AMARILLO, TX – The federal anti-kickback statute (AKS) makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a federal health care program.

The AKS’s prohibition also extends to remuneration to induce, or in return for, the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursed by a federal health care program. “Remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind. The AKS has been interpreted to cover any arrangement where one purpose of the remuneration is to induce referrals for items or services reimbursable by a federal health care program.

Over the years, there have been government enforcement actions against arrangements in which a hospital, or a lab, or a home health agency, or a DME supplier, provide free services to a physician. The government’s theory is that (i) the free services save the physician money (i.e., he/she does not have to pay an employee to provide the services) and (ii) the free services constitute “remuneration” in violation of the AKS.

And yet, over the last couple of years we have witnessed government enforcement agencies (e.g., the Department of Justice and Office of Inspector General) back off a bit and not bring enforcement actions against arrangements that (i) result in a low risk of fraud and abuse, (ii) are unlikely to increase costs to federal health care programs, and (iii) make health care more accessible to patients. In particular, (i) the OIG published several Advisory Opinions providing guidelines for when it is proper to provide fee health care to patients and (ii) effective January 1, 2021, the Personal Services and Management Contracts safe harbor to the AKS was broadened.

It appears that government enforcement agencies are backing away a bit from a strict reading of the wording of the AKS and are focusing more on (i) the intent of the parties to the arrangement, (ii) whether the arrangement will result in increased costs to a federal health care program, and (iii) whether patients will be provided expanded access to health care.

The latest OIG guidance is Advisory Opinion (“AO”) No. 22-20, issued on December 14, 2022 and posted on December 19, 2022. It states:

Proposed Arrangement
Requestor is an acute-care hospital comprised of two campuses that provide a range of inpatient and outpatient hospital-based services. Under the Arrangement, for physicians who choose to participate (“Participating Physicians”), Requestor utilizes its employed nurse practitioners (“NPs”) to assist in rendering certain care to those patients of the Participating Physicians who are inpatients or in observation status in two designated medical units. The NPs perform a wide range of tasks, some of which the Participating Physicians otherwise would perform, including:

• promptly initiating plans of care through existing protocols;
• implementing any applicable care protocols instituted by Requestor (e.g., stroke or community-acquired pneumonia protocols);
• making rounds on assigned units, during which the NPs address concerns of patients, their families, nurses, and other clinicians (e.g., physical therapists and speech therapists);
• responding to laboratory or imaging studies, including arranging prompt follow-up testing and attending to abnormal results as needed;
• addressing rapid changes in patient condition, including adjusting care plans and ordering imaging, laboratory tests, or other diagnostic tools or interventions in real time;
• educating and supporting patients and families;
• coaching, educating, and otherwise supporting nurses on the unit, including providing certified continuing education;
• overseeing and supporting unit-based quality improvement projects; and
• discharge planning, which at times includes obtaining insurance authorizations for postacute care (such as for home health care, skilled nursing, or acute inpatient rehabilitation) and scheduling follow-up testing and appointments.

Requestor certified that the two medical units subject to the Arrangement are general care units and are neither surgery nor specialty care units (e.g., critical care, cardiology), and the Participating Physicians are predominantly primary care physicians. According to Requestor, patients in the medical units covered by the Arrangement are undergoing active evaluation to determine the cause and extent of their illnesses and often require ongoing attention throughout the day, including real-time responses to changes in patient condition. From Requestor’s experience, having the NPs readily available in these medical units improves patient care by allowing patients to be evaluated more quickly and efficiently so that they can receive diagnoses and treatments as soon as practicable.

Requestor certified that all of the duties performed by the NPs are done in communication and collaboration with the Participating Physician treating the patient. The Participating Physician (or other qualified physician designated by the Participating Physician if the Participating Physician is unavailable) must still round daily, and Participating Physicians maintain the same accountability for patient care as physicians not participating in the Arrangement. Requestor certified that it prohibits Participating Physicians from billing for the services furnished by the NP. According to Requestor, consistent with Medicare guidelines, Participating Physicians must conduct their own patient assessments and generate their own documentation in order to bill for their services, and they are prohibited from relying on the NPs’ services or documentation to bill for any services. Requestor certified that it pays for all services rendered by NPs under the Arrangement, and it does not separately bill any payor, including Federal health care programs, for the NPs’ services.

