care services are routinely provided by the DHS entity.
A professional courtesy policy is set out in writing and approved in
advance by the governing body.
Professional courtesy is not offered to a Medicare/Medicaid
beneficiary (except in the case of financial need).
Electronic Health Records
Exception
DHS entity can donate software or information
technology and training services used
predominantly to receive and transmit HER ifThe remuneration is provided to a physician
Software is interoperable
Physician pays 15% of donor’s cost and donor does not
finance
Not a condition of doing business
Eligibility for an amount/nature of items/services is not
determined in a manner that directly takes into account
referrals (indirect is okay)
Other conditions
Medicare and Medicaid Fraud and
Abuse Law (“Anti-Kickback
Statute”) 42 U.S.C. 1320a-7b

Under the Anti-kickback Statute, it is
illegal to knowingly or willfully:
offer, pay, solicit, or receive remuneration;
directly or indirectly;
in cash or in kind;
in exchange for;
referring an individual; or
furnishing or arranging for a good or
service; and
for which payment may be made under
Medicare, Medicaid, or other federal health care
programs
PENALTY
Fined
-Up to $50,000 per claim
or Imprisoned for up to
Five (5) years
or both
Three Necessary Elements
Intentional Act
Direct or Indirect Payment
of Remuneration
To Induce the Referral of
Patients or Business
What is Remuneration?
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Extremely Broad Scope, whether in cash or in
kind, and whether made directly or indirectly,
including:
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Kickbacks;
Bribes;
Rebates;
Gifts;
Above or below market rent or lease payments;
Discounts
Furnishing of supplies, services or equipment either free,
above or below market;
• Above or below market credit arrangements; and
• Waivers of payments due.
CAUTION
Almost Any Benefit
by and Between
Medical Providers
Can Be Considered
Remuneration
What constitutes “Knowing and
Willful” Violation of the Law?
Hanlester Network v. Shalala- the
OIG tests the new remedy of
program exclusion; providers won
because they did not specifically
intend to violate the Anti-Kickback
Statute.
 6402(f) ACA-Amends Anti-Kickback
Statute to provide that specific intent to
violate the statute is not necessary.
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Common
Safe Harbor Provisions
42 C.F.R. 1001.952
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If entity/person satisfies requirements of one or
more of the following safe harbor provisions,
otherwise suspect payment practices are NOT
subject to criminal prosecution-
• Investment interests for publicly traded companies and
smaller entities;
• Space and equipment rental agreements;
• Personal services and management contracts;
• Sale of a medical practice;
• Employees;
• Group purchasing organizations and Discounts;
• Waiver of beneficiary co-insurance and deductible
amounts;
• Warranties
Safe Harbor Provisions
42 C.F.R. 1001.952
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Investments in Ambulatory Surgical Centers
(ASCs)
Joint Ventures in Underserved Areas
Practitioner Recruitment in Underserved Areas
Sales of Physician Practices to Hospitals in
Underserved Areas
Subsidies for Obstetrical Malpractice insurance in
Underserved Areas
Cooperative Hospital Services Organizations
Investments in Group Practices