INNOVATIVE MARKETING & ARRANGEMENTS WITH REFERRAL SOURCES

Denise M. Leard, Esq. © 2018 Brown & Fortunato, P.C.

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  INTRODUCTION

  TOPICS

§  Legal issues arising from arrangements with referral sources

§  Enforcement trends and examples

  LEGAL ISSUES

§ Anti-Kickback Statute – federal and state §  Stark Law § Telephone Solicitation Statute/Supplier Standard 11 §  Beneficiary Inducement Statute § HIPAA

  LEGAL ISSUES

§ Types of referral sources § Marketing reps § Lead generation companies § Manufacturers § Physicians § Hospitals § Sleep labs

  LEGAL ISSUES

§ Anti-Kickback Statute § Whoever knowingly and willfully solicits, receives, offers,

or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind— •  in return for referring an individual to a person for the

furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or

  LEGAL ISSUES

•  in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,

shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years or both.

  LEGAL ISSUES

§ Anti-Kickback Statute – federal and state §  Stark Law § Telephone Solicitation Statute/Supplier Standard 11 §  Beneficiary Inducement Statute § HIPAA

  LEGAL ISSUES

§  State anti-kickback statutes § Some limited to Medicaid § Some apply regardless of payor

  LEGAL ISSUES

§  Stark Law § … [I]f a physician (or an immediate family member of such

physician) has a financial relationship with an entity … , 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,

•  (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). and

  LEGAL ISSUES

§ Anti-Kickback Statute § Doesn’t it just apply to someone who exchanges money for

referrals? •  NO!

§  Stark Law § Doesn’t it only apply if a referring physician has an

ownership interest? •  NO!

  LEGAL ISSUES

§ Arrangements involving anything of value going to a referral source need to be scrutinized. This could be § $$$ § Services § Relieving referral source of duties it would be responsible

for

  LEGAL ISSUES

§  Flow of remuneration might be indirect and not obvious § Example •  Doctor Smith prescribes item to patient •  Supplier furnishes prescribed item to patient •  Supplier sells claim to Doctor Smith for less than allowable •  Doctor submits claim and pockets difference between allowable

and amount paid for claim

  LEGAL ISSUES

§ Whether something is a referral might not be obvious § Referral vs. Raw Lead •  Referral not defined in AKS and very broadly defined in Stark •  AKS guidance suggests that information not sufficient to enable

a health care provider to discern whether a person is covered by an FHCP or the likelihood of that person developing into a paying customer is less likely to be viewed as a referral prohibited under the AKS

•  Courts have interpreted “referral” broadly to include arrangements where one party acts as a “gatekeeper” that facilitates or authorizes a patient’s choice to use a provider (e.g., leads with conditions)

  LEGAL ISSUES

§ Carve Outs § What about referrals of cash or commercial patients? § Repeated statements from OIG that remuneration provided

for cash or commercially insured patients could be a disguised kickback for FHCP patient referrals

§ State kickback statutes

  LEGAL ISSUES

§ Anti-Kickback Statute § Personal Services and Management Contracts Safe Harbor •  Written agreement •  Term at least one year •  Aggregate compensation fixed in advance •  Fair market value •  Does not take into consideration volume or value of referrals

  LEGAL ISSUES

§  Stark Law § Personal Service Arrangements Exception •  (i) the arrangement is set out in writing, signed by the parties,

and specifies the services covered by the arrangement, •  (ii) the arrangement covers all of the services to be provided by

the physician (or an immediate family member of such physician) to the entity,

•  (iii) the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement,

  LEGAL ISSUES

•  (iv) the term of the arrangement is for at least 1 year, •  (v) the compensation to be paid over the term of the

arrangement is set in advance, does not exceed fair market value, and except in the case of a physician incentive plan described in subparagraph (B), is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties,

•  (vi) the services to be performed under the arrangement do not involve the counseling or promotion or a business arrangement or other activity that violates any state or federal law

  LEGAL ISSUES

§ Discount Safe Harbor § What if I buy items covered by Medicare from a

manufacturer that gives me volume-based discounts? § Safe harbor allows for volume-based discounts and rebates

under certain conditions •  Discount made at time of sale or rebate fixed and disclosed in

writing at time of initial sale •  Buyer must provide information about discount to CMS upon

request •  Manufacturer must fully and accurately report discount on

invoice or statement to DME supplier and inform DME supplier of its obligation to report to discount and provide information to CMS upon request

  LEGAL ISSUES

§ Discount Safe Harbor § Other industries may have very different relationships

between the manufacturer and the retailer with regard to discounts or rebates •  Auto industry •  http://tal.fm/513 –  1:40-4:40

  LEGAL ISSUES

§ Telephone Solicitation Statute/Supplier Standard 11 § Referral source gives you contact information for Medicare

patients. Under what circumstances can you call them? § A DME supplier may not call a Medicare beneficiary on the

telephone about furnishing an item covered by Medicare unless one of the following applies: •  The individual has given written permission to the supplier to

make contact by telephone about furnishing a covered item;

