Anti-Kickback Statute

December 21, 2023

Posted on by jwilbert

QUESTION:
I have always found the OIG’s past “Compliance Guidance” to be vague and not particularly helpful.  Is there anything more recent that will provide an analytical framework to comply with the Anti-kickback statute?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
The Anti-kickback statute is an intent-based statute.  So, the OIG can be forgiven to a certain extent for their “it depends” guidance on compliance with this law.  However, given the fact the Anti‑kickback statute is a criminal statute and that federal health care program claims resulting from a violation of this law will also constitute a violation of the False Claims Act, even the OIG has realized that more definitive guidance is required.

The OIG seems to have heard your plea for help, and has provided the following analytical framework for compliance with the Anti-kickback statute on Pages 12-14 of the November 6, 2023, OIG General Compliance Program Guidance (“GCPG”).

When attempting to identify problematic arrangements under the federal Anti-kickback statute, some relevant inquiries to explore and consider can include the following.  This list of questions is illustrative, not exhaustive, and the answers to these questions alone are not determinative as to whether an arrangement violates the federal Anti-kickback statute.

Key Questions:

(1)        Nature of the relationship between the parties –

        • What degree of influence do the parties have, directly or indirectly, on the generation of federal health care program business for each other?

(2)        Manner in which participants were selected –

        • Were parties selected to participate in an arrangement in whole or in part because of their past or anticipated referrals?

(3)        Manner in which the remuneration is determined –

        • Does the remuneration take into account, either directly or indirectly, the volume or value of business generated?
        • Is the remuneration conditioned in whole or in part on referrals or other business generated between the parties? Is the arrangement itself conditioned, either directly or indirectly, on the volume or value of federal health care program business?  Is there any service provided other than referrals?

(4)        Value of the remuneration.

        • Is the remuneration fair market value in an arm’s-length transaction for legitimate, reasonable, and necessary services that are actually rendered?
        • Is the entity paying an inflated rate to a potential referral source? Is the entity receiving free or below-market-rate items or services from a provider, supplier, or other entity involved in health care business?
        • Is compensation tied, either directly or indirectly, to federal health care program reimbursement?
        • Is the determination of fair market value based upon a reasonable methodology that is uniformly applied and properly documented?

(5)        Nature of items or services provided.

        • Are the items and services actually needed and rendered, commercially reasonable, and necessary to achieve a legitimate business purpose?

(6)        Federal program impact.

        • Does the remuneration have the potential to affect costs to any of the federal health care programs or their beneficiaries?
        • Could the remuneration lead to overutilization or inappropriate utilization?

(7)        Clinical decision making.

        • Does the arrangement or practice have the potential to interfere with, or skew, clinical decision making?
        • Does the arrangement or practice raise patient safety or quality of care concerns?
        • Could the payment structure lead to cherry-picking healthy patients or lemon-dropping patients with chronic or other potentially costly conditions to save on costs?

(8)        Steering.

        • Does the arrangement or practice raise concerns related to steering patients or health care entities to a particular item or service, or steering to a particular health care entity to provide, supply, or furnish items or services?

(9)        Potential conflicts of interest.

        • Would acceptance of the remuneration diminish, or appear to diminish, the objectivity of professional judgment?
        • If the remuneration relates to the dissemination of information, is the information complete, accurate, and not misleading?

(10)      Manner in which the arrangement is documented.

        • Is the arrangement properly and fully documented in writing?
        • Are the parties documenting the items and services they provide? Are the entities monitoring items and services provided?
        • Are arrangements actually conducted according to the terms of the written agreements (when written to comply with the law)?

Is this perfect guidance – No.  But it is a significant improvement over any compliance guidance that the OIG has provided in the past.  In fact, we find the OIG’s New General Compliance Guidance to provide an excellent framework for compliance with the Anti-kickback statute, and a number of other federal laws that affect health care providers.

If you have a quick question about this, e-mail Henry Casale at hcasale@hortyspringer.com.

For an in-depth discussion of the OIG’s November 6, 2023, OIG General Compliance Program Guidance, please check out the Horty Springer Health Law Expressions Podcast  “New OIG General Compliance Program Guidance by Dan Mulholland and Henry Casale.”

 

August 18, 2022

Posted on by Courtney Patterson

QUESTION:
Our On-Call Policy requires physicians to have 30 admissions or operating cases at the hospital per year to participate in the on-call schedule. The Policy also gives discretion to the department chairs, who develop the call schedules, to limit the ability of a particular physician to participate in the schedule for a number of reasons, some of which have nothing to do with the quality of care being provided. Do these provisions in our Policy pose any legal concerns?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY CHARLES CHULACK:
Yes. First, conditioning participation in the call schedule on admissions at, or procedures done in, the hospital could be interpreted as conditioning participation on referrals to the hospital. Such a requirement could present compliance issues with the federal Anti-Kickback Statute. In Supplemental Compliance Program Guidance for Hospitals, the Department of Health and Human Services Office of Inspector General (“OIG”) cautioned that “conditioning privileges on a particular number of referrals or requiring the performance of a particular number of procedures, beyond volumes necessary to ensure clinical proficiency, potentially raise substantial risks under the [Anti-Kickback] statute.” Some state courts have found that participation on the call-coverage roster constitutes a “privilege.”

This issue is something that is on the Department of Justice’s radar as well.  For example, in 2010, a hospital agreed to pay the United States $108 million to settle claims that it violated the Anti‑Kickback Statute and the False Claims Act by limiting the opportunity to work at an outpatient cardiology testing unit to cardiologists who referred business to the hospital, giving the cardiologists a percentage of time in the testing unit which corresponded with the gross revenue attributed to the cardiologists’ referrals.  Conditioning participation on the call roster on admissions or performing cases at the hospital presents similar risks.

