Martie Ross

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Kansas Hospital AssociationTrustee Webinar
Series September 30, 2008HospitalPhysician
RelationshipsImpact of the Anti-Kickback
Statute and Stark Law
Jeff Ellis 913.451.5139 jellis_at_lathropgage.com

Martie Ross 913.451-5152 mross_at_lathropgage.com
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Whats the focus of your hospitals compliance
program?

• Reimbursement
• HIPAA
• EMTALA

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Todays Agenda

• Overview of the Anti-Kickback Statute
• Prohibitions
• Penalties
• Overview of the Stark Law
• Prohibitions
• Penalties
• Recent government enforcement activity
• Trustees role in monitoring hospital-physician
  relationships

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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
• Furnishing or arranging for a good or service
• For which payment may be made under Medicare or
  Medicaid

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Three Necessary Elements

• Intentional act
• Direct or indirect payment of remuneration
• To induce the referral of patients or business

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Intentional Act One Purpose Rule

• If one purpose is to influence referrals, the
  arrangement violates the Anti-Kickback Statute
• Not only, not primary ONE purpose

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Remuneration

• Kickbacks, bribes, rebates
• Gifts and gratuities
• Above or below market rent or lease payments
• Discounts
• Furnishing supplies, services, or equipment
  either free, above or below market
• Above or below market credit arrangements
• Waivers of payments due

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Bottom Line

• Almost any benefit by and between healthcare
  providers can be considered remuneration
• Any exchange of goods or services between
  healthcare providers not based on fair market
  value has the potential of violating the
  Anti-Kickback Statute

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Safe Harbors

• Both statutory and regulatory
• Government will not prosecute parties to an
  arrangement which meets all of a safe harbors
  requirements
• Failure to bring an arrangement within a safe
  harbor ? arrangement violates the Anti-Kickback
  Statute

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Penalties

• Violation of the Anti-Kickback Statute is a
  felony
• Individuals
• Repayment of federal healthcare program payments
  plus fines of up to 250,000
• Imprisonment for up to 5 years
• Organizations
• Up to 500,000 in fines
• Civil money penalties up to 50,000 for each
  violation
• False Claims Act penalties 3X amount of claim
  plus a mandatory penalty of 5,500 to 11,000 per
  claim
• Imposition of onerous Corporate Integrity
  Agreement as a condition of continued
  participation in Medicare/Medicaid

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United States v. Anderson

• Doctors had consulting agreements with hospitals
  to serve as medical directors of geriatrics
  programs
• Compelling evidence patients benefitted from the
  programs
• Doctors did not maintain time records
• Government claimed agreements were disguised
  payments for referrals
• Result
• Millions in settlement payments by hospitals
• Hospital executives convicted
• Physicians convicted

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Stark Law Physician Self-Referral
LawLegislative and Regulatory History

• Legislation
• Stark I (November 1989)
• Stark II (January 1995)
• Regulation
• Stark I Regulation (August 1995)
• Stark II Regulations
• Phase I (January 2001)
• Phase II (March 2004)
• Phase III (September 2007)
• 2009 Final IPPS Rule (August 2008)
• 2009 Medicare Physician Fee Schedule Rule
  (November 2008)

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Six Elements of a Stark Law Violation

• A physician
• The referral of a patient by the physician to a
  provider to receive a designated health service
  (DHS), which includes all inpatient and
  outpatient hospital services
• The receipt by such patient of DHS from the
  provider
• The payment for the DHS by Medicare or Medicaid
• A financial relationship between the physician
  (or immediate family member) and the DHS
  provider
• The absence of an applicable exception for such
  financial relationship

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Financial Relationship Between Physician and
Hospital

• Compensation Arrangement
• Hospital provides any sort of payment, good, or
  service to a physician, either directly or
  indirectly
• Ownership or Investment Interest
• Physician holds any sort of ownership or
  investment interest in the hospital

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Key Concepts

• Civil, not criminal
• Knowledge and/or intent not necessary to violate
  the law
• Exceptions vs. safe harbors
• Leases
• Personal Services Agreements (including
  employment)
• Recruitment/retention
• Incidental medical staff benefit/non-monetary
  compensation

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Stark Penalties

• Denial of payment / repayment of amounts
  collected
• Civil monetary penalty (CMP) of up to 15,000 per
  item or service plus 2x the amount of claims
  submitted
• Extra CMP of up to 100,000 for circumvention
  schemes
• Possible exclusion from Medicare and Medicaid
  participation
• False claims liability through boot-strapping

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Little Mistake, Big Penalty

• During 2006 and 2007, hospital paid Doctor
  100,000 total for medical director services, and
  Doctor admitted 267 Medicare/Medicaid patients to
  hospital.
• Hospital charges for those services were 3.4
  million, and received 1.6 million in payments
• Hospital did not have signed contract with Doctor
• Total liability 14.2 million
• Charges x 3 10.2 million
• Penalty of 15,000 per services (267 patients)
  4 million

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Settlements

• Metropolitan Hospital (December 2003)
• Grand Rapids, MI
• 6.5 million
• Erlanger Medical Center
• Chattanooga, TN
• 40 million
• Alvarado Medical Center (April 2006)
• San Diego, CA
• 21 million
• Marion Regional Health Care System (July 2006)
• Marion, GA
• 3.75 million
• Univ. Hospitals Health System (August 2006)
• Cleveland, OH
• 14 million

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More Settlements

• HealthSouth (December 2007)
• Birmingham, AL
• 14.9 million
• Harris Methodist HEB Hospital (January 2008)
• Dallas, TX
• 1.9 million
• Memorial Medical Center (April 2008)
• Savannah, GA
• 5.08 million
• University of Medicine and Dentistry (ongoing)
• New Jersey
• Doctors have settled for more than their annual
  salaries

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Still More Settlements

• Baptist HealthSouth (May 2008)
• Miami, FL
• 7.65 million
• Cox Health Systems (July 2008)
• Springfield, MO
• 60 million

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Monitoring Hospital-Physician Relationships

• 42 CFR 411.361 Stark reporting requirement
• CMS Disclosure of Financial Relationships Report
  
• Initially target 500 hospitals
• Estimated 100 hours to complete
• 60 days to respond 10,000/day penalty for
  failure to respond
• Must produce copies of all leases, personal
  services agreements, recruiting agreements
• Identify any non-compliant relationships
• Certification

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High Risk Arrangements

• Medical directorships
• Call coverage arrangements
• Services agreements
• Employment arrangements
• Management contracts
• Space and equipment leases
• Joint ventures

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Areas of Concern

• Fair market value
• Legitimate need for services
• No written agreement
• No method for proving services actually performed
• Inclusion of revenue from ancillary services in
  compensation

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Role of Trustees

• Board policy concerning approval of physician
  relationships
• Limits on administrations authority in
  negotiations
• Types of arrangements
• Dollar limits
• Documented need for services
• Fair market value analysis
• Rebuttable presumption
• Legal review
• Board approval of specific agreements

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Role of Trustees

• Regular reports concerning hospital-physician
  relationships
• Contract management system
• Routine audits of contract performance
• Delegate sufficient authority to auditor
• Monitoring other relationships
• Non-monetary compensation
• Incidental medical staff benefits

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