  LEGAL ISSUES

•  The supplier has furnished a covered item to the individual, and the supplier is contacting the individual only about the furnishing of the item previously furnished; or

•  If the contact is about the furnishing of a covered item other than a covered item previously furnished to the individual, the supplier has furnished at least one covered item to the individual within the 15 month period before the date of contact

§ Referral source could obtain consent for a call •  Preferably consent will be written (paper or electronic opt in)

and list the name of DME supplier that will call

  LEGAL ISSUES

•  The supplier has furnished a covered item to the individual, and the supplier is contacting the individual only about the furnishing of the item previously furnished; or

•  If the contact is about the furnishing of a covered item other than a covered item previously furnished to the individual, the supplier has furnished at least one covered item to the individual within the 15 month period before the date of contact

  LEGAL ISSUES

§ Telephone Solicitation Statute/Supplier Standard 11 § OIG FAQs

https://oig.hhs.gov/fraud/docs/alertsandbulletins/fraudalert_telemarketing_DME.pdf •  Q: Is a supplier returning a beneficiary’s phone call be

considered an “unsolicited” contact”? •  A: No. In that scenario, the beneficiary initiated the contact

and is inviting a response from the supplier.

  LEGAL ISSUES

•  Q: Is a supplier contacting the beneficiary, based on the receipt of a physician order, considered an "unsolicited" contact?

•  A: If a physician contacts a supplier on behalf of a beneficiary with the beneficiary's knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including delivery and billing information), then that contact would not be considered "unsolicited". Please note that the beneficiary need only be aware that a supplier will be contacting him/her regarding the prescribed covered item, recognizing that the appropriate supplier may not have been identified at the time of consultation.

  LEGAL ISSUES

•  Q: What if a supplier contacts the beneficiary based solely on the physician order (and therefore the contact is without the beneficiary's knowledge that the physician would be contacting a supplier on the beneficiary's behalf)?

•  A: Then that contact would be considered "unsolicited" and, depending on the facts and circumstances of the particular case, may be prohibited.

•  Q: Does a supplier have to collect and maintain documentation from the physician reflecting that the physician has contacted the supplier with the beneficiary's knowledge?

•  A: No. However, it would be a business decision on the part of the supplier whether to collect and obtain such documentation for their records.

  LEGAL ISSUES

•  Q: If a supplier makes solicited contact with a beneficiary for a particular covered item, can the supplier speak with the beneficiary about additional covered items during that same contact?

•  A: No. If this is the first contact ever made by the supplier to the beneficiary, then the supplier is prohibited from attempting to solicit the purchase of additional covered items since the supplier only had permission to contact the beneficiary regarding the particular covered item prescribed by the physician. Once the supplier has provided the covered item to the beneficiary, then the supplier may contact that patient about the same covered item anytime in the future or about other covered items for the next 15 months.

  LEGAL ISSUES

§  Beneficiary Inducement Statute § This statute prohibits a provider from offering or giving

anything of value to a Medicare beneficiary that the provider knows, or should know, is likely to persuade the person to purchase an item covered by a federal health care program.

§ In the preamble to the regulations implementing this statute, the OIG stated that the inducement statute does not prohibit the giving of incentives that are of “nominal value.”

§ The OIG defines “nominal value” as no more than $15 per item or $75 in the aggregate to any one beneficiary on an annual basis.

§ “Nominal value” is based on the retail purchase price of the item.

  TYPES OF ARRANGEMENTS

§ Utilization of a Marketing Company: Be Aware of Kickback Problem § In the real world, it is common for a business to

“outsource” marketing to a marketing company. § Unfortunately, what works in the real world often does not

work in the health care universe. An example of this has to do with marketing companies.

§ If a marketing company generates patients for a provider, when at least some of the patients are covered by a government health care program, then the provider cannot pay commissions to the marketing company.

  TYPES OF ARRANGEMENTS

§ Such payment of commissions will violate the AKS. § The only way that an independent contractor can be paid

for marketing or promoting Medicare-covered items or services is if the arrangement complies with the personal services and management contracts safe harbor.

§ This safe harbor permits payments to referral sources as long as a number of requirements are met.

  TYPES OF ARRANGEMENTS

§  Expenditures for Physicians § If a provider pays money to a physician for services, or

provides meals, gifts and entertainment to a physician, or subsidizes a trip that the physician will take, then both the provider and the physician need to comply with the federal and state laws that govern these arrangements.

§ While the Stark non-monetary compensation exception allows a provider to spend up to a set amount per year (e.g., $407 in 2018) for non-cash/non-cash equivalent items for a physician, the Medicare anti-kickback statute does not include a similar exception.

