AMARILLO, TX – When a DME supplier enters into a financial/ownership arrangement with a referring physician, the supplier needs to be aware of the restrictions and prohibitions of the federal anti-kickback statute (AKS), federal physician self-referral statute (Stark), the applicable state anti-kickback and physician self-referral statute, and the state’s Medical Practice Act (a set of laws specific to physicians).

A “financial/ownership” arrangement can include (i) the DME supplier paying a referring physician for services (e.g., as a Medical Director), (ii) the supplier spending money to entertain the referring physician, (iii) the supplier renting space in a building owned by a referring physician, (iv) the supplier paying a physician to present an education program, and (v) the physician having an ownership interest in the DME supplier.

This article focuses on Stark…and how Stark defines a “referral.”

Under Stark, a physician may not refer a Medicare or Medicaid (M/M) patient to a DME supplier if the referring physician, or a member of his/her immediate family, has a financial or ownership relationship with the supplier. Under Stark, an immediate family member includes (i) husband or wife; (ii) birth or adoptive parent, child, or sibling; (iii) stepparent, stepchild, stepbrother, or stepsister; (iv) father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; (v) grandparent or grandchild; and (vi) spouse of a grandparent or grandchild. For example, if Dr. Jones owns ABC Medical Equipment, Inc. (“ABC”), he cannot refer M/M patients to ABC for most types of DME. As another example, if Dr. Jones’ son…or spouse…or brother…owns ABC, Dr. Jones cannot refer M/M patients to ABC for most types of DME.

Here is where it gets interesting. Assume that Dr. Jones’ spouse owns ABC. Dr. Jones may, quite logically, take the position that if he writes an order for DME…and neither he nor his staff makes any mention of ABC…and if one of Dr. Jones’ patients chooses ABC to obtain DME…then Dr. Jones and ABC have no worries about Stark. That is, Dr. Jones may assert (again, quite logically) that neither he nor his office “referred” the patient to ABC. From a practical standpoint, this is true. In a normal view of what transpired, there was no referral to ABC.

But sometimes the law is not “normal.” Stark defines a “referral” as “a request by a physician, or ordering of, or certifying or recertifying of the need for any designated health service for which payment may be made under Medicare Part B…” and/or “a request by a physician that includes the provision of any designated health service for which payment may be made under Medicare, the establishment of a plan of care by a physician that includes the provision of such a designated health service, or the certifying or recertifying of the need for such a designated health service, but not including any designated health service personally performed or provided by the referring physician.”

And so if Dr. Jones merely orders DME for an M/M patient without mentioning ABC, and if the patient chooses ABC on his own, Stark will nevertheless construe Dr. Jones as “referring” the patient to ABC. If ABC is located next door to Dr. Jones’ office, the risk is very high that multiple M/M patients of Dr. Jones will obtain their DME from ABC, thereby triggering a Stark violation. On the other hand, if ABC is located “across town,” the risk of a Dr. Jones patient obtaining DME from ABC is greatly reduced.

The lesson to be learned is as follows:

• If a DME supplier is directly or indirectly compensating a physician (or immediate family member of the physician), or otherwise giving anything of value to a physician/immediate family member, Stark will construe the parties to have a “financial” relationship.
• If a physician/immediate family member has an ownership interest in a DME supplier, no matter how small, Stark will construe the parties to have a “financial” relationship.
• If a DME supplier and a physician/immediate family member have a financial relationship, the physician cannot refer M/M patients to the supplier unless the arrangement complies with a Stark exception. And as discussed above, Stark broadly defines “refer” as the physician simply ordering DME for the patient.
• Fortunately, there are a number of Stark exceptions that will allow a physician to refer M/M patients to a DME supplier with which the physician has a financial relationship. The key is to fit the arrangement into one of the exceptions.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, 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: Benefits and Pitfalls

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Kianna L. Sitarski, Esq., Brown & Fortunato

Thursday, July 11, 2024

1:30-2:30 p.m. CENTRAL TIME
The COVID pandemic was unprecedented … and traumatic … for all of us. In response, the federal government passed laws – and issued regulations – designed to (i) provide “safety nets” to businesses, (ii) expand the provision of health care in the home, and (iii) assist families financially. A key provision 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 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. The webinar 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: Benefits and Pitfalls on Thursday, July 11, 2024, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Kianna L. Sitarski, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129