When physicians refer post-acute providers
Elizabeth E. Hogue, Esq.
Burtonsville, MD
Discharge planners/case managers may encounter physicians who insist upon making referrals to specific post-acute providers. These physicians may serve as medical directors or provide consulting services to the providers to whom they insist upon making referrals. Are these types of arrangements appropriate?
The "short answer" is that they are permissible, if applicable requirements are met.
Specifically, these types of arrangements must comply with the following:
- Federal statute governing illegal remuneration or kickbacks and rebates and regulations that provide for exceptions or "safe harbors."
- Federal Stark laws and regulations, including exceptions.
- State statutes and regulations that may govern referrals by physicians to other providers.
The federal statute that governs illegal remuneration says that anyone who either offers to give or actually gives anything to anyone in order to induce referrals has engaged in criminal conduct. There are, however, exceptions or "safe harbors" that often apply to arrangements between referring physicians and providers who receive referrals, as described below.
The so-called Stark laws and regulations prohibit physicians from making referrals to providers in which they have a financial interest, including contractual arrangements, unless the arrangements meet the requirements of an applicable exception described below. Stark applies only to designated health services (DHS). DHS include home health and home medical equipment (HME) services but do not include hospice services.
State legislatures also have enacted statutes that govern referral arrangements between physicians and other providers. These statutes vary from state to state.
Payments by post-acute providers to physicians who provide consulting/medical director services and also make referrals are kickbacks and violate the Stark law and regulations. As indicated above, however, there are a number of exceptions to both statutes. If physicians and post-acute providers meet the requirements of applicable exceptions, these types of arrangements are appropriate even though they would otherwise violate the anti-kickback and Stark statutes and regulations.
Specifically these types of arrangements must meet the requirements of the personal services and management contract safe harbor under the anti-kickback and rebate statute and the contractual exception to the Stark statute. They must also meet the requirements of applicable statute statutes and regulations, if any.
The basic requirements that must be met to comply with the exceptions to federal laws are as follows:
- Providers must enter into written agreements with physicians that are signed by providers and physicians, which specify the services covered by the arrangement.
- The arrangement must cover all of the services to be furnished by referring physicians to providers.
- Aggregate services provided cannot exceed those that are reasonable and necessary for the legitimate business purposes of providers.
- The term of these arrangements must be for at least one year.
- Compensation paid over the term of the agreement is set in advance, does not exceed fair market value, and is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties.
The services to be furnished under such arrangements do not involve the counseling or promotion of a business arrangement or other activity that violates any state or federal law.
If these requirements are met, it is permissible for physicians who provide paid consulting/medical director services to make referrals to providers who pay them for their services. The "bottom line" is that these types of arrangements may be acceptable and should not be viewed as illegal or unethical by case managers/discharge planners unless the applicable requirements are not met.
Discharge planners/case managers may encounter physicians who insist upon making referrals to specific post-acute providers. These physicians may serve as medical directors or provide consulting services to the providers to whom they insist upon making referrals. Are these types of arrangements appropriate?You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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