  TYPES OF ARRANGEMENTS

§ Nevertheless, if the Stark exception is met, it is unlikely that the government will take the position that the non-cash/non-cash equivalent items provided by the provider to the physician violate the AKS.

§ Separate from furnishing gifts and entertainment, and subsidizing trips, the provider can pay the physician for legitimate services.

§ For example, if the provider has a legitimate need for a Medical Director, then the provider and physician can enter into a Medical Director Agreement that complies with both the PSMC safe harbor to the AKS and the Personal Services exception to Stark.

  TYPES OF ARRANGEMENTS

§ Another legitimate way for money to exchange hands between a provider and a physician is for the physician to rent space to the provider or vice versa.

§ The rental arrangement needs to comply with the Space Rental safe harbor to the AKS.

§ This safe harbor is similar to the PSMC safe harbor.

  TYPES OF ARRANGEMENTS

§  Loan/Consignment Closets § Assume that the provider provides DME (e.g., braces and

splints). A provider may place inventory in a hospital or physician office. The inventory must be for the convenience only of the hospital’s/physician’s patients and the hospital/physician cannot financially benefit, directly or indirectly, from the inventory.

§ If a provider pays rent for a space in which the consigned inventory is placed, then the arrangement should comply with the Space Rental safe harbor.

  TYPES OF ARRANGEMENTS

§  Preferred Provider Agreement § The provider can enter into a Preferred Provider Agreement

with a hospital whereby, subject to patient choice, the hospital will recommend the provider to its patients who are about to be discharged.

  TYPES OF ARRANGEMENTS

§  Employee Liaison § A provider may designate an employee to be on a facility’s

premises for a certain number of hours each week. § The employee may educate the facility staff regarding

services the provider can offer on a post-discharge basis. § The employee liaison may not assume responsibilities that

the facility is required to fulfill. § Doing so will save the facility money, which will likely

constitute a violation of the AKS.

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  HOW TO AVOID GOVERNMENT ENFORCEMENT EFFORTS

  RECENT GOVERNMENT ENFORCEMENT EFFORTS § Western District Tennessee 2/28/2018 § DME providers selling wheelchairs and back braces

convicted of fraud § Hot Topics •  Patient recruiters, falsified records, compliant medical

providers, falsification of records, and sale commissions

§ New Orleans Federal Court 3/28/2018 § Hot Topics •  Medically unnecessary DME, kickback payments, improperly

obtained physician signatures, and illegally obtained referrals.

  RECENT GOVERNMENT ENFORCEMENT EFFORTS § Des Moines, Iowa, Settlement 05/04/2018 § Hot Topics •  DME billed to Medicaid even after provider received full

payment for the equipment’s purchase price.

§  South District New York 5/17/2018 § Hot Topics •  Medically unnecessary adult diapers and other medical supplies,

falsified medical charts, broad array of defendants and related companies.

  RECENT GOVERNMENT ENFORCEMENT EFFORTS §  Largest health care fraud enforcement action in

Department of Justice history § Hot Topics •  Doctors as prosecution targets

§ Owner of DME company pleads guilty to Medicaid fraud § Hot Topics •  Incontinence and wound care supplies, false claims sent to

billing company, and excessive spending a dead giveaway.

  RECENT GOVERNMENT ENFORCEMENT EFFORTS §  Lincare pays $5.25 million to resolve False Claims Aact

allegations § Hot Topics •  Illegal price reductions to Medicare beneficiaries, waiver or

reduction of co-payments, and former Lincare billing supervisor as whistleblower (received $918,750).

§ DME company owner sentenced to 2 years in prison for health care fraud. § Hot Topics •  Billing company submitted claims but DME owner convicted.

  RECENT GOVERNMENT ENFORCEMENT EFFORTS § Question § How do DME companies find themselves under

investigation?

§ DME company owner sentenced to 2 years in prison for health care fraud. § Disgruntled employees or ex-employees § Whistleblower cases § Snared in doctor investigation cases

  RECENT GOVERNMENT ENFORCEMENT EFFORTS § Disgruntled employees or ex-employees are a major

source of complaints § Tips to avoid •  Termination •  Past due wages •  Unemployment compensation

  UNDER INVESTIGATION

WhistleblowerCases

GovernvmentInves4ga4ons

  UNDER INVESTIGATION

DoctorInves4ga4ons

DMEInves4ga4ons

  RECENT GOVERNMENT ENFORCEMENT EFFORTS § How to avoid marketing-based whistleblower cases § Tips •  Corporate compliance plans •  Vet company arrangements •  Do not rely on marketers’ “legal advice” claims

§ Vetting company’s contractual arrangements § Tips •  Review medical director arrangements •  Know your referral sources •  Examine your contracts

  QUESTIONS?

  THANK YOU Denise M. Leard, Esq. Brown & Fortunato, P.C. 905 S. Fillmore St., Ste. 400 Amarillo, Texas 79101 dleard@bf-law.com 806-345-6318

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