Each year, Requestor sends an educational letter to all physicians with privileges at Requestor who regularly admit patients to the two designated medical units, including physicians employed by affiliates of Requestor and physicians employed by independent physician groups, informing them of the Arrangement. Requestor certified that it does not take into account a physician’s volume or value of expected or past referrals, nor does it target any particular referring physicians, when offering (and providing NPs’ services under) the Arrangement. Requestor certified that it does not make payments to Participating Physicians under the Arrangement and that it has no ancillary agreements with Participating Physicians that would otherwise induce or reward referrals to Requestor. Requestor also certified that any compensation it pays to Participating Physicians outside of the Arrangement does not reflect or take into account any services performed by the NPs under the Arrangement.

OIG Analysis
The OIG’s position on the provision of free or below-market-price goods or services to actual or potential referral sources is longstanding and clear: such arrangements are suspect and may violate the Federal anti-kickback statute, depending on the circumstances. When a party in a position to benefit from referrals provides remuneration to an existing or potential referral source, there is a risk that at least one purpose of providing the remuneration is to influence referrals.

For example, OIG’s Supplemental Compliance Program Guidance for Hospitals explains that:

[t]he general rule of thumb is that any remuneration flowing between hospitals and physicians should be at fair market value . . . . Arrangements under which hospitals . . . provide physicians with items or services for free or less than fair market value . . . [or] relieve physicians of financial obligations they would otherwise incur . . . pose significant risk.

The Arrangement implicates the Federal anti-kickback statute because Requestor is providing remuneration in the form of NP services to Participating Physicians that could induce such physicians to make referrals to Requestor for items and services reimbursable by a Federal health care program. Under the Arrangement, Requestor assigns its employed NPs to perform a range of tasks that Participating Physicians otherwise would have to perform as part of their responsibilities to care for their patients appropriately from the time of admission to Requestor to the time of discharge.

Under the Arrangement, services performed by Requestor’s NPs on behalf of any Participating Physician potentially relieve the Participating Physician of a range of tasks and services for which they otherwise would have to expend their time and resources. For example, an NP performing services on behalf of a Participating Physician might save that physician the time and costs associated with having to return to the hospital or taking calls from the hospital to make treatment decisions.

These services also might allow Participating Physicians to use the time they would have spent performing these tasks to perform other separately billable services. The NPs’ services may be particularly valuable to a Participating Physician where the physician can bill Medicare for only one evaluation and management service per day, regardless of whether the physician sees a patient more than once in a day.

For these reasons, using NPs to take on patient care duties for which Participating Physicians otherwise are responsible constitutes remuneration to such Participating Physicians, and at least one purpose of providing such remuneration may be to induce them to make referrals to Requestor for items and services reimbursable by a Federal health care program. However, for the combination of the following reasons, we believe the Arrangement presents a minimal risk of fraud and abuse under the Federal anti-kickback statute.

First, the Arrangement is restricted to two non-surgical, non-specialty units at one of Requestor’s hospital campuses. We might reach a different conclusion if, for instance, the Arrangement was offered on surgical or specialty units where specialist physicians typically make more lucrative referrals to Requestor. In addition, the Arrangement does not target any particular referring physicians, and Requestor certified that Participating Physicians are predominately primary care physicians, as opposed to specialist physicians who could be in a position to make more lucrative referrals to Requestor.

Requestor also certified that any compensation it pays to Participating Physicians outside of the Arrangement does not reflect or take into account any services performed by the NPs under the Arrangement. Finally, Requestor certified that it does not take into account a physician’s volume or value of expected or past referrals when offering the Arrangement. These facts mitigate the risk that the Arrangement is used to induce or reward valuable referrals from any physicians, including specialist physicians.

Second, the Arrangement contains safeguards that lower the risk of fraud and abuse under the Federal anti-kickback statute. For example, Requestor certified that all of the duties performed by the NPs are done in communication and collaboration with the Participating Physician treating the patient. The Participating Physician (or other qualified physician designated by the Participating Physician if the Participating Physician is unavailable) still must round daily, and Participating Physicians maintain the same accountability for patient care as physicians not participating in the Arrangement.

