AMARILLO, TX – It is not uncommon for a DME supplier to (i) desire to sponsor a physician to speak at an in-person conference for the supplier’s employees (“Conference”), (ii) pay the physician for his/her time to prepare for and present a program at the Conference, and (iii) reimburse the physician for his/her out-of-pocket expenses. This article will discuss the parameters the DME supplier must follow when sponsoring a physician to speak at a Conference.
Assume that Dr. Jones refers federal health care program (“FHCP”) patients to XYZ Medical Equipment (“XYZ”). If XYZ compensates Dr. Jones to speak at a Conference, then a financial relationship between Dr. Jones and XYZ is created. This, in turn, implicates the federal physician self-referral statute (“Stark”) unless a Stark exception is met.
Assume that Dr. Jones’ program will focus on clinical issues that XYZ’s employees need to understand as they work with XYZ’s customers. Since Dr. Jones is providing XYZ a service, the arrangement can be structured to fall under the Stark Personal Services exception. Among other requirements, the written agreement should include: (i) a description of Dr. Jones’ program; (ii) a set compensation amount that is the fair market value (“FMV”) equivalent of Dr. Jones’ time that he/she expends in preparing for and presenting the program; and (iii) a term for not less than one year. The Stark Personal Services exception also requires that Dr. Jones’ services be reasonable and necessary and for a legitimate business purpose.
XYZ’s arrangement with Dr. Jones may also fall within the Stark FMV exception if, among other requirements, Dr. Jones’ presentation (i) is commercially reasonable and (ii) furthers a legitimate business purpose.
The arrangement can be structured to comply with (or substantially comply with) the Personal Services and Management Contracts (“PSMC”) safe harbor to the federal anti-kickback statute (“AKS”). Among other requirements, (i) the parties must enter into a written agreement with a term of at least one year, (ii) the methodology for compensating Dr. Jones must be set one year in advance, and (iii) the compensation must be the FMV equivalent of Dr. Jones’ services.
To reduce the risk of a governmental agency asserting that the arrangement violates Stark and/or the AKS, the Speaker Services Agreement (“SSA”) between Dr. Jones and XYZ should include detail on the amount of time Dr. Jones will be paid to prepare and present his/her program. For example, the SSA can require Dr. Jones to submit his/her presentation for approval by XYZ prior to the Conference. The SSA should also limit Dr. Jones’s expenses to reasonable amounts and require Dr. Jones to submit an invoice of his/her time and expenses to XYZ. This will allow XYZ to review Dr. Jones’s expenses and ensure that his/her costs are reasonable and within the compensation amount set forth in the SSA. Only after XYZ’s review and approval of the invoice should XYZ compensate Dr. Jones.
Provisions to be included in the SSA can include the following:
- Speaker Services – Speaker will present a minute program concerning at XYZ’s Annual Conference for its staff on , 2023, in . Speaker will spend as much time as reasonably necessary to prepare for and present the program.
- Compensation – XYZ will pay Speaker a flat fee of $ for preparing for and presenting the program, to be paid within 30 days after the Conference. The Parties agree that such compensation is commercially reasonable and is fair market value for the Speaker’s services.
- Expenses – XYZ will reimburse Speaker for reasonable travel expenses, including airfare and lodging, incurred in connection with the performance of Speaker’s services under this Agreement. XYZ will make payment to Speaker within 30 days after receiving actual or copies of receipts evidencing travel expenses incurred by Speaker. If XYZ considers any travel expense presented by Speaker to be excessive, XYZ has the right to reduce such expense to an amount it determines to be reasonable under the circumstances related to the expense.
- Referrals – Speaker will have no obligation to refer patients to XYZ nor to recommend the purchase of XYZ products.
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. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or firstname.lastname@example.org.
AAHOMECARE’S EDUCATIONAL WEBINAR
Copayment Collection and Patient Assistance Programs
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Matthew D. Earl, Esq., Brown & Fortunato
Tuesday, February 14, 2023
1:30-2:30 p.m. CENTRAL TIME
Federal law is clear: a DME supplier must make a reasonable effort to collect copayments. All (or virtually all) commercial insurers, including Medicare Advantage Plan, impose the same requirement. If a DME supplier routinely waives or reduces copayments, it can be held liable under the federal anti-kickback statute, federal beneficiary inducement statute, and federal False Claims Act. In fact, many federal criminal and civil cases brough against DME suppliers (often at the instigation of a whistleblower) are based, in whole or in part, on the failure to make a reasonable effort to collect copayments. In the same vein, insurers will terminate agreements with suppliers on the basis of not making a reasonable effort to collect copayments. This program will (i) discuss what it means to “make a reasonable effort” to collect copayments; (ii) discuss how a supplier can implement a financial hardship policy that allows the supplier to waive/reduce a copayment on a patient-by-patient basis; (iii) point out that the existence of such a financial hardship policy cannot be advertised; (iv) discuss how a DME supplier can implement a patient assistance program; and (v) discuss how a supplier can access charities that may be in the position to assist patients in paying their copayments.