If compensation is involved in the call coverage arrangements, there is further concern under the Anti‑Kickback Statute. The OIG has warned that under the Anti-Kickback Statute there is “considerable risk” in conditioning compensation for on-call coverage on “doing business at a hospital.”

Finally, giving the department chairs the discretion to limit the ability of a physician to take call poses anticompetitive concerns. While there may be legitimate reasons to limit the ability of a physician to take call, such as issues with a physician’s quality of care, such decisions should not be made solely by potential competitors in the department.

August 13, 2020

Posted on by hortyspringer

QUESTION:          Are you aware of anything new on the Proposed Stark Rules and Anti-Kickback Safe Harbors?  If they are adopted now, is there anything that could affect those rules from going into effect?

 

ANSWER:           The answer to both of your questions is yes.

You are referring to the proposed regulations to the Stark Law and the proposed safe harbor regulations to the Medicare Anti-Kickback Statute that were proposed on October 17, 2019.  The notice and comment period for these rules ended on December 31, 2019 (click the links below to read our comments on these rules).

Comments on Proposed Safe Harbor Regulations (File Code OIG-0936-AA10P)

Comments on Proposed Regulations to the Physician Self-Referral Law (File Code CMS-1720-P)

Supplement to Comments on Proposed Regulations to the Physician Self-Referral Law (File Code CMS-1720-P)

While the rules have not been published in final form, according to a July 21, 2020 posting by the Office of Management and Budget, those regulations are under review by OMB and it is our understanding that these rules remain a high priority for CMS.

The proposed rules provide practical, realistic guidance for compliance with both the Stark law and the Medicare Anti-Kickback Statute.  It is our hope that both sets of regulations are published in final form in much the same form as proposed.

But here is where life gets complicated.  Due to a provision in a little known law called the Congressional Review Act (“CRA”) and the upcoming Presidential, House and Senate elections, publication of those rules in final form at this late date in the Trump administration may not be enough for them to remain in effect.

The CRA was enacted in 1996.  The provision in the CRA to keep an eye on is the section of the CRA that applies to regulations that are published within 60 legislative days of the end of a presidential term (which has long passed).

The CRA requires regulatory agencies to submit their rules, regulations, and guidance documents to Congress before they can officially take effect.  Congress has 60 legislative days to review a rule.  If Congress does nothing, then the rule takes effect.  However, if a simple majority in the House and the Senate (filibuster rules do not apply) do not like the rule/regulation/guidance, they can issue a “resolution of disapproval.”  Once the “resolution of disapproval has passed, unless it is vetoed by the President, the rule/regulation/guidance document is dead.

It is important to note that as a practical matter, the CRA will only be relevant if there is a change in the President, the Democrats hold the House and the Democrats flip the senate.  If that does not occur, then it will be virtually impossible to get the votes necessary for the CRA to apply.

Prior to the Trump Administration, the CRA was only used once.  However, after President Trump was elected and the Republicans held a majority in the House and Senate, the CRA was used 14 times to invalidate Obama/Biden Administration enacted rules.  It will be interesting to see if the Democrats will do the same if they are given the chance and whether the Stark rules and/or the Safe Harbor regulations will be a victim of the CRA.

January 24, 2019

Posted on by hortyspringer

QUESTION:        Is there anything new on physician retention arrangements?

 

ANSWER:            Unfortunately, no.  However, we have asked both the OIG and CMS to consider updating their respective positions on physician retention arrangements in response to the OIG’s and CMS’s requests for information on whether the Antikickback Statute and/or the Stark Law are creating barriers to improving quality care and achieving clinical and/or financial integration.

We urged CMS to consider changes to its exception for physician retention arrangements, 42 C.F.R. § 411.357(t), that will permit any hospital, regardless of its location, to use this exception and not limit this exception to instances where there is a firm, written recruitment offer.

There is no rational basis or business justification to continue to limit this exception to hospitals that are located in a rural area or HPSA (42 C.F.R. § 411.357(t)(3)(i)(A)) or where the physician’s patients reside in a medically underserved area or are members of a medically underserved population (42 C.F.R. § 411.357(t)(3)(i)(B)).

In our experience, hospitals, regardless of their location, would benefit from the ability to assist a physician in an existing independent practice to remain independent.  We are aware of clients that have been approached by a group of physicians who want to remain independent.  However, between the charity care they provide, their Medicaid patient population, and the amounts that were being paid to the physicians by Medicaid, Medicare and other third-party payors for their professional services, the group could not generate a sufficient amount of professional reimbursement to allow the group to compensate the physicians at a reasonable fair market rate and precluded the group from expanding the practice even though there was a need for additional physician services.

The hospital could have employed the physicians.  However, the physicians preferred to remain independent and the hospital determined that it would lose more money if the hospital employed the physicians than it would if the hospital provided a guarantee-like payment that would allow the physicians to remain independent.  While such a compensation arrangement might be able to be structured to comply with the Anti-Kickback Statute, there is no safe harbor that will protect such a retention arrangement.  Of greater concern is that currently there is no exception to the Stark Law that would permit this type of retention assistance in most hospitals.

One of the other problems with the Stark retention exception is that a hospital must wait until a physician has a written offer from a third party before it can offer retention assistance.  42 C.F.R. §411.357(t)(2).  By the time a physician has such a firm, written offer, he/she has often decided to leave the area and the permitted retention benefit is of little practical benefit.  We urged CMS to change the exception so that any hospital will be permitted to be proactive and has the ability to offer retention assistance to independent practicing physicians as long as the hospital has a good faith belief that the community served by the hospital would benefit from retention assistance, the amount of the financial assistance is reasonable, and the compensation arrangement complies with the other requirements set forth in this exception.

Whether CMS or the OIG listens to these concerns remains to be seen.