Additionally, Requestor certified that it does not make any payments to Participating Physicians under the Arrangement, and there are not any ancillary agreements with the Participating Physicians that otherwise induce or reward referrals. Requestor also certified that Participating Physicians in the Arrangement can bill for services only where they have documentation supporting the work they actually have performed, and they are prohibited from billing for services performed by the NPs. We believe the specific facts of the Arrangement are distinguishable from suspect arrangements where, for example, hospitals permit their employed NPs to provide services to physicians’ patients at no cost to the physicians, and the physicians then bill payors, including Federal health care programs, for the services performed by these NPs.

Finally, the design of the Arrangement appears unlikely to increase costs to Federal health care programs and may ensure an appropriate level of care for patients in these units. Requestor certified that it does not bill any payor, including Federal health care programs, for the services performed by the NPs. The fact that Requestor does not bill for NPs services—even when the NPs’ services performed under the Arrangement would otherwise be separately reimbursable– mitigates the risk of inappropriately increased costs to Federal health care programs from additional claims for reimbursement.

Moreover, according to Requestor, patients in the medical units covered by the Arrangement are undergoing active monitoring and evaluation to determine the cause and extent of their illness, and they often require ongoing attention throughout the day, including real-time responses to changes in a patient’s condition. Accordingly, Requestor certified that having the NPs available in these medical units improves care for patients by allowing them to be evaluated more quickly and efficiently so that they can receive diagnoses and treatments as soon as practicable. The services performed by the NPs under the Arrangement appear reasonably designed to address these objectives.

Applicability to DME Suppliers
Although the AO focuses on free services provided by a hospital to physicians who refer patients to the hospital, the OIG’s reasoning applies equally to free services provided by DME suppliers to physicians. The question is this: “What kind of services can a DME supplier provide to a physician that fall within the parameters of the AO?” In answering this question, the DME supplier needs to answer the following questions:

• Do the DME supplier’s services target only referring physicians or are they also offered to non-referring physicians?
• Do the referring physicians, who receive the services from the DME supplier, send orders to the DME supplier for expensive or non-expensive products?
• If the DME supplier is paying a physician for services as a Medical Director, is the amount of the payments influenced by the free services being provided by the supplier?
• In rendering free services (e.g., to the physician’s patients), is the DME supplier communicating and collaborating with the physician?
• Does the DME supplier have any other arrangements with the physician that induce or reward referrals?
• Does the physician bill third party payors for the services provided by the DME supplier?
• Do the DME supplier’s services to the physician increase expenditures by a federal health care program?
• Do the DME supplier’s services facilitate the provision of health care to patients who otherwise would likely not be able to receive such health care?

As an example, the following arrangement appears to comply with the guidance set out in the AO:

• The physician and DME supplier sign a Preferred Provider Agreement in which, subject to patient choice, the physician will refer his/her patients to the DME supplier.
• The supplier will commit to stay in communication with the patient, his/her family members, and the treating physician.
• The purpose of the communications will be to (i) encourage the patient to take his/her medications as prescribed, (ii) encourage the patient to meet with the treating physician at the scheduled times, and (iii) encourage the patient to eat healthy food, hydrate and be as active as possible.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Employee Retention Tax Credit: What It Means to DME Suppliers

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Allison L. Davis, Esq., Brown & Fortunato

Tuesday, February 28, 2023

1:30-2:30 p.m. CENTRAL TIME
The COVID pandemic was a game changer. It affected all aspects of American life. Recognizing the severity of the pandemic, the federal government passed laws – and issued regulations – designed to (i) expand the provision of health care in the home, (ii) assist families financially, and (iii) provide “safety nets” to businesses. One of the safety nets is the Employee Retention Tax Credit that is designed to encourage employers, that are adversely affected by the pandemic, to keep employees on their payroll. Since its inception in 2020, the Employee Retention Credit has been modified by federal statute and IRS regulations to relieve the ongoing financial struggles faced by employers. This webinar will discuss the history of the Employee Retention Credit, including eligibility and value of tax credits available for wages paid between March 2020 and December 31, 2021.  We will also discuss how to retroactively claim the Employee Retention credits and common pitfalls to avoid when the DME supplier is amending its tax filing. Lastly, the webinar will discuss how the DME supplier can avoid the scams that have arisen in conjunction with the Employee Retention Tax Credit. 

Register for Employee Retention Tax Credit: What It Means to DME Suppliers on Tuesday, February 28, 2023, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Allison L. Davis, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129