Keep physician pacts moored in safe harbors
By Elizabeth E. Hogue, Esq. Burtonsville, MD
Marketing strategies utilized by post-acute providers are generating fierce competition for referrals. As a result, providers are appropriately committing more and more resources to
marketing strategies.
Case managers/discharge planners also are feeling the heat from post-acute providers on a variety of issues related to referrals.
Providers, for example, are entering into agreements with referring physicians to provide consulting services to their organizations.
These legitimate relationships may be misunderstood by case managers/discharge planners, creating concerns about whether it is legal or ethical to refer patients to providers who have these types of arrangements.
First, it is important to acknowledge that post-acute providers need the services of consulting physicians. Examples of services that are genuinely needed from a business perspective may include the following:
- consultation regarding clinically complex cases;
- assistance with the development and maintenance of specialty programs;
- communications with physicians who provide inappropriate orders for care, do not return signed orders on time, or are unresponsive to staff members who are seeking modifications to treatment plans.
It certainly is appropriate for providers to establish consulting relationships with physicians who also make referrals to the providers with whom they have these types of arrangements.
Of course, these types of arrangements raise important legal issues related to potential violations of the federal anti-kickback and rebate statute, the federal so-called Stark laws, and state statutes that are likely to be similar to these federal statutes.
But if providers meet the requirements of the personal services and management contract "safe harbor" under the anti-kickback and rebate statute and the contractual exception under the Stark laws, they are likely to avoid violations.
The safe harbor and exception generally require providers to pay consulting physicians who also make referrals to them based upon written agreements that require payments at fair-market value for services actually rendered without regard to the volume or value of referrals received.
The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) recently has started scrutinizing these types of relationships more carefully.
From a practical point of view, providers should do the following in addition to meeting the requirements described previously:
- Providers should develop standardized or form agreements and use them consistently with all referring physicians who receive consulting fees from them. Providers cannot afford utilization of a variety of different agreements that may not meet the requirements described previously. Staff must understand that they can use only the standard approved agreement and cannot modify it without advance, written approval from a designated, knowledgeable individual.
- Documentation of services rendered and the amount of time spent in these activities is absolutely crucial. Providers should develop and implement policies and procedures that permit payments to physicians only after appropriate documentation to support payments has been received and reviewed.
- Providers should not have agreements for consulting services with physicians whose services they do not actually use, even if they make no payments to them. If providers do not need the services covered by the agreements, they should terminate the agreements because it may appear that the only purpose for the agreements is to induce referrals, as opposed to a documented need for services.
- Although there technically are no limits on the number of consulting physicians/medical directors providers can have at any given time, a very large number is likely to invite scrutiny by regulators and should be avoided. How many is too many? The number certainly should bear some relationship to the size of the provider organization and the geographic area served. Beyond this general guideline, common sense must prevail.
- The commercially reasonable services consulting physicians are asked by providers to perform cannot be related to the volume and value of referrals made. Providers cannot, for example, ask referring physicians to assist with quality assurance activities that entail review by consulting physicians of the charts of patients they referred to the provider so that the more referrals made, the more money consulting physicians make.
If providers follow these practical guidelines they are more likely to avoid enforcement activities. Likewise, case managers/discharge planners can have greater confidence that referring patients to providers who follow these guidelines are not likely to result in legal and ethical quagmires.
Violations hurt providers and referral sources alike.
Expenditures of financial and other resources are justified in view of possible adverse consequences.
[More information about the fraud and abuse implications of consulting arrangements with referring physicians is available from Hogue’s book — Medicare/ Medicaid Fraud and Abuse: A Practical Guide for Providers. To order, send a check for $30 (includes shipping and handling) to Elizabeth E. Hogue, Esq., 15118 Liberty Grove, Burtonsville, MD 20